In August 2019, the Federal Government shut the Nigeria-Benin border in order to check smuggling of fuel, rice and other commodities by local and foreign traders. The move angered several neighbouring countries as many of them saw the action as unilateral. Few months after, several African countries impacted by the closure pleaded with Nigeria’s President Muhammadu Buhari to re-open the borders to save their economies from slump.
Nana Akufo-Addo, president of Ghana, was reported to have begged Buhari to re-open the land borders to boost the Ghanaian economy. This, according to reports, happened on the sidelines of the UK-Africa Investment Summit 2020 in London.
A statement released by Nigeria’s presidency in January 2020 said that the Ghanaian president showed understanding and realised the need for Africa’s most populous nation to protect its citizens, but pleaded for an expedited process given that the Nigerian market was significant for certain categories of business people in the West African country.
In 2019, John Mahama, former president of Ghana, appealed to Buhari to reconsider opening Nigeria’s land borders as the shut-down was hurting many small and medium businesses, especially in Togo, Ghana and Cote D’Ivoire, which rely on regional trade for survival.
The land borders have been on the shut-down for the past 14 months. Proponents and supporters of the closure of the land borders argue that local rice production has risen in the last one year. They see evidence in the 1.58 percent growth recorded by the agriculture sector in the second quarter of 2020. Another piece of evidence for the proponents is data from the United States Department of Agriculture (USDA) which put Nigeria’s milled rice production in 2018/2019 at 4.78 million metric tons (MMT), up over 2.5 percent from 2017/18 figure of 4.66 million MT. Data from the Thai Rice Exporters Association show that Nigeria imported a total of 2,796 metric tons in the half-year 2019 and 1,192 metric tons in the corresponding period of 2020, indicating a 57.36 percent decline over the period.
“Since the border closure, lots of farmers, who had abandoned growing rice, have returned. Other farmers are shifting to rice cultivation because the market is there now and it is profitable,” Muhammed Augie, former chairman, Rice Farmers Association, Kebbi State chapter, recently said.
“Nigerians are now changing their preference to local brands and consuming it more,” Augie further said.
Protectionists have always argued that border closure is the best measure to promote the local production or manufacturing. They argue that by shutting borders, imports are restricted and local manufacturers have the space to scale and make sales/profits. For them, border closure reduces the level of unfair competition faced by local producers and increases their competitiveness. They further contend that border closure helps to protect infant industries, especially in Nigeria where firms’ survival rate is low.
Border closure, for the proponents, can also curb smuggling, especially of arms and ammunition, and is a vital policy for a country like Nigeria which is facing insecurity crisis.
However, opponents of border closure and proponents of open borders do not see many positives in protectionism.
They say that it creates monopolies and enriches a few at the expense of many others. This point is evident in the price of rice today. Before the border closure in August 2019, a 50kg bag of local parboiled rice was sold for an average of N17,000, but it now sells for an average of N28,000, indicating a 65percent increase in Lagos, Abuja and other parts of the country.
Similarly, a 50Kg bag of foreign rice, which was sold for an average of N14, 000 before the border closure, now goes for N32,000 at Lagos markets. This shows a 129 percent increase in 14 months. In Onitsha and Aba, South-East Nigeria, a 50kg bag of rice goes between N28,000 and N35,000 today. The increases are not limited to rice.
A 25-liter gallon of vegetable oil goes for N17,500 today in Lagos and other parts of Nigeria, as against N10,500 a year ago, indicating a 67 percent price rise. On the other hand, a 25-litre gallon of palm oil now sells for N14,500 as against N9,000 in July 2019, representing a 61 percent price increase. A big basket of tomatoes that was sold for N6,000 last year is now being sold for N15,000 in Lagos. The prices of food and cash crops have risen by over 50 percent in the last 14 months, thus out-pricing the majority poor and enriching rice farmers who are also getting government incentives.
Rising prices of basic food products are down to the fact that the country is not producing much food even with border closure. Shutting down a critical border like Nigeria-Benin only created artificial scarcity of food, leading to price spikes. With nearly 50 percent of Nigerians living in extreme poverty and almost one in every three persons jobless, the border closure increases the misery of many poor and lower middle-class I a country notorious for being world’s sixth most miserable country, according to Hanke’s 2020 Misery Index.
According to available data, Nigeria is not yet self-sufficient in any food or cash crop, which is why it needs import to close demand. But the Federal Government and its officials wrongly believe that shutting down borders will lead to sudden production increase. If the production has risen, will it not result in low prices, at least for local rice?
More so, rice produced by many farmers in Nigeria is not properly processed and can lead to diseases. It is, therefore, unconscionable to force everybody to patronise it for patriotism reasons. It denies consumers their right to choice.
It is critical to point out that the fundamental issues of competitiveness have not been addressed in Nigeria’s agriculture and manufacturing sectors. As of today, power supply issues have not been addressed in local production, and many farmers cannot access several markets due to poor road network. Flood is still a major issue for rice farmers, which naturally affects their output and cast doubt on their capacity to pay back government loans. More so, many farmers are still using crude tools because they are not farming commercially or cannot afford sophisticated machinery such as tractors. Also, quality of seeds is still a critical issue yet to be addressed, while input prices are sometimes very high.
These fundamental issues are still with Nigeria and cannot guarantee improved productivity even if the borders are shut till 2050 years.
While the border closure favours some manufacturers, it disfavours many others who cannot import inputs or set up offices in other West African countries.
Many Nigerians blindly support protectionism because they rightly believe it can increase production, but they fail to learn that they will pay the heavy price as long as these fundamental issues remain unaddressed.
One of the biggest problems with border closure is that it could make or mar the African Continental Free Trade Area (AfCFTA) starting in January 2021. Nigeria is a very significant country, being the continent’s largest economy and most populous. It needs to trade with the rest of Africa to boost its own growth.
Trade among West African countries is about 12 percent, which is relatively low when compared with other regions. On continental basis, trade among African countries is 16 percent, which is poor when compared with Europe’s 59 percent, Asia’s 51 percent, North America’s 37 percent, and Latin America’s 20 percent, data show
The Nigerian economy is sick. Inflation rate is 13.71 percent and poverty among the consumers reached 44 percent in 2018, according to World Poverty Clock. Unemployment rate hit 27.1 percent in the second quarter of 2020, from 23 percent in the third quarter of 2018. The GDP contracted 6.1 percent in the second quarter of 2020, according to the NBS. The country is facing a worsening foreign exchange crisis, including low Foreign Direct Investment and Diaspora dollar inflows.
This is why trade is important to create opportunities for businesses, which, in turn, will create jobs and grow the economy.
President Muhammadu Buhari must re-open the Nigeria-Benin border to save the Nigerian economy from total collapse and lift the poor out of poverty. He cannot lift anybody out of poverty with border closure-induced high prices.
