Charles Nwaoguji 08032715118 [email protected]
The closure of Nigerian land borders for close to two months now has come with benefits and costs. There are upsides and downsides. Reports indicate a drastic reduction in smuggling of rice, poultry products and sugar. The smuggling of petroleum products out of the country to neighbouring countries has also declined considerably.
It was believed that the closure of the border by President Muhammadu Buhari was aimed at boosting local agricultural production and reducing its dependence on crude oil, which provides some 90% of its foreign exchange.
But it is important to reckon with the costs, supply chain disruptions and loses that businesses 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.
Manufacturers are counting their loses as the cost of raw materials has skyrocketed. They no longer get raw materials for their production.
According to those who spoke to Daily Sun, recently, many jobs have been lost, prices have skyrocketed, legitimate exports to the subregion have been halted, intermediate products for some manufacturers have been cut off, some multinationals have been de-linked from their sister companies in the sub-region.
“The economies of border communities have been paralyzed as over 90 per cent 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, onions, among others, “ they stated.
They added: “The local production of rice — Nigeria’s most popular food staple — increased between 2013 and 2017 to 8.9-million tonnes. But this still isn’t enough to meet the demand of the country’s 200-million people.”
The shortfall, coupled with import controls, have kept the price of rice high and led to rampant smuggling of rice — mostly originating in Thailand and India — over the border into Nigeria.
For the Director General of Lagos Chamber of Commerce and Industry, (LCCI), Mr. Muda Yusuf , the border are sources of livelihood of Nigerians doing legitimate businesses.
“There are also thousands of transporters who make a living from these legitimate trading activities. These are costs that would run into hundreds of billions of naira. We must weigh the costs and benefits. Most often we do not count the cost of government policy on the citizens and businesses,” Yusuf explained
“We should not underestimate the contribution of trade and commerce to the economy of the country. Distributive trade sector accounts for about 15 per cent of GDP, estimated at N20 trillion. Traders play a major role in the value chain of the real sector activities in the economy. The trade sector is perhaps the largest employer of labor in the Nigerian economy,” he said.
However, he said, we need to fix the structural, institutional and policy shortcomings that perpetuate the phenomenon of smuggling and increases vulnerabilities. And unless we address these shortcomings, it would be difficult to put an end to the problem of smuggling.
According to the President of Manufacturers Association of Nigeria (MAN), Mansur Ahmed, “we export manufactured products as well as agricultural products – detergents, toothpastes, plastic products, steel products, kitchen utensils, grains, ginger, onions, among others.
We also undertake many exports to the sub region. These are sources of livelihood of Nigerians doing legitimate businesses. There are also thousands of transporters who make a living from these legitimate trading activities. These are costs that would run into hundreds of billions of Naira. We must weigh the costs and benefits. Most often we do not count the cost of government policy on the citizens and businesses. We should not underestimate the contribution of trade and commerce to the economy of the country. Distributive trade sector accounts for about 15 per cent of the nation’ s GDP, which is estimated at N20 trillion.
He stated that traders play a major role in the value chain of the real sector activities in the economy. The trade sector is perhaps the largest employer of labour in the Nigerian economy.
The MAN boss stated that it is not to diminish the importance of security in the border management process but it is also true that neighboring countries have been sabotaging government efforts to curb smuggling and check insecurity.
He said government has a duty to manage the situation and deploy appropriate responses.
He called on government to fix the structural, institutional and policy shortcomings that perpetuates the phenomenon of smuggling and increases vulnerabilities, adding that unless these shortcomings are addressed it would be difficult to put an end to the problem of smuggling.
Yusuf identified some of the challenges as 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 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 transportation costs and weak domestic connectivity which affects domestic prices.
Others are high poverty incidence which makes majority of citizens crave for cheap products, including food items; high and prohibitive import tariffs which creates daunting compliance and enforcement challenges for the Nigerian customs services and also perpetuates corruption; foreign exchange policy which incentivises imports and penalises domestic production and exports; unsustainable subsidy regime on petroleum products; high transaction costs, high charges, corruption, inadequate equipment at the nation’s ports making the cost of clearing cargo at the ports very prohibitive.