• Thursday, December 07, 2023
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Nigeria remains closed for business

Nigeria remains closed for business

At every opportunity to woo investors, Nigerian officials would declare that the country is a suitable place for them to do business. But the irony is that in practical terms, Nigeria has not really been opened for business. At least not in the last four years.

‘Come and do business in Nigeria, and you are also guaranteed access to the huge regional market,’ is one way to describe the fancy catch phrases that have not been backed by reality. Since 2019, the country’s land borders have remained shut to commerce. Unless the catch is for investors to depend solely on the ‘large local population’, without expecting to tap into the regional market, then that is all the business there is.

Not even raw materials can be brought in through the borders for whoever invests locally, and certainly, they cannot export to neighbouring countries via the land borders after producing. At least not officially. But who wants to invest multimillion dollar funds only to become a smuggler? Exporting via the sea is not only cumbersome but expensive and may not show financial wisdom. Those who tried it have reported losses.

As BusinessDay reported, the year 2019, when Nigeria closed its land borders (and shut all trade), was ironically the most successful in terms of exports to other West African countries. Nigeria’s exports had taken a strong trajectory never seen before, and just like committing economic suicide, the borders were shut.

To understand the significance of the decision, in 2016, Nigeria exported N576.59 billion worth of goods to the ECOWAS region, increasing to N782.65 billion in 2017, and then N1.04 trillion in 2018. The growth continued, and in fact, reached its peak in 2019 when it became N2.24 trillion.

Those whose livelihoods depended on legitimate international trade through the borders have become jobless. Multinationals and manufacturers have also not been left out of the losses

In all these years, Nigeria’s imports from ECOWAS were barely up to 10 percent the value of its exports. This, at least as official data shows, negated common sentiments that Nigeria was a dumping ground for neighbouring countries. And even if this was true and has been occurring through smuggling, then rather than fix the inefficiencies of the Nigeria Customs Service and the several security agencies operating around the borders, the country opted to close off all trades through the borders.

Yet, the Manufacturers Association of Nigeria (MAN), in documents seen by BusinessDay, said that “the closure of the official posts has shown that the intensity of smuggling activities through illegal routes may not be heavy as to significantly disrupt economic activities in the country.

“Experience has now shown that most damaging smuggling activities may have been coming from the official border posts.”

On a reporting trip to some border communities in Ogun and Lagos states, the presence of multiple checkpoints is the most notable feature of the entire stretch of road networks. Whether it is the Abeokuta to Imeko to Ilara axis, or Lagos to Badagry to Seme, dozens of checkpoints are mounted by the police, army, immigration, and customs itself. They are also said to be present in known smuggling routes in the bush and along the waterways. But for some reason, smuggling continues to thrive while legitimate trade remains outlawed.

Between Seme border and Gbaji Bridge in Badagry, a distance of less than 20 kilometres, 40 checkpoints were counted during the visit on a Saturday. A day many officers are said not to even show up since its weekend.

However, Nigeria’s response to inept officers (across various security agencies) responsible for its border control was to hang a huge sign at the borders, to literally announce that the country is closed for business. As Emmanuel Ijewere, president, Nigeria Agribusiness Group (NABG) had said in a previous interview, the border closure largely failed because “Nigerians are smart people and when they have an intention, and the government obstructs it they will find a way around it. Because there are people in the government that will connive with them to achieve that goal.”

According to him, rather than border closure ending whatever the government may have considered ‘problems’, the actors were simply swapped. This time, “relations of those who are supposed to be gatekeepers take over from genuine business people or become commissioned agents,” said Ijewere.

But as legitimate trade was stopped, smuggling did not reduce. Yet, there is now reason, at least as alluded to by MAN that much of whatever was being smuggled into Nigeria in fact came in through the official border posts.

The country has little or nothing to show for its protectionism over the years, notable among which has been the current border closure. Protecting farmers and other local producers was touted as one of the objectives but as BusinessDay investigations showed in 2020, even farmers became victims of the border closure.

