Nigeria's leading finance and market intelligence news report.

Border closure: The wrong solution to a pressing issue

Few weeks ago, the Nigerian government announced the closure of the country’s land borders to all goods. While the decision has been severely criticized by economic experts, the Buhari administration has justified the decision as a tactic to stem the influx of smuggled goods from neighbouring countries.

That the border closure is an economic aberration is not in question. Countries seldom close their borders for trade-related reasons as a border closure often comes with significant economic and socio-political consequences. Nevertheless, the Nigerian government has doubled down on this policy, arguing that the decision was taken to protect Nigerians and Nigerian businesses from negative business practices, particularly the smuggling of cheap, low-quality products into the Nigerian market.

* indicates required

Nigeria’s decision to close the border was predicated on the claim that neighbouring countries do not just serve as bases for entrepôt trade – the importation of goods and the subsequent re-exporting of same goods to other markets; but that goods imported into these countries are mostly not re-exported to Nigeria via legal and conventional means, but often illegally via smuggling. While this claim is not baseless, it is pertinent to understand why this situation persists.

For decades, neighbouring countries have profited from dysfunctions in the Nigerian economy. For instance, the inefficient state of Nigerian ports actively encouraged Benin to adopt an economic strategy centred on being entrepôt state re-exporting to Nigeria. In addition, other Nigerian economic dysfunctions including the continued subsidy of petroleum products which makes petroleum products in Nigeria substantially cheaper than in neighbouring countries have further facilitated a conducive environment for illegal cross border transactions.

Therefore, while the Nigerian government’s claims that neighbouring countries serve as bases for smuggling and illegal cross border transactions are not totally false, the closure of the nation’s land borders fails to address the root causes of this issue. Rather the government’s decision to close the nation’s land borders is akin to treating the symptoms of an illness while allow its actual cause to fester.

 While the Nigerian government’s claims that neighbouring countries serve as bases for smuggling and illegal cross border transactions are not totally false, the closure of the nation’s land borders fails to address the root causes of this issue. Rather the government’s decision to close the nation’s land borders is akin to treating the symptoms of an illness while allow its actual cause to fester

The effects of the border closure have been significant. Since the announcement of the border closure, the nation’s inflation rate has been on an upward trajectory. Already, basic commodities including food, transportation etc. have become more expensive, with the severest effects suffered by the nation’s poor. This does not bode well for a nation which was only recently adjudged the poverty capital of the world.

In addition to these, the border closure has also had severe effects on local production. Factories and traders have struggled to import key raw materials and have had to devise alternative routes for their exports. Overall, all of these do not bode well for the Nigerian populace and the Nigerian economy.

It is noteworthy that the government’s decision to close the nation’s land borders is that similar to other policies formulated and implemented by the Buhari administration, in that the government formulates a policy aimed at solving a problem, however the formulated policy only treats the symptoms of the problem but fails to address the root cause of the malaise. Therefore, while cross border smuggling is an issue to be addressed, border closure is hardly the solution.

In fact, the border closure is an implicit admission of the incompetence of the Nigeria Customs Service. Smuggling is only rife at the nation’s borders due to the inability of the authorities to adequately protect the border. If the nation’s Customs Service were efficient, there would be no reason to close the nation’s border for an extended period to curb smuggling. Furthermore, it is no secret that the nation’s land borders are porous, with numerous illegal paths through which smuggled goods can be transported. This is also another issue which needs to be tackled, not only for the protection of the economy against smuggling, but also as a matter of national security.

Therefore, there is a need to strengthen the capacity of the Nigeria Custom Service to protect the country’s borders. The professionalisation of the Nigerian customs service in line with global best practices, along with the use of modern technology for border control will go a long way in achieving this. In addition, there is a need for significant investments in information technology and formal management procedures which will improve security, accountability and transparency at the nation’s borders.

The case for improved port logistics as well as linked rail and road infrastructure can also not be overemphasised. Smuggling across the land borders thrive because the Nigerian ports are inefficient to deal with the imports demands of the large Nigerian population. Therefore, there is a need to undertake fundamental infrastructure development projects at Nigeria’s ports to improve their efficiency.

Overall, the government’s decision to close the nation’s land borders does not address the actual factors responsible for smuggling and illegal cross border transactions. Instead, the government has implemented a “solution” which in reality fails to solve any of the factors responsible for illegal cross border transactions and other malaises. Therefore, there is a need to there is a need to actually resolve the key factors responsible for illegal cross border trades. A failure to do this would only mean that when the borders are eventually reopened, the nation would be back where it started.

OLARENWAJU RUFAI

Comments are closed, but trackbacks and pingbacks are open.