On October 14, 2019, the Comptroller-General
of the Nigerian Customs Service, rtd Col Hameed Ali, told newsmen in Abuja that
Nigeria had closed its land borders to all movement of goods, giving no
timeline for re-opening them. Customs CG, Hameed Ali The Federal Government had
earlier in August announced a partial border closure as part of an effort to
curb smuggling of rice and other goods, which government believed can be
produced locally. However, Ali’s Monday announcement was the first official
confirmation of a total shutdown in trade across Nigeria’s land borders —
including goods that had been moving legally. The closure has no impact on
Nigeria’s economically crucial oil exports, which are shipped out almost
entirely via the nation’s seaports and offshore oil platforms. Ali added that
despite the land border closure, it would still be possible for goods to cross
at points equipped with special scanners, but did not say where those are
located.
The Customs boss said reopening the borders would depend on
the actions of neighbouring states, and that as long as they and Nigeria were
not in accord on what goods should be imported or exported overland, the
frontier would remain shut. Although it was not the first time that Nigeria
moved to check the activities of smugglers at her borders, this time the
Federal Government had deemed it necessary to act in order to boost local
production of food items and manufactured goods. In line with this, the Central
Bank of Nigeria drew up a list of 41 items, whose importation would no longer
be welcomed in the country. Rice and other food items featured prominently on
this list. Prior to the closure of Seme and Idiroko borders, the Federal
Government had stopped the issuance of Form M to importers willing to bring in
goods by sea. As a result, no goods were imported to the country through the
seaports in the last four years.
How border closure can benefit Nigeria’s economy — Don(Opens
in a new browser tab) Similarly, the Nigeria Customs Service had in 2016,
banned importation of rice through the land borders. Despite these measures,
imported rice continued to flood the Nigerian market at rock bottom prices,
thereby rendering locally-produced rice very unattractive to buyers. The fight
to put an end to the smuggling of rice across the border also saw operatives of
the NCS engage in shootouts with smugglers, which sometimes resulted in the
loss of lives. Many Nigerians have commended the closure, while some have
expressed some reservations, with supporting arguments on both sides. Upsides
The Customs’ Comptroller-General said the agency’s revenue had risen to over
N5billion daily, since the closure.
Also, more than 200 illegal immigrants, he added, have been
apprehended across the border and thousands of bags of rice and other
contrabands confiscated. The Group Managing Director of the Nigerian National
Petroleum Corporation, Mele Kyari, tweeted in September that the closure of
Nigeria’s borders, as well as other interventions, had helped to check the
smuggling of Premium Motor Spirit (petrol) outside Nigeria. For the
Director-General of Lagos Chamber of Commerce and Industry LCCI, Muda Yusuf
reports indicate a drastic reduction in smuggling of rice, poultry products and
sugar. The smuggling of petroleum products outside the country to
neighbouring countries has also declined considerably. “We note and appreciate
these outcomes.” Professor of Economics at Bingham University, Abuja, Dr. Jonathan
Oniore said with growing insecurity in Nigeria, the border closure becomes
imperative and a matter of necessity.
Oniore maintained that the border closure will boost
government revenues as all imports will come through the country’s seaports
where they can be monitored more easily and subjected to the necessary import
duty tax. Also, the border closure will enhance agricultural productivity in
Nigeria and create more jobs for the teaming unemployed population. Apart from
boosting local production of food items and manufactured goods, the border
closure will checkmate fuel smuggling. Miyetti Allah warns members against
encroachment on farmlands(Opens in a new browser tab) For Liman Abubakar, a
livestock, petty farmer and member of Ogun State Co-operative Produce
Association, the border closure will undoubtedly lead to “enhancement of our
farmer’s produce and give Nigeria other benefits of revenue, in addition to
national security.
Most of the weapons being used for kidnappings,
insurgencies, banditry and other crimes come through our porous borders
concealed in foods and other goods imported into Nigeria. We cannot achieve
food sufficiency, job creation, security and economic advancement if we allow
other countries to decide our fate by allowing everything to transit in them on
their way to us.” “Nigeria has severally urged Benin Republic to control what
they allow into Nigeria through their border, but they refused. Now they are
crying because their entire economy is dependent on Nigeria. Kudos to the government
of Nigeria for taking such a decisive and bold step,” he said. Downsides Most
importers of perishable goods, valued at millions of naira, have had their
consignment of goods trapped in Cotonou, capital of Benin Republic for several
weeks now because the Seme and Idiroko borders were closed without warning.
As expected, the prices of common food consumed by
Nigerians have hit the roof. Food items, such as frozen foods have gone up by
65 per cent. The price of foreign parboiled rice also went up by 29.4 per cent
from N17, 000 to N22, 000. The demand for local rice in the absence of foreign
rice drove the price of local rice up from N15, 000 to N17, 000. The situation
has left many people questioning the wisdom in shutting the borders against
rice imports, whereas Nigeria has not been able to produce enough to meet local
demand. The volume of local rice production in the country is put at 3.7
million tonnes per annum, while consumption is almost 7 million tonnes.
The wide gap between the production and consumption of the
item is filled with imports. But the Federal Government had decided that
spending the sum of $35bn on the importation of food annually was not healthy
for the economy. Ali revealed that about 20 million tonnes of rice were stuck
in Benin during the seven weeks period since the August border partial closure.
Benin Republic is a small country with a population of 11.8 million. Ali, who
doubted that such a small population consumed 20 million tonnes of rice,
concluded that the final destination of the rice was Nigeria. According to
Nonso Obikili, Director at the Turgot Center for Economics and Policy Research
in Abuja: “Already we are seeing effects on prices and inflation and I’m sure
we will see effects on Q3 Gross Domestic Product GDP once that data comes out
in November. Exports are also restricted, which will stop movements of cocoa
and sesame seeds via land borders.” Yusuf, the LCCI chief said it is important
to reckon with the costs, supply chain disruptions and losses that business and
individuals have suffered as a result of the closure. Corporates, large
number of informal sector players and individuals doing legitimate businesses
across the borders have become victims of the border closure.
This poses a dilemma. The government means well, but there
are many innocent casualties. He said counting the costs: Jobs have been lost,
prices have skyrocketed, legitimate exports to the sub-region have been halted,
intermediate products for some manufacturers have been cut off, some multinational
companies have been de-linked from their sister companies in the sub-region.
“Over 90% of Nigeria’s trade with the West African sub region is by road. We
export manufactured products as well as agricultural products–detergents,
toothpastes, plastic products, steel products, kitchen utensils, grains,
ginger, and onions, among others.” Border closure: Joint security agencies
seize N1.4bn items – Ali(Opens in a new browser tab) Oniore said the sudden
closure seems to be having negative impact on prices of commodities such as
rice and frozen foods already. Closing the border requires holistic and
coordinated approach as against the present sudden closure.
There should have been an extensive appraisal of the trade
problems at the border before the sudden closure. Though, goods can be exported
through the seaports, but how many local farmers and exporters are educated on
alternative channels of exports? Clearly, the sudden closure of the borders is
poorly done. I strongly believe decision on public policy issues should be
carefully managed. FG says Nigerian Embassy in Benin Republic not
attacked(Opens in a new browser tab) Way out To Yusuf, Nigeria needs to fix the
structural, institutional and policy shortcomings that perpetuate the
phenomenon of smuggling and increased vulnerabilities, advising President
Muhammadu Buhari to immediately address shortcomings, like: weak institutional
capacity to police the country’s vast borders across the country; Porosity of
nations borders because of the expansive nature of the borders stretching over
four thousand kilometers of land borders and 853 kilometers of coastline;
Failure to deploy technology to manage our borders and international trade
processes; Weak productivity in the domestic economy which aggravates production
and operating costs, thus impacting adversely on domestic prices and
competitiveness; High and prohibitive import tariffs which creates daunting
compliance and enforcement challenges for the Nigerian customs services and
also perpetuates corruption, and others. All of these are fundamental domestic
policy, structural and institutional challenges that we must fix for an
enduring solution to be achieved. For Oniore, there’s need for a comprehensive
and well coordinated approaches towards the borders closure because the sudden
closure of Nigeria’s borders goes against all commercial and freedom of
movement treaties signed under the Economic Community of West African States
(ECOWAS) and the recently signed African Continental Free Trade (AfCFTA).
Credits: Vanguard
Credits: Vanguard