Border closure and lessons from World Bank
It is common knowledge that the Federal Government on August 20th, 2019, ordered the closure of Nigeria’s border with the Benin Republic, citing massive smuggling activities taking place on that corridor as the reason(s).
Within this space also, Nigerians have listened with rapt attention to the Federal Government reel out how smuggling of rice and other communities from the neighbouring countries threatens the nation’s domestic rice production and frustrates the Central Bank of Nigeria (CBN)’s Anchor Borrowers Programme.
Expectedly, the decision has elicited various comments from numerous stakeholders. While Pro-border-closure expressed the view that though the Economic Community of West African States (ECOWAS) protocol permits free movement of people, security must be prioritised, adding that the initiative aside from other gains has brought about the increase to the nations’ revenue.
Despite these ingrain “virtues and attributes” associated with the programme, Nigerians with critical interest have expressed concern about introducing such a policy without palliative, submitting that the policy in their estimation remains an unjust man-made code that neither squares with moral laws nor uplifts human personalities, as it possesses the capacity to render many Nigerians jobless and hungry.
Whatever the true position maybe, like the next paragraph will illustrate, when one juxtaposes government narrative with the World Bank report on a similar decision in June 2015 by the Nigerian government, where it among other things excluded certain products eligibility for purposes of importation, it will further illustrate that FG’s present decision was more consistent with income generation and not in agreement with the harsh effect the policy may visit on the households.
Writing on the short-run impact of the import ban on poverty; the case of Nigeria (2008 to 2012), Andrew Dabalen and Nga Thi Biet Nguyen, Lead Economist and Economist respectively, in the World Bank poverty and equity global practice noted that the Nigerian Government uses food import prohibition as part of policies that seek to protect existing domestic producers and reduce the country’s dependence on imports; without considering the fact that such policies have negative effects on net customers of such products due to higher prices.
The World Bank on that report particularly noted that with 70% of poor households’ budget spent on food, and about 13% of the total budget devoted to products subject to import-banned, poor households are vulnerable to such trade policies. Prices of some imports prohibited food products are found to be higher than what they will in the absence of such bans.
During this period (2008 to 2012), ‘products that make about 13% of the household budget were subject to the import ban. And the unintended consequences of such a policy stand on net consumers of products subject to import bans- particularly, the impact on prices of banned products and welfare of households who are net consumers.
They empirically established that prices of products that were subject to import prohibition between 2008 and 2012 were on average 29% higher in Nigeria than in Ghana and Senegal, and therefore advised that elimination of import, bans would result in welfare gains for the population (Nigerians). The magnitude of the estimate, the report added, differ by the country or countries used as benchmarks. On average National poverty, measured as those living below the international poverty line of 1.25dollars, could be lower by 2.6 percentage point, if Ghana is used as a benchmark country while suggesting that removal of import bans would lead to 2.9 percentage point reduction in rural poverty.
These findings in my views seem puzzling, and, the analysis demonstrates a direct relationship with what the vast majority of Nigerians currently experience as a result of the Federal Government closure of Nigeria’s borders Substantially, this piece is not against border closure if it is aimed at greater good for greater number. Also, the purpose is not to illogically criticize the policy but to objectively understand the basic reason(s) responsible for the policy and what made it seem attractive to the FG; and possibly challenge those ‘fundamental’ assumptions.
Interestingly, one of the best ways to achieve these are by finding the answer to; why this is coming at a time when the agricultural sector is not yet viable enough to carter for that consumption gaps created by the border closure? Why is the FG coming up with such decision at a time when the unemployment rate in the country is going by the National Bureau Statistics (NBS), 2019 report is presently at 23.1 per cent, underemployment rate of 16.6 per cent and expected to reach an all-time high of 33.5 per cent by 2020.
Aside from the challenge posed by unemployment which makes the unemployed and underemployed a threat to the few that are employed, one of the incongruities of this situation is the Minister of Agriculture and Rural Development Sabo Nanono’s recent declaration during media a briefing to mark World Food Day in Abuja that Nigeria is not in jeopardy of a food crisis or hunger as the Nation is producing enough to feed ourselves. This cannot be further from the truth.
Regardless of what others may say, there is hunger in the land and it is obvious. The price of rice and other commodities that have astronomically gone up in the market occasioned by the boarder-closure and stands as a telling proof to this assertion. In many ways, the present administration may have a sincere desire to move the nation forward, but there are two major militating factors. First, there is no clear definition of our problem as a nation, the goals to be achieved, or the means chose to address the problems and to achieve the goals.
Secondly, the system has virtually no consideration for connecting the poor with good means of livelihood-food, job, and security. This is the only possible explanation for this situation. To solve this lingering challenge, we must as a nation start looking for ways to developing/implementing plans and policies that will lead to price stability, high employment, effective regulation, trade and availability of finance for business.
As the debate rages, the Federal Government may go on with the closure as it appears socio-economically alluring. But one thing is sure; the harsh impact on Nigerians will be high. The choice is left for the FG to make.
Jerome-Mario wrote from Lagos.