Border closure bites harder, hobbles local production

Mid August, barely three months after signing the African Continental Free Trade Agreement (ACFTA), Nigeria initiated a partial border closure, which it later escalated to full closure. To date, the closure is being criticised as being contrary to the ACFTA spirit.

In ordering the joint border security campaign via an exercise codenamed “Exercise Swift Response,” and aimed at securing the country’s land and maritime borders, the Federal Government said the closure was necessary to stem the tide of massive smuggling activities taking place along the country’s borders, with foodstuffs, especially frozen food, textile and automobile topping the chart.

Since the exercise commenced, the Federal Government has repeatedly said that smuggling, which is a major industry draining the country of millions of naira daily (having defied several strategies in the past), especially along the Seme border has been given a bloody nose.

Government’s claims notwithstanding, a barrage of criticisms has continued to trail the exercise, with many saying that it has adversely affected Federal Government’s trade commitment to West African countries, as well as threatened the Economic Community of West African States (ECOWAS) protocol on free movement.

Critics of the initiative jointly conducted by the Nigeria Custom Services (NCS), Nigerian Immigration Service (NIS), the Nigerian Police, the Nigerian Army, and coordinated by the Office of the National Security Adviser, are also quick to point out that indigenes of border communities, indigenous manufacturers, international travellers, bureau de change operators, cross-border traders and transporters have all been at the receiving end of government’s action.

But the National Public Relations Officer of the NCS, Deputy Comptroller (DC) Joseph Attah, in countering this submission earlier, insisted that the exercise has so far been a huge success.“The resolve of Nigerian security agencies to better secure the country’s territorial integrity, particularly land and maritime borders against trans-border security concerns has started yielding positive results from the ongoing joint border security exercise…” he stated, adding that the “exercise, has received appreciable support from members of the public, as well as border community dwellers and other well-meaning Nigerians.

Apart from the increase in revenue announced by the NCS, the Nigerian National Petroleum Corporation (NNPC), has also reported a decrease in the volume of petrol smuggled out of the country. The Comptroller General of NIS, Mohammad Babadende, while also shedding light on the exercise explained that the joint operation apart from saving the country millions of naira daