Juliana Taiwo-Obalonye, Abuja
The federal government on Wednesday admitted that the border closure has contributed to a large extent to rising inflation.
This is even as it noted that the benefits of the closure for the last three months far outweighs the little inflation.
While assuring that the measure is temporary as government expects the neighboring countries to respect the ECOWAS protocols on transit to enable the reopening of the borders, it said import duties has increased by 15 percent since the closure.
Answering questions while briefing State House Correspondents at the end of the Federal Executive Council (FEC), presided over by President Muhammadu Buhari on Wednesday, Minister of Finance, Budget and National Planning, Zainab Ahmed, said talks was however ongoing with neigbours.
The nation’s annual inflation rate was said to have increased to 11.61 percent in October 2019 from 11.24 percent in the previous month, reaching the highest since May of 2018.
It was also reported that prices rose mainly for food. Ahmed who briefed alongside her colleague’s minister of Information and Culture, Lai Mohammed and Minister of Works and Housing, Babatunde Fashola said, “On inflation, headline inflation declined every month for several months before we noticed an optic in the last two months. And now headline inflation is at about 11:61 percent as at the end of October. The slight increase in inflation between September and October is due to food inflation. The food inflation we are ascribing to prices of cereals, rice, and fish. And part of the reason is the border closure but the border closure is very very short and temporary and the increase is just about two basis points. “Remember there was time inflation was nine percent and it grew to about 18 percent in January 2017 when we were in recession.
“The relationship between inflation, interest rates and growth is managed by the monetary authorities and is a management that is tracked on a regular basis.
“So if you reduce interest rate you expect more borrowing for investments in the real sector. But at the same time that also has the tendency of reducing money that is used for consumption on a day to day basis.
“So it’s a balance that we continue to watch on a regular basis, we expect that this will be moderated as border closure impact fizzles out and also as the monetary authorities continue to support the MPR rate, therefore, ensuring that interest rates are not on the high side.”
On the discussion with neighboring countries, Ahmed said: “I need to remind us that the border closure is temporary. We have really advanced in our discussions between ourselves and our neigbours. We expect that the outcomes of those discussions and agreements is that each party will respect the protocols that we all committed to and then the borders will be open again.
“What we are doing is important for our economy. We signed up to the African Continental Free Trade Area (ACFTA) agreement, we have to make sure that we put in place checks to make sure that our economy will not be overrun as a result of the coming into effect of the ACFTA. That is why we have this border closure to return to the discipline of respecting the protocols that we all committed to.”
Also speaking, Minister of information and culture, added: “You see, the issue of border closure and I think it will be quite misleading and will not save the real purpose if our headlines tomorrow is that inflation is as a result of border closure.
“The border closure frankly speaking is what we needed to do and we had to do it. We cannot continue to subsidize the rest of West Africa. And the benefits for border closure for me, I think far surpasses the very little increase in inflation. We have been able to save about 30 percent from our fuel consumption which means that over time we have been subsidizing the fuel consumption of other countries.
“Within the last three months, we have been able to increase by 15 percent duties collected from import. Within the same period and this is very important, we have been able to drastically reduced the volumes of arms and ammunition that have been coming into the country through smuggling, ditto with illicit drugs.
“All Nigeria is saying, please let’s respect the protocol on transit. ECOWAS set up a protocol on transist goods which is very simple if a container meant for Nigeria is dropped in Cotonou, the authorities in Benin Republic should escort the container to customs in Seme border, and that way proper duty will be levied and will be paid. But on the contrary, what we have seen happening… and the protocol said, you cannot break the seal, you cannot open the container. But what has been happening over the years is that our neigbours, will translate the container, put about five containers on one truck and drive it to the border as if it is only one container that they are going to pay duties on. Worse still, less than even 50 percent of what is meant for Nigeria will come through the approved border.
So, what we have done and it has maximum effect is ask our neigbours to respect the protocol on transist, if they do that the borders will be open. But you cannot continue to play the big brother at the expense of national security at the expense of our national economy.”
Asked if there were no headway with the neigbouring countries since the discussion began, Mohammed said: “Even yesterday (Tuesday) there was a meeting between the various actors. I know that the Comptrollers of Customs of all the three countries involved met yesterday. As we speak today, we have not reached any agreement but channels have been deployed, everything is going on but our insistence is that we must all respect the ECOWAS protocol on transit goods, we must respect the various MOUs we entered into, so that there will be freedom of movement of goods from one country to the other, provided those goods are manufactured in the states that are exporting it. But what we have seen is that goods are imported from everywhere and repackaged to look as if there are manufactured in an ECOWAS country and they are brought into Nigeria. This is discouraging local manufacturers, local industry.”