Africa (Commonwealth Union) _ The removal of fuel subsidies in Nigeria is having an impact beyond its borders, particularly in neighboring Benin. The price of smuggled gasoline, known as “Kpayo,” has doubled from 350 to 700 CFA francs (0.5 to 1 euro) on the black market since Nigeria ended its subsidy two weeks ago. This increase has made the smuggled fuel more expensive than the petrol sold at service stations, causing a decline in demand for illegal gasoline. The decision to end subsidies aims to address financial waste and curb massive smuggling of subsidized fuel to neighboring countries.
The smuggling of low-cost Nigerian gasoline has been a longstanding practice, with informal sellers transporting it to countries like Benin, where it is sold on the black market. The suspension of subsidies has led to higher taxi fares in Benin and strikes by motorcycle taxi unions in Cameroon. Many individuals in Benin, such as Jeannine, a widow with five children, rely on the income generated from selling smuggled fuel to support themselves and their families. The sudden surge in demand for legal fuel has caught suppliers off guard, resulting in long queues at gas stations.
While the subsidy removal has caused economic difficulties for some, the Beninese government sees an opportunity to increase tax revenue by reducing the importance of contraband gasoline. Benin’s economy is heavily reliant on its Nigerian neighbor, as illustrated by the impact of a previous border closure in 2019. The recent dismissal of Benin’s foreign affairs minister and the appointment of someone with connections to Nigerian President Bola Tinubu suggests a desire to maintain close ties with Nigeria.
At the Seme-Krake border post between Benin and Nigeria, the trade of rice continues despite the official ban on rice imports in Nigeria. Cars loaded with bags of rice from Benin are openly unloaded on the Nigerian side and transferred to other vehicles for transport within Nigeria.
