Nigeria and its neighbours: Big fish (or shark) in a small pond

HUGE jars of iridescent yellow liquid glow on almost every street corner in Cotonou, the commercial capital of Benin. Taxi drivers pull over to fill up their cars using a hose and funnel. Proper petrol stations, by contrast, stand empty. “It’s cheaper this way,” explains a taxi driver, as he tanks up using the unofficial method.

The origins of this black market lie less than an hour’s drive away, across Benin’s eastern border, in Nigeria, where imported fuel is sold at subsidised rates and the price paid by drivers is capped, thus generating a massive trade in illicit petrol. Known in Benin as kpayo, it is a third cheaper than the legal stuff; 80% of the petrol in Benin’s cars is said to have been smuggled in. Of the 2m or so barrels of oil pumped out of wells in Nigeria each day, as many as 400,000 are reckoned to be stolen, often with the connivance of politicians.

Some argue that the black market does at least provide jobs. But Daniel Ndoye, a Senegalese economist at the African Development Bank in Cotonou, says that on balance it holds back Benin’s development: “It causes huge loss of revenue for government, which affects infrastructure development and the business climate.” Illegal fuel can be dangerous: people have been burnt alive in accidents with it.

To read the entire article, please click here.

Source: http://www.economist.com

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