Chinedu Okafor, a trader at the Lagos international Trade Fair Complex, has had to deal with bad roads, a sluggish economy, gridlock and inefficiency at the Apapa ports that have squeezed his business in the past three years.
Now, the recent border closure ordered by President Muhammadu Buhari is threatening to put him out of business altogether as sales slow to a trickle.
“It is looking like 1984 all over again,” lamented Okafor, who was an apprentice some 30 years ago when Buhari, then a military ruler, ordered the borders closed to check smuggling.
Without any formal notice, on Wednesday, August 21, President Buhari ordered the closure of the Seme border between Nigeria and Benin Republic to check smuggling of rice and wheat.
The border closure is constraining trade which contributed about a fifth of Nigeria’s GDP at 17.16 percent in 2018 and breeding untold hardship to small businesses who depend on cross-border trade to survive.
“This closure is killing my business,” said Onyenanu Ndidiamaka, who runs Debbies Cosmetics in Lagos. “Since this action, sales have gone down by 60 percent because I am unable to replace my stock.”
Muda Yusuf, director general of Lagos Chamber of Commerce and Industry (LCCI), said the action does not address the lapses in state institutions that should check smuggling, leaving innocent citizens to suffer.
“Border closure does not offer a sustainable solution. It only penalises small players in the informal sector. It also disrupts the supply chains and exports transactions of many big firms that do business across the subregion,” Yusuf said.
Data from both Thailand and India, which previously accounted for up to 90 percent of Nigeria’s rice imports, have shown legal imports to the country have declined but at the same time, exports of rice to Benin Republic have increased. This, according to industry players, points to diversion of consignments originally meant for Nigeria, only for them to find their way back to the country through smuggling.
Data by the Thailand Rice Exporters Association show that 644,131 metric tonnes (MT) of rice was exported to Nigeria in 2015, while 58,260MT was exported in 2016, and in 2017, rice exports to Nigeria stood at 23,192MT. The figure was 6,537 MT in 2018, and as at June 2019 Thailand rice exports to Nigeria stood 2,796 MT. The exports from India have followed the same trend, decreasing consistently over the years.
However, Nigeria’s neighbour, Benin Republic, is now the highest importer of rice from Thailand. An addition of rice exports from Thailand and India based on data sourced from the associations of rice exporters from both countries shows that 2.05 million MT of rice was exported to Benin in 2016, and in 2017, the country recorded imports of 2.51 million MT from India and Thailand alone. This represented about 20 percent increase, but in 2018 exports from both Thailand and India were 2.39 million MT.
The Agriculture Promotion Policy of the Federal Government for 2016-2020 showed that rice production in Nigeria stood at 2.3 million MT, with a 4-million-MT deficit from the country’s 6.3-million-MT demand.
Nigeria does not produce enough of most of the commodities the government is restricting access for forex for their imports. According to the 2019 Food Business Africa report, Nigeria spent $1.1 billion to import 5.5 million tonnes of wheat (which translates to 99 percent of wheat consumed) in 2018 as domestic production stagnated at 60,000 tonnes. National dairy output per annum is put at 700,000 MT while the national demand is put at 1.3 million MT annually, leaving a gap of 600,000 MT.
The deficit has been attributed to insufficient supply chain integration which remains a nagging issue in achieving self-sustenance. The deficit was previously filled through a combination of massive legal imports through the ports and unabated smuggling through the many porous land borders.
Rotimi Williams, CEO, Kereskuk rice farm, which is said to cover 45,000 hectares in Nasarawa State, in a previous chat with BusinessDay, took exceptions with the sincerity and practicality of achieving sufficiency in rice production, considering current realities.
“Do we even know what our consumption is? If we keep pretending like smuggling is not part of our consumption, then we will never really address this issue,” said Williams.
Officers of the Nigerian Customs Service are also allegedly aiding activities of smugglers by collecting bribes, and turning a blind eye to massive smuggling despite the anticorruption rhetoric of the Buhari administration.
While the Federal Government is closing borders in the south to check rice smuggling, Nigeria continues to subsidise petrol for the West Africa sub-continent as smuggling of refined petrol continues unabated at its northern borders.
Henry Ikem-Obih, NNPC’s chief operating officer, downstream, at the Nigeria Oil and Gas conference held in Abuja in July, said while the pump price of PMS in Nigeria was N145 per litre, the cost in many other West African markets was between N350 to N430 per litre providing a lucrative smuggling venture across the borders.
NNPC has blamed smuggling of the commodity for the sharp rise in the volume of fuel imported for local consumption from 35 million litres per day in 2015 to over 55 million litres per day currently. Subsidy spend has since shot up to over N1.4 trillion annually to fund an obsession with cheap petrol.
The Seme Border Customs said in January that it generated N4.4 billion in the first six months of 2019 which translates roughly to N24.4 million revenue being lost each day by the closure.
“The closure of the border without any formal notice to businesses and companies who use the corridors further imperils Nigeria’s ease of doing business ranking,” said Vincent Nwani, an investment and business consultant based in Lagos.
Nwani said that Nigerian borders cannot be closed by a mere order without any protocol and despite a subsisting West Africa Trade Protocol Agreement that allows for mutually opened borders. It poses both economic and reputational risks for the country.
Buhari’s policies to force home-grown production of food without the right conditions continue to fuel poverty and strain economic growth, analysts say.
Under Buhari’s watch, Nigeria has slipped into a recession, seen double-digit inflation, spending more servicing loans than on health and education, has become the poverty capital of the world and embraced a foreign exchange policy that rations dollars for milk imports, threatening a generation of children with stunted growth.
Nigeria’s economic growth slowed in the first quarter of 2019, after the oil sector, the country’s biggest foreign-exchange earner, contracted.
Gross domestic product in Africa’s largest oil producer expanded by 2.01 percent in the three months through March from a year earlier, the National Bureau of Statistics (NBS) said in May.
That compares with 2.4 percent expansion in the fourth quarter (Q4) of 2018.
“Q3 GDP data is going to take the hit from this border closure,” an economist who did not want his name in print told BusinessDay. “But that data won’t come out until early 2020.”
Yusuf of LCCI counsels that the Federal Government should strengthen the capacity of state institutions at the borders and use more technology in tackling the problem.
“Scanners at the nation’s borders and seaports have not functioned for over a year. We should deploy drone technology and strengthen intelligence. Above all, we need to deal with the people issues. The system should hold relevant institutions and their leadership accountable for lapses in the discharge of their duties,” he said.
ISAAC ANYAOGU & CALEB OJEWALE
