Adjustment in Import Duty Tax Imperative in Combating Increasing Rice Prices

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By Amin Kef (Ranger)

The cost of rice in Sierra Leone has skyrocketed, leaving many households struggling to afford the staple food. The situation, which has been worsening over time, has now reached a critical point where even the smallest bag sizes are becoming prohibitively expensive for the majority of citizens.

Sierra Leone has long depended on imported rice, primarily supplied by private sector businesses. Although the country does produce rice locally, the quantity is far below the demand, and ironically, much of this domestic rice never reaches the capital, Freetown. Instead, it is often smuggled to neighboring countries, exacerbating the shortage at home.

The recent implementation of the 2024 Finance Act is a significant factor behind the soaring rice prices. Despite claims to the contrary, the Act’s restoration of a 5% import duty on rice has contributed to the sharp price increases. The Ministry of Finance justified this move by arguing that it would generate revenue for the Government and protect local rice production. Additionally, funds from this tax were supposed to support the Government’s flagship “Feed Salone” program, aimed at boosting domestic rice production.

Financial Secretary, Matthew Dingie, has promised that the Government would develop a pricing formula for essential commodities like rice, cement and iron rods to protect consumers. However, this plan has yet to materialize, leading many to question the Government’s commitment to addressing the crisis.

While the Ministry of Agriculture and Food Security and its partners have made efforts to support the “Feed Salone” initiative, the impact on food security and rice production has been minimal. The lack of significant progress means that for the foreseeable future, households will continue to face exorbitant rice prices that strain their ability to secure enough food.

The delay in implementing a pricing formula and the persistent high prices has led to growing frustration among citizens. Economic principles dictate that when demand exceeds supply, prices will rise. However, the situation is compounded by the restored import duty and other costs that importers face, which are passed on to consumers. As a result, rice stocks that once sold out in a few months now linger in warehouses for nearly a year due to reduced purchasing power.

Immediate and long-term measures are urgently needed to address this dire situation. Waiving the 5% import duty on rice could provide some relief by encouraging importers to lower their prices. The Government should also continue to support farmers, as recently demonstrated by the distribution of fertilizers across the country. A shift from subsistence farming to mechanized agriculture, along with the expertise of agricultural professionals, is essential for transforming the sector.

Improving the road networks leading to farming communities is another critical step. Poor infrastructure not only hinders the transport of agricultural produce to markets but also drives up transportation costs, further inflating prices. Without viable transport options within the country, farmers may resort to smuggling their goods to neighboring nations where returns are higher.

In this troubling scenario, urgent action is required to prevent widespread hunger and ensure that rice, a staple food for Sierra Leoneans, remains accessible to all.

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