Nigeria’s manufacturing exporters are counting their losses as the ill-advised closure of Seme border between Nigeria and Benin Republic cripples their business.
Many of them who spoke with BusinessDay weekend said their raw materials were stuck at the border, incurring demurrages and crippling production at factories.
They added that it crippled their export transactions, thereby hurting projections and putting them in more jeopardy.
Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Group (MANEG), said the losses that will be incurred by genuine exporters will further cut Nigeria’s non-oil export projections.
‘I understand that the government has closed the borders in order to catch those who are smuggling various goods into Nigeria.
“If this is indeed true then it is unimaginable that a solution could not be found to this problem that did not penalise all genuine traders (importers and exporters alike) for the sake of catching those smugglers operating through the land borders,” he said.
“Who will be responsible for the additional demurrage to be paid or on the perishables that have now spoilt? The government would not be closing all banks because of the discovery of bank fraud and similarly should not close all land borders to catch those that are smuggling,” he reasoned.
President Muhamadu Buhari, on Wednesday, August 21, ordered the closure of the Seme border between Nigeria and Benin Republic to check smuggling of rice and wheat.
Analysts wonder why such an ill-advised step could be taken without paying attention to its hazardous implication.
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.
A manufacturing exporter, who did not want her name in print, said the closure will likely erode her margins at the end of the financial year.
“When you close borders, you prevent inputs or raw materials from coming in. They stay there for ‘no-one-knows-when’ and incurs demurrages. All these are costs,” she said.
“Those that are exporting goods through the land borders will also have problems. So, where is this taking us to as a nation, especially when all businesses are facing challenges due to economic mismanagement?” she asked.
Buhari’s policies to force home-grown production of food without the right conditions continue to fuel poverty and strain economic growth, analysts say.
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.
“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.
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.
ODINAKA ANUDU
