By Charles Abuede
The recent decision by the Nigerian government to selectively reopen four of its national land borders after 16 months of closure has come under heavy scrutiny by stakeholders who say the decision may have pressured by influential powers. The reopening came a month after the African giant ratified its membership of the AfCFTA pact which is due to take off effective January 2021.
Some experts who spoke to Business A.M. believe that some regional powers have played into the scheme of things, igniting fears that the ratified agreement could lead to dumping of goods in Nigeria for negative and not positive impacts.
Nigeria’s President Muhammadu Buhari had in August 2019 ordered the closures of the national land borders in a bid to rein in the illegal activities of smugglers into Nigeria. The reopened borders include the Seme Border in the western part of Nigeria, Illela border, Maigatari border located in the northeastern region, and Mfun border located within the southern bloc of Nigeria.
Nigeria’s decisions contradict trade philosophies in the agreement
Oye Akinsemoyin, president of the Nigerian Vietnam Chambers of Commerce, told Business A.M. that the reopening of the border stands to be seen as a good a and bad decision by virtue of the fact that Nigeria is a member of a single market whose decisions to close trade borders seem to contradict some of the philosophies of free trade, after she has penned down her support for the free market contract (AfCFTA) on the continent.
“Now, the AfCFTA is another level within the continent and outside the country, seeking the need for a free flow of goods and services. The closure of the borders seem to be a contradiction to some of the philosophies of free trade that have hindered and affected the flow of goods and services as part of an embedded investment,” he concluded.
Similarly, John Isemede, a trade expert and a former director-general of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), in a note to Business A.M., said the president took the bold step to reopen the borders after 16 months and the decision shows that he actually listens to expert advice. Conversely, the decision by the federal government does not really fit into the AfCFTA market as border closures negate trade agreements.
“Under the ECOWAS agreement, I don’t think Nigeria fit into the Africa Continental Free Trade market with their drag on the continental free trade. Border closure negates all agreement under ECOWAS. The closure of the border has revealed a contrary reason to the government’s claim. An instance is a naira which trades for N306 before the border closure, now trading at over N450 during the closure. We have no airline nor shipping lines; border closure has halted export activities to neighbouring countries,” the trade expert concluded.
Implication on businesses, demand, the economy
Michael Nwakalor, economic analyst at Cardinal Stone Securities Limited in a monitored interview said some Nigerian businesses have complained about the inaccessibility of raw materials for import from neighbouring countries. The economist also said that these businesses are not able to export as much as they used to, to neighbouring countries. Though, there was improved demand in locally produced goods as a result of the border closure on smuggled goods, especially those goods with high tariff rates imposed on them.
“I think the impact has been mixed as some producers have benefited from the border closures both in terms of volumes and in terms of the ability to charge higher prices. But on the other hand, some people have found it more difficult to export and some people have complained about getting unfettered access to raw materials. So, with the land border closures, I think a lot of local exporters have been able to regain market share from smuggled goods,” Michael revealed.
Also, Orji Udemezue, an economic analyst and banker told Business A.M. that the lack of trust within the system is deep, thus leading to the government taking over the mantle to manage the borders as against the principle of delegation of authority.
“Government has put so many people in a very big, economic quagmire. In the bid to shut off the smuggling of illegitimate or contraband items, the Nigerian government closed out everyone else; local Nigerian manufacturers that used to move their goods across the border to other African countries could no longer export anything, even in the midst of tight FX situation in the country.
“In today’s globalized world, that was not well thought out and a rash decision to close the borders. By closing the borders, the government has passed a vote of no confidence in themselves. Every year, billions of naira is voted for institutions like the Nigerian Customs Service, Immigration, the Police, the military, and such other security outfits, who we assume are supposed to protect us and protect our trade activities through the borders,” Udemezue asserted.
Nevertheless, amidst the clamour of Nigerian exporters and other stakeholders on the latest development, Business A.M. gathered that the decision could be termed economic sabotage. This can be hinged on the fact that Nigeria took a decision to shut her borders without proper consultation and strategies put in place to address the issues of boosting local production within the agricultural value chain, provision of seedlings or grains to farmers, rendering support to processors as a means to the building of human capacity and also the development of the manufacturing sector.