On a national scale, inflation, especially that of food prices, is at an all-time-high. Inflation reached 27.33 percent in October from 26.72 percent in the previous month, with food inflation accelerating to 31.52 percent on a year-on-year basis.

“Since the border closure, food prices have consistently been increasing,” said Afeez, a border town resident in Ilara. “The food that we were able to bring in here ensured food was also not expensive in the cities after we transported them across.”

Not only are food prices accelerating every other day (like virtually every other thing), but those whose livelihoods depended on legitimate international trade through the borders have become jobless. Multinationals and manufacturers have also not been left out of the losses. While some may have thought the border closure would ‘secure the local market for them’, they would later realise it was a double-edged sword that shut them out of the regional market as well. They were now only certain to be local champions in an unstable economy, even if they once exported to other West African countries and beyond through the land borders.

“Before the border was closed, we know how much a bag of rice was sold, including local food stuff like Garri,” Afeez said. “If the borders are opened today, as it reflects in our standard of living and ability to trade, it will also reflect in the cities (and the rest of Nigeria).”

He is not alone. The Brookings Institution in a 2019 report, said “given the sheer number of people engaged in cross-border trade and deriving their livelihoods from it on both sides of the border as well as the ineffective policing of that trade, the success of its closure is up for debate.”

Four years later, it has become obvious that the border closure failed. Previous reporting by BusinessDay also showed it failed to curb insecurity (which, in fact worsened) as it was claimed it would. For those who reside in border towns, not only are their once vibrant communities shadows of themselves, they also remain cut off from fuel supply from the rest of Nigeria even though the subsidy on fuel has been removed for more than five months.

To even transport goods from the cities to their communities and sell in local markets, they are subjected to extortions and inhumane treatments, all on the suspicion and often unfounded claims that they want to sell to neighbouring countries. In an ideal world, this would be a good thing, but apparently, commerce works upside down in Nigeria.

“Why stay far from the border and claim we are taking the goods outside Nigeria?” asked Olanireti Bankole, Iyaloja of Ilara who trades in fabrics. She gets her goods from Oshodi market in Lagos, and apart from transport costs that have more than doubled, the extortions are a major pain point. While most checkpoints accept N500, many refuse and there are more than 30 such checkpoints between Abeokuta and Ilara.

Her trade has become hazardous because whenever goods are being transported to her community, Customs officers (and other security agents) would claim they are taking the goods to Ketu (a community in Benin Republic).

“But if they have suspicions goods are being taken beyond the Nigerian communities to Benin republic communities such as Ketu, why not stand at the border rather than staying along the road?” she asks again. “Why not stand by the border and whoever you apprehend, then you know, he or she is taking goods to the French territory and then you can arrest him.”

Read also: Moghalu harps on Private Sector Bill of Rights to open Africa for business

But the point isn’t to police the borders. They stand several kilometres away from the borders to extort rural dwellers and local traders, a practice that has in the last four years killed many businesses and rendered many people jobless. BusinessDay’s investigation also showed this.

In December 2020, one month to the ‘commencement’ of the Africa Continental Free Trade Agreement (AfCFTA), Nigeria reopened four out of eight major land borders closed; Seme, Illela, Maigatari and Mfun. In April 2022, it re-opened the Idi iroko, Jibiya, Kamba, and Ikom land borders, after 32 months. But the country has Eighty-Six (86) official land borders according to the International Organization for Migration, which also says hundreds more exist illegally.

“We are not asking the government to give us money. We are only asking for them to open the borders so that we can trade and so that fuel can get here just like every other part of the country is legitimately supplied,” said Sunday, who was once into the sale of building materials but stopped when Customs officers repeatedly frustrated him transporting goods to sell in his Ilara community.

As noted by the Institute for Security Studies, “rather than closing borders, Nigeria and its neighbours should invest in better border security and surveillance, and ensure the development and upliftment of border communities that rely on smuggling as a livelihood source.”

It is yet to be seen if Nigeria would take the logical approach of strengthening border security, while finding ways to ensure legitimate trade not only resumes but flourishes across all official border posts in the country.