When President Muhammadu Buhari announced the closure of the Nigeria-Benin border in August 2019, many manufacturers and farmers saw increased margins and productivity.
But the policy has turned to hit them hard as many manufacturers struggle to import inputs and machinery and farmers who rely on imports count losses. The price of poultry feeds has risen by 15 to 20 percent since August 2019.
“It is not a sustainable policy,” Segun Ajayi-Kadir, director-general, Manufacturers Association of Nigeria (MAN), said at a Lagos Chamber of Commerce and Industry-organised stakeholders’ forum on border closure.
“While it has curtailed smuggling, it is not sustainable because many local manufacturers that export products to neighbouring countries now spend eight weeks as against eight days before because they have to take it through a longer route with great cost implications,” Ajayi-Kadir, represented by Ambrose Oruche, director of public affairs at MAN, said on Tuesday.
He said this would make local manufacturers less competitive as the exercise would stifle trade which was necessary for economic growth and development.
Inflation has risen for the fifth straight month, hitting 12.13 percent in January 2020 from 11.98 percent in December 2019, according to data released by the National Bureau of Statistics on Tuesday. Food inflation accelerated to 14.85 percent from 14.67 percent.
Trade accounts for 18 to 20 percent of Nigeria’s GDP, but it has been subdued by border closure, putting many outward-looking manufacturers in peril.
“For us in the brewery industry, cash has been trapped by border closure,” Baker Magunda, managing director, Guinness Nigeria plc, said in an interactive session in Lagos on Tuesday.
“This is because over 80 percent of transactions at the border is cash,” he said.
Margins of Guinness, Nigerian Breweries, International Breweries, PZ, Unilever, Okomu, Presco, among many others, have been hit as consumer spending power shrinks on high poverty rate and unemployment crimp.
Mustapha Bashiru, representing Poultry Association of Nigeria (PAN), said on Tuesday that regulatory and financial agencies should communicate before establishing and implementing policies, rather than dictate them in a rigid form that will immediately be implemented without prior preparation.
Olabode Adetoyi, vice president of PAN and CEO of Hi Nutrients, in a separate interview, attributed the rise in feed prices to border closure, saying that prices had gone up by about 20 percent.
BusinessDay learnt that a 25kg bag of poultry feed has risen from N3,700 before August 2019 to between N3,900 and N4,200 as of Thursday in some locations across the country.
Toki Mabogunje, president, Lagos Chamber of Commerce and Industry (LCCI), said the policy was a mixed grill.
“This policy action has had positive and negative implications for the economy,” she said at the event held by LCCI in conjunction with the Centre for International Private Enterprise (CIPE).
“On positives, we have seen appreciable increase in domestic rice and poultry product production. Fuel smuggling to neighbouring countries has reduced. The directive paid off for the Nigerian Customs Service as revenue generated by the agency increased to N1.34 trillion in 2019 from N1.2 trillion in 2018,” she said.
On the flip side, it has triggered inflationary pressure, led to unplanned losses for manufacturers especially those who export their products to neighbouring countries by road, said Mabogunje, who was represented at the event.
She said cross-border trade has also been stifled as traders from neighbouring countries could no longer access Nigerian market by road while it also paralysed commercial activities in larger communities. As a result, the trade sector fell into recession in Q3 2019, she said.
However, Hameed Ibrahim Ali, comptroller general of Customs, represented by KC Ekekezie, assistant comptroller general, zonal coordinator Zone A, Lagos, said the Federal Government was forced to close the borders because Nigeria’s neighbouring countries were not willing to comply with the ECOWAS protocol on transit of goods and persons which required that when a transit container berthed at a seaport, the receiving country should escort it to the border of the destination country and hand it over to the Customs officials of that country.
“The recurrent breach of this protocol mandated security and regulatory agencies to carry out a joint border security exercise tagged ‘Ex-swift Response’ aimed at securing the borders and addressing other trans-border security issues,” he said.
Ali said while the Customs was able to block every visible opening, the smugglers easily found a way to create another opening.
Michael Adeojo, chairman, Toyota Nigeria, said the border closure exercise was not sustainable for a long term and urged that a committee be set up to ensure strict adherence to the ECOWAS protocol by the neighbouring countries.
Adeojo, represented by Tola Olukile, said Customs should create an avenue where incoming products were properly scrutinised before being granted entry.
