With few days to January 31, the planned end date for the first phase of Operation ‘EX-SWIFT’ Response embarked on by the Nigeria Customs Service (NCS), the Nigerian Immigration Service (NIS), the Nigeria Police Force and the armed forces to check insecurity along the nation’s entry points, industry experts have opted for reopening of the border.
The recommendation of five analysts polled in a BusinessDay survey was based on the fragile state of the economy. They said the earnings of some companies may take a hit as a result of the closure.
“I am in support of a reopening. When the closure was announced, I felt it was premature to do that given the fragile nature of the local industry,” Ayorinde Akinloye, a research analyst at Lagos-based CSL, said.
Without any formal notice, President Muhammadu Buhari had on August 20, 2019, through the Office of the National Security Adviser, ordered the closure of Nigeria’s land borders aimed at curbing smuggling activities, especially of rice. It was initially planned to last for one month before its indefinite extension.
Five months and counting, businesses in Nigeria and other neighbouring West African countries have raised expectations that the Federal Government would finally agree with its neighbours to reopen the borders to genuine import and export trade.
Since the closure, business owners in Nigeria, Benin Republic, and Niger that depend on the border to survive have been seriously affected following their inability to carry out their legitimate businesses.
Ayodeji Ebo, managing director, Afrinvest Securities Limited, said the border closure shouldn’t last for a long time because there are a lot of consumer goods companies that depend heavily on export whose earnings would be negatively affected as a result of the closure.
“The border cannot remain permanently closed. What I will advocate is that some of the inefficacies that led to the closure should have been resolved. The government should use the opportunity to resolve and review the agreement with neighbouring countries so it can be open as there is a lot of informal trade that is going on at the land borders,” Ebo said.
Inflation in Nigeria soared 11-month high to 11.98 percent in December 2019, the fifth month since Nigeria shut its land borders, raising concerns on the state of local production to plug supply gaps.
The fear of a further spike in inflation regime forced the Central Bank of Nigeria (CBN) to undertake a moderate tightening stance at the first Monetary Policy Committee meeting of 2020, leading to the raising of banks’ Cash Reserve Ratio (CRR) by 500 basis points, from 22.5 percent to 27.5 percent.
The move by the CBN is to mop up what it described as liquidity surfeit in the Nigerian economy, responsible for driving the inflation since August of 2019.
“The border closure is a chicken and egg situation, depending on who’s talking. The manufacturing sector is benefitting while the consumer goods industry is negatively affected,” said Yinka Ademuwagun, research analyst, FMCGs, United Capital plc.
He said the smuggling at Nigeria’s land borders is a challenge and as urged that measures be put in place before opening the border.
Ademuwagun said there had not been any detailed document from the committee looking into the border closure and as such it was very likely that the January 31 deadline would be extended and the border would remain closed.
Hameed Ali, comptroller-general of the Nigerian Customs Service (NCS), recently told the National Assembly that the agency had been raking in between N4.7 billion and N5.8 billion since the Federal Government closed the borders.
“When we closed the border, I feared that our revenue was going to drop. To be honest, our revenue kept increasing. There was a day in September that we collected N9.2 billion in one day. It has never happened before,” Ali said when he appeared before the Senate and House of Representatives Joint Committees on Finance and National Planning working on the 2020-2022 Medium Term Expenditure Framework and Fiscal Strategy Paper.
“Let’s hold on and see what the numbers are saying to know the impact of the border closure on local productivity but at the moment, we haven’t seen figures except for a rising inflation rate,” Paul Uzuma, MD of Halo Nigeria Capital Ltd, said.
The Federal Government had insisted that it would only reopen the borders if neighbouring West African countries comply strictly with the regional trade agreements of the Economic Community of West Africa States (ECOWAS).
“We had a strategic meeting with the three countries, and what we agreed with our neighbours is to activate a joint border patrol, and the border patrol comprises the Customs, all the security agencies and to follow the actual protocol laid by ECOWAS,” Mariam Katagum, minister of state for industry, trade, and investment, said.
ENDURANCE OKAFOR
