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Tuesday 10th December 2019,
Hope for Nigeria

Gains of border closure blown out of proportion – Stakeholders

Gains of border closure

• Only N689b Of N1t Revenue Claimed By Customs Recorded By CBN
• Border Closure Simplistic Solution To Complicated, Multidimensional Problem- LCCI
• Firms Recording Significant Losses, Businesses Risk Imminent Collapse- MAN
• Customs’ Officials Demand N200, 000 Bribe To Allow Exported Goods Passage – WAASA
• Nigeria’s Action Damaging Our Economy – Ghanaian Lawmakers

Despite the Federal Government’s claim of massive gains from the three-month-old border closure, latest data from the National Bureau of Statistics (NBS) and key members of the organised private sector reveal that the country might be at the losing end. While the country regales itself with gains, especially in the area of curbing rice and fuel smuggling to neighbouring countries, experts maintain that the border closure may be an exercise in futility if underlying issues of border protection by the Nigeria Customs Service (NCS) and respect for trade protocols are not addressed.

A cursory look at available data reveals that trade’s contribution to the Gross Domestic Product (GDP) dropped further in the third quarter, inflation figures remained untamed in the last two months, local manufacturing, especially for export-bound goods, has also witnessed a slow-down as inventory rises.

Data from the NBS are also yet to corroborate the Federal Government’s claims that over a trillion naira has been saved as a result of land border closure, even as the country’s export is suffering from the impact of the closure. While some neighbouring countries are beginning to seek alternative suppliers for products hitherto provided by Nigerian businesses, some others, including Ghana are appealing to the country to save their economy from collapse.

According to some operators, Nigeria holds the title of the biggest supplier of traded goods along the Abidjan-Lagos corridor. So, the closure of the Seme-Krake border has cut off the origin and supply of many semi-processed and manufactured products to cross-border markets in Benin, Togo, Ghana, and Cote d’Ivoire.

While the NCS claimed to have generated revenue of about N1.002t from January to September 2019, based on data from its Department of Research and Statistics, data from the monthly economic report of the Central Bank of Nigeria (CBN) showed that revenue earned from Customs and Excise duties between January and October stood at N689.7b.

The Comptroller-General of the NCS, Col. Hameed Ali (rtd), last month, told the National Assembly that the agency has been raking in between N4.7b and N5.8b daily since the Federal Government closed the nation’s borders.However, data from the CBN reveals that Customs’ revenue dropped from N76.7b in August, when the border was closed to N69b in September and N72.9b in October.

In real terms, trade’s year-on-year growth stood at –1.45 per cent, or –2.43 per cent points lower than the rate recorded a year earlier (0.98 per cent), and –1.20 per cent points lower than the preceding quarter (–0.25 per cent), while in real terms, trade’s contribution to GDP was 15.23 per cent, lower than the 15.80 per cent it represented in the previous year, and lower than the 16.07 per cent recorded in Q2 2019.

Though unofficial and informal trades are not accounted for, in 2018, Nigeria sold goods/services worth N1.04t to its West African neighbours, and imported goods/services worth N74.7b from ECOWAS.In its year-to-date data, covering the first and second quarters of 2019, the NBS showed that Nigeria imported N173.84b worth of goods and services from its ECOWAS neighbours, and exported N500.8b worth of goods to neighbouring countries.

While supporters of border closure hail the decision, which they claim has improved local capacity for certain goods, inflationary trend proved otherwise showing that demand has not been largely met. For manufacturers like Nestle, Cadbury and PZ Industries, who export their products to neighbouring countries, as well as shipments of production inputs, the losses from the border closure will largely impact their operations at the end of the 2019 financial year.

THE Chairman, Manufacturers Association of Nigeria (MAN) Export Promotion Group (MANEG), Ede Dafinone, said due to the current border situation, many companies are in dire straits, adding that significant losses have been recorded while many businesses are about to collapse. He explained that there are companies that rely on the West African market for additional sales to make profits, while those who manufacture locally in the country for export have had their warehouses filled with unsold inventory.

Dafinone said: “There are companies experiencing all sorts of dire problems. Some companies that manufacture here have 100 per cent of their products meant for exports. How are they going to survive these months of border closure? They will make significant losses and the business would collapse. They will still pay interest on loans, pay their staff for this period when they are not selling anything. Many are already losing their supply chains.

“The best alternative means is the sea link that has been mentioned over the years, but that ship going across the coast is yet to be launched and we are waiting for that as an alternative, but even at that it is still expensive, but going forward, it is the only alternative.”“If Nigeria’s land borders are not re-opened soon, its neighbouring countries may look for alternative suppliers to fill the current gaps created by the closure. If this happens, even when the border reopens, it may be too late for Nigerian suppliers to regain their market share. This would certainly be a big shot in the foot,” Coordinator of the African Trade Policy Centre, at the United Nations Economic Commission for Africa, David Luke, and the Executive Director of the Eastern Africa Grain Council, Gerald Masila stated.

