The closure of Nigeria-Benin border has advantages and disadvantages. While some key economic players are enjoying higher patronage, others are hard hit by the policy.
Rice farmers have reported increased production, but prices of poultry feed have risen by 15 to 20 percent since August 2019 when the border was first shut, according to BusinessDay findings. Also, exporters can no longer ship their products to West and Central Africa through land borders as their goods take seven to eight weeks to arrive through the sea.
“It is not a sustainable policy,” Segun Ajayi- Kadir, director-general, Manufacturers Association of Nigeria (MAN), said last Tuesday at the Lagos Chamber of Commerce and Industry (LCCI)-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.
He said exporters spent between eight weeks to ship out their goods to the African market now as against seven or eight days before the closure.
He further 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.
Margins of 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.
Mustapha Bashiru, representing Poultry Association of Nigeria (PAN), said that regulatory and financial agencies should communicate properly before establishing and implementing policies, rather than dictate them in a rigid form that will immediately be implemented without prior preparation.
BusinessDay learnt that a 25kg of poultry feed has risen from N3,700 before August 2019 to N3,900 to N4,200 as of last Thursday in some locations across the country.
Toki Mabogunje, president of the Lagos Chamber of Commerce and Industry (LCCI), said the policy was a mixed bag.
“This policy action has had positive and negative implications for the economy,” she said at the event held by LCCI in conjunction with the Center 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 further 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, Mabogunje, represented by Gabriel Idahosa, said.
She said cross trade had also been stifled as traders from neighbouring countries could no longer access Nigerian market by road while it also paralyzed 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.”
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 of the ECOWAS protocol by the neighbouring countries.
Adeojo, represented by Tola Olukile, said that the Customs should create an avenue where incoming products were properly scrutinised before being granted entry.
ODINAKA ANUDU & GBEMI FAMINU
