Nigerian farmers may be smiling to the bank due to the closure of Nigeria-Benin border, but exporters to West Africa cannot find vessels to move their products to the regional market, BusinessDay has learnt.
Since the closure of the land border in August 2019, Nigerian exporters have resorted to export by sea, but vessels carrying products bound for West Africa first of all move to and berth in Europe before returning to West Africa. This is because none of the vessels berth in West Africa at the moment owing to the poor level of trade in the region. They, therefore, move to Europe where they can fully load their containers before returning to unload in West Africa. This is a significant cost to exporters who are struggling to compete with China, the European Union and other parts of the world in the global market.
“I do not think there is any vessel that stops in West Africa at the moment,” Ede Dafinone, chairman of the Manufacturers Association of Nigeria Export Group (MANEG), told BusinessDay.
“It is a challenge to West Africa because of lack of vessels to move the goods. We hope the Sealink Project will start soon,” he said.
Okhai Ehimigbai, export manager at Aarti Steel, which exports steel products and zinc ash, said his company has stopped export to the Economic Community of West African countries (ECOWAS) due to the closure of the border. He said export to Ghana by sea takes one month now as against two weeks or less through the land borders.
He further disclosed that his firm has been searching for six containers to move goods by sea to Europe since November 2019 but could only find five.
“We can’t export because we can’t get all the containers on time,” he said.
‘At the moment, many shipping companies have a lot of empty containers due to the situation at the Nigerian ports,” he said.
“They pick empty containers or containers with fewer goods to Europe and then return with containers filled with goods. Some Nigerian exporters whose goods are sometimes in those containers will have to wait till the vessels return,” he said.
Nigeria shut borders with Benin Republic to reduce smuggling of rice and petrol. The situation has ramped up production of major crops like rice and has raised the sales of manufacturers who are serving the Nigerian market only.
“Lots of rice farmers are increasing their production areas because there is a huge market for paddy since the border closure,” said Aminu Goronyo, national president, Rice Farmers Association of Nigeria, in a telephone response to questions.
“This is because millers are patronising rice farmers now and off-taking all that they produce immediately,” Goronyo said.
But this comes at a cost to traders and exporters as their cost of operations continues to rise.
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.
Due to poor sea linkages in West Africa, the Nigerian Export-Import Bank, Transimex SA Cameroun, Sealink Promotional Company Ltd (SPCL) and other partners started the Sealink Project many years ago, but it is yet to commence fully. It is a public-private partnership (PPP) arrangement established for the purpose of promoting the development of a regional sealink company that would be private sector driven.
Nexim Bank is targeting $1.2 billion export through the project. Abubakar Bello, managing director of NEXIM Bank, said in November 2019 that 26 cargo ships had been committed by partners for the commencement of the West and Central Africa Sealink project.
“We are frustrated and can’t wait to have that,” Okhai of Aarti Steel said.
The situation will likely hurt Nigeria’s non-oil export which finished $3.3 billion in 2018 as against Bangladesh which earned 10 times that from only the export of ready-to-wear products.
Toki Mabogunje, president of the Lagos Chamber of Commerce and Industry (LCCI), said connectivity between countries in the sub region is a major concern.
She explained that more than 80 percent of trade in the sub-region is done by road which creates a great deal of transit problems for movement of goods in the region.
Mabogunje further said that lack of rail connectivity within the region causes investors a lot of problems, stressing that there is a weak link by sea because of the volume of cargo destined for the sub region and the economics of shipments to the sub region.
“These are the bigger constraints to economic integration which the Heads of States of ECOWAS need to address. It is important to get priorities right as far as economic integration issues are concerned,” she admonished.