THE Lagos Chamber of Commerce and Industry (LCCI) in its reaction stated that the government ought to be more strategic and tactical in dealing with problems of this nature.LCCI Director-General, Muda Yusuf said: “The border closure is a simplistic solution to a complicated, broader and multidimensional problem. We should develop the culture of tackling the causes of problems, not fighting the symptoms. This is the way to solve a problem sustainably.

“One of the critical challenges we face as a nation is that of weak state institutions. This is what has manifested in the escalation of the phenomenon of smuggling. Regrettably, innocent citizens that are struggling to make a living are now being made to pay the price for lapses of ineffectual institutions of the state,” Yusuf said.He added: “The truth is that government agencies at our borders have not lived up to their mandates. It is impossible for the scale of smuggling being reported to take place without the connivance of state officials at the borders. The starting point in dealing with this problem is to get the state institutions to do their job.

“Border closure does not offer a sustainable solution. It only penalises small players in the informal sector. It also disrupts the supply chains and export transactions of many big firms that do business across the sub-region. The cost of this closure to businesses is phenomenal and would be in billions of naira. It also has implications for the confidence of investors as well.”Yusuf urged the government to strengthen the capacity of state institutions at the borders, by deploying greater use of technology in tackling the problem.

A chieftain of Women in Agricultural Advancement and Sustainability Africa, Chi Tola, who decried the development said most of her members, who export agro products to neighbouring countries have been negatively impacted.Tola noted that she currently recording a loss of about $4, 000 monthly from exporting tiger nut flour to Ghana, adding that Customs’ officials now demand as much as N200, 000 to allow goods to pass through the border.

Tola, who said she has not been able to export her goods since the closure stated that the cost of moving her goods to Ghana has soared from N50, 000 to about N200, 000. “Government needs to find a way to allow legitimate businesses to operate. Since the border closure, I have not been able to export anything to Ghana. My business partners have not been able to cross with goods. We don’t need to close the border aimlessly,” she said.

TRADE Lawyer and Executive Director, Nigeria Private Sector Alliance (NiPSA), Nwaiabu Legborsi Nuka, noted that the development could affect regional agreement that Nigeria has signed.“Nigeria needs to respect regional integration and other continental agreements that we have signed. We cannot sign unto agreements, leave our borders unprotected and turn around to use it against other countries,” he said.

According to him, most of the countries that require to ply the country’s borders into their countries are equally affected, even though the country is legally bound under international trade to allow those goods into their countries.

MEANWHILE Ghanaian members of parliament while addressing the plenary of the ECOWAS Parliament’s Second Ordinary Session, said even though the closure was not targeted at Ghana, the country was suffering collateral damage to its economy.Clement Kofi Humado, who presented Ghana’s Country Report at the plenary, noted that a lot of goods coming into Ghana from Nigerian, and those coming into Ghana from Nigeria have been left stranded.

The Ghanaian delegation was made up of Sampson Ahi, Ama Pomaa Boateng, Mahama Ayariga and Kwabena Appiah Pinkrah.Addressing the Parliament, Humado said: “Another issue affecting Ghana’s trade with its neighbours in the sub-region is the closure of the Nigerian-Benin border in September this year.

“Several trucks from Ghana sending goods to Nigeria have been stranded at the Seme-Krake side of the border for over two months now. “Similarly, Ghana trucks returning from Nigeria with goods cannot also cross the border. In October this year, a representation from Ghana made up of our Foreign Minister and Trade Minister met with their Nigerian counterparts to discuss the effects on of the border closure between Nigeria and Benin on Ghana.“We believe that Nigeria may have good reasons for taking such action but the measures infringe on the provisions of the ECOWAS Trade Liberalisation Scheme (ETLS).“Whatever be the reason, this situation needs to be resolved as quickly as possible,” he said.

While acknowledging that Nigeria might have a good reason for the closure, the MPs noted that it contravened ECOWAS protocol, advising that a body be set up for such issues.“For the medium to long-term, Ghana’s delegation wishes to propose that the present mandate of the Task Force on ETLS be expanded to become an office of Trade Ombudsman.

“Member countries that wish to undertake measures that will deviate from the provisions of the ETLS must notify this office,” he said.A lawmaker from Togo, would rather not speak officially, told The Guardian that although the closure of the border has its effects, but it is not much of Togo, except for a particular brand of cement product made in Nigeria, which is now scarce.Sawani Karimou, Member of Parliament representing Niger Republic, who also spoke to The Guardian, said he appreciates Nigeria’s concerns on the border closure. He added that being a sovereign state, Nigeria has every right to take the decision that it has taken.

Senator Mohammed Shaba Lafiagi, who represents the country at ECOWAS Parliament said, “For now, Nigeria has kept its borders closed, all importation and exportation have been put on hold. Nigeria has always played the role of big brother, but that cannot continue until the end of time because that is harmful to the economy of our society.“Importation and exportation have been encouraged but certainly not illegal. Going through the illegal process is badly abusing the economy of the country.

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