Gains, losses of Nigeria’s border closure

NNAMDI ABANA x-rays the closure of Nigeria’s land borders by the Federal Government, what has been lost and the percieved gains

The closure of the land borders by the Nigerian government led by President Muhammadu Buhari, a former military general, to curb smuggling and free movement of bandits, has elicited mixed reactions.

While government officials and the benefitting farmers hail the policy, it was knocked by other Nigerians, their neighbours and advocates of sub-regional integration.

Buhari, while justifying the decision, expressed great concern over the smuggling of goods into the country, which adversely affects production, especially of rice. The president said the activities of the smugglers threatened the self-sufficiency already attained through his administration’s agricultural policies.

“Now our people in the rural areas are going back to their farms, and the country has saved huge sums of money, which would otherwise have been expended on importing rice using our scarce foreign reserves.

“We cannot allow smuggling of the product at such alarming proportion to continue,” he said.

The Nigerian president added that the closure of the western border was to allow the country’s security forces to develop a strategy to stem insecurity.

However, the economic consequence of the border closure particularly for informal traders along the Benin/Nigeria border cannot be over-estimated.

Financial Street economic analysts are of the view that informal trade generated substantial income and employment in Benin, whose government collected substantial revenues on entrepôt trade – goods imported legally and either legally re-exported to Nigeria, or illegally through smuggling.

West Africa’s informal sector, particularly in Benin, represents approximately 50 per cent of Gross Domestic Product (70 per cent in Benin) and 90 per cent of employment.

The Informal Cross-Border Trade is fast spreading. Given the region’s porous borders, a long history of regional trade, weak border enforcement, corruption, and, perhaps most importantly, lack of coordination of economic policies among neighbouring countries suffice.

Notably, ICBT takes several forms, not all of which are illegal. For example, trade in traditional agricultural products and livestock may involve little or no intent to deceive the authorities, as peasants and herders take artificial and un-policed borders for granted.

The economic relationship between Nigeria and her neighbours, especially Benin and Togo, who are all members of the Economic Community of West African States, is far from being symbiotic. Given Nigeria’s larger population, economy and natural resource, Benin seems to have chosen to be a trading hub, importing goods and re-exporting them, often illegally to Nigeria, thus profiting from distortions in Nigeria’s economy.

It became apparent that Nigeria’s trade policies and porous borders incentivised smuggling because of the country’s heavy dependence on oil as well as many dysfunctional economic policies which created an environment for ICBT between it and its neighbours, mainly Benin and Togo, to flourish.

Realising the huge economic losses it was recording, the Nigerian government decided to slam the door.

Justifying the border closure, Comptroller General of Nigeria Customs Service, Col. Hameed Ali (rtd.), said the pains would be for the short term. He added that Nigerians needed to bear the initial pain, as the situation would stabilise eventually.

According to the NCS boss, there is no better time than now to shut the borders, since infrastructure doesn’t have to be perfect before such a move is made.

His words, “There will never be a good time. The decision of closing the border is ripe. We don’t need to have 100 per cent electricity and good roads before we take the step. Most importantly, we must be able to bear the initial pains to stabilise and have long term success.

“We don’t have to eat rice every day; there are other foods. I assure you that the price of (rice) will stabilise and the ordinary farmer will have value for their farming business.”

But the government was censured for, among other reasons, not giving manufacturers adequate time to adjust to the effect of the policy.

Unfortunately, the impact has gone beyond Nigeria, affecting other countries that are not even sharing borders with the country. Already, the Ghanaian and Vietnam governments have visited country over the policy.

Ali further stated that expired foreign rice were being imported into Nigeria in fresh bags.

He added, “All those things they are bringing into our country are aimed at bringing us to our knees. We must reach out to Nigerians for them to know the deadly effect of what they are consuming.”

Senior Executive, Corporate Relations at Olam, Ade Adefeko, said investment in Nigerian agriculture was being hamstrung by rice trafficking, estimated to reach two million tonnes a year.

Olam has the biggest rice-growing business in the country, owning 13,000 hectares of arable land of which only 4,500 hectares are used because the sector is not profitable in the face of competition from Asian rice, he said.

But “since the border closure, locally-milled rice has started selling, and the entire rice value-chain has been positively impacted,” Adefeko added.

He called for the border closure to be maintained.

Meanwhile, traders in Lagos Island, a vast market of Made-in-China textiles and gadgets, say the closure crippled their supplies through Cotonou.

“Lagos port is too slow and you have to pay too many bribes to get your goods out,” said a swimsuit hawker. “I have to cut down my margin by half.”

The policy has also been loathed by some notable organisations in Nigeria, citing poor irrigation. The Director of Agriculture at the Lower River Niger Basin Authority, Dr. Olabisi Awoniyi, said Nigeria was not yet prepared for large-scale local production of rice.

“Irrigation facilities to revolutionise rice production are scanty and obsolete, while the seed system is not supportive of rice production,” he argued.

Going forward, the Regional Coordinator of Africa Rice Centre, Dr. Francis Nwilenele, urged all state governments to invest in irrigation facilities if they were serious about agriculture and food security.

He also lamented poor investment in research and development of improved varieties and technologies, irrigation facilities, and asked for check on activities of fraudsters parading as farmers to corner incentives meant for real farmers.

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