Curbing smuggling of rice and sugar in Tanzania

Research question

The port of Dar es Salaam is the main gateway of Tanzania and has been at the centre of multiple corruption and rent capture activities. The latter are intertwined with corruption problems in tax and import duties collection, and have impacted the development of a number of productive sectors in Tanzania. This project asks: what drives the smuggling of rice and sugar and how can this be reduced to address scarcity and enable productive development?

Project summary

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Despite several recent studies assessing inefficiencies and corruption issues in Dar es Salaam’s main port, the evidence on corruption dynamics remains scattered. These studies mainly looked at inefficiencies in the port, in particular the loss determined by long delays affecting ships that arrive in Tanzania’s central port.

Rice and sugar remain scarce and their production largely uncompetitive in Tanzania. Large segments of the rural population are involved in rice and sugar production and they depend on them as cash crops. Powerful organisations and their clientelistic networks exploit scarcity to capture rents from these commodities along the value chain and are involved in smuggling activities. The corrupt rents capture from sugar and rice also generates an intricate web of domestic and regional conflicts among powerful organisations.

We analyse the following:

Mirror statistics on rice and sugar to estimate the magnitude and patterns of smuggling (e.g. cyclicality, major sources) over time.
Detailed customs information on rice and sugar imported for the 2015 to 2017 period to identify systematic patterns of tax evasion and avoidance.
Changes in trade regulation over time to identify potential rent-seeking opportunities, for example: Common External Tariff negotiated with the East African Community; export and import bans; issuing of emergency import licences, Rules of Origin interpretations.

Smuggling of products, including raw materials, imports of counterfeit drugs, as well as dumping, have undermined the development of a number of sectors with comparative advantage potential, including rice and sugar. Finally, smuggling and rent capture activities affecting Dar es Salaam and other minor ports in Tanzania are also at the centre of the political tensions between the mainland and Zanzibar.