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‘Continued border closure negates AfCFTA’s liberalisation agenda’, says MAN

By Femi Adekoya
02 December 2020   |   3:40 am
The Manufacturers Association of Nigeria (MAN) has urged the Federal Government to review its stance on border closure, especially as the timeline for African Continental Free Trade Agreement

Seme Border

With less than 30 days to the January 1, 2021 date for the implementation of the African Continental Free Trade Agreement (AfCFTA), the Manufacturers Association of Nigeria (MAN), has urged the Federal Government to review its stance on border closure, citing that the trade protocol is premised on liberalisation of intra-regional trade in the continent.

Indeed, the border closure has created rancour between Nigerian and its neighbours, especially Ghana, while its economic impact has been severe for Nigerians that depend on imported food to address the shortfalls in local production, as well as manufacturers that exploit the West African markets for expansion.

From rising food inflation to higher costs of logistics and loss of business to other suppliers in the global value-chain, the closure of the borders might have spurred domestic agricultural industry, but production capacity remains inadequate to meet rising food demand and raw materials.

While farmers craved that the borders remained shut for as long as possible to continue to enjoy the monopoly in local markets despite supply gaps, the Manufacturers Association of Nigeria (MAN) stated that the negative effect of the border closure is far-reaching and would linger even after the border is opened.

According to the Q2 2020 foreign trade data from the National Bureau of Statistics (NBS), Nigeria’s trade with ECOWAS has been on the decline, with import dropping from N215.79billion in 2019 to N59.41 billion as at 2020 Q2, while export shrunk from N2.24 trillion in 2019 to N445.6 billion this year.

The Federal Government had announced that it had ratified Nigeria’s membership to AfCFTA, ahead of the December 5, 2020 deadline, even as Customs officials agreed to draft continental guidelines to enable the movement of goods, services and people for the agreement.

“Liberalization of 90% of tariff lines will affect customs revenues. About 85% of imports come from outside Africa, leaving about 15% from the continent, but the agreement is an opportunity for Nigeria to boost exports and production,” the Customs Service disclosed at the AfCFTA Sensitization Seminar.

The guidelines cover a number of new sub-sections to respond to specific gaps in existing rules, including the regulation of small-scale cross-border trade and cross-border trade by fishermen, gender considerations, and treatment of essential workers, including transport and humanitarian workers.

“Once in force, the continental guidelines are expected to ensure a harmonized approach to support smooth and safe trade amid the pandemic, including transit trade between RECs,” said Hussein Hassan, AUC’s Acting Director for Trade and Industry.

Local manufacturers had kicked against the exclusion of Nigeria’s priority products from the sensitive and exclusive lists of the AfCFTA, citing the identified 429 tariff lines in the Sensitive and 184 tariff lines in the Exclusion lists consolidated by the ECOWAS Commission because preferences of the country were not included.

With the Federal Government sending its instrument of ratification, it is believed that some of the concerns might have been addressed and agreed upon by relevant stakeholders.

MAN noted that its Export Group had suffered huge losses due to logistics issues occasioned by the closure, as it takes an average of eight weeks for the carriers to ship and truck goods within countries in the same region vis-à-vis trucking through the land border, which takes an average of 7-10days.

The producers added that the increased traffic through the seaport as a result of the closure has increased the perennial congestion at the Apapa and Tin Can Island Ports, leading to greater challenges to exporters and increased demurrage cost and other Port levies.

Although the Federal Government claimed to have recorded some gains from the border closure that took effect on August 20, 2019, especially in the area of rice and fuel smuggling to neighbouring countries, data from the National Bureau of Statistics (NBS) and some members of the organised private sector showed that the country might actually be at the losing end.

While the closure was speculated to last 28 days, the government has not given a definite timeline for the re-opening of the borders, as affected companies and exporters have had to move their goods through the seaports, which given the perennial congestion at Apapa, has made this a nightmare.

From rising food inflation to higher costs of logistics and loss of business to other suppliers in the global value-chain, the closure of the borders might have spurred domestic agricultural industry, but production capacity remains inadequate to meet rising food demand and raw materials.

MAN President, Mansur Ahmed, in the Association’s position on the reopening of the land border closure, said some manufacturers who export to neighbouring African countries had to close down their export segments due to the border closure, which discouraged long-term investments and affected the economy.

“The implications of these are that manufacturers in Nigeria have continued to lose and are still losing market share on a daily basis in the West African corridor, as export of manufacturers products has now become overly less-competitive.

“For instance, major players in the beverages; polypropylene (PP) bags, tobacco, cement, toiletries and cosmetics industries are losing markets they had worked very hard to secure in the West and Central African region. This is a position that Nigeria has hoped to leverage to secure a strong position in the African Continental Free Trade Area (AfCFTA), which kicks off in January 2021,” he added.

MAN, however, advocated a holistic approach that will address the root cause of the problem and provide mutually reinforcing solutions rather than a border closure, which is not a sustainable solution to the challenge of trade distortions and abuse of economic protocols by neighbouring countries in the region.

President, National Association of Nigerian Traders (NANTS) and member of the ECOWAS Task Force, Ken Ukaoha in an earlier chat with The Guardian, said the reason why the borders have remained closed or its re-opening may have been delayed, may not be disconnected from the implementation of the COVID-19 protocols.

He, however, warned that the border closure was becoming a bit too late and dicey, as the majority of the goods have been stranded and abandoned at the border till this time.

The Chairman of the Manufacturers Association of Nigeria Export Promotion Group (MANEG), Ede Dafinone had told The Guardian that economic managers should declare force majeure on the AfCFTA, noting that the country was not fully prepared for its take-off.

Dafinone, explained that riding on the back of the Covid-19 pandemic, Nigeria should seek for an additional year to put its house in order before going live on the trade deal.

In his words: “We are not properly prepared to take advantage of the possible benefits to Nigeria in terms of the AfCFTA, and in my opinion as a country; we need additional preparation to take full advantage. My view would be that we should, on the back of Covid-19, declare force majeure on this, and ask for an additional year to put our house in order before we go live on the AfCFTA.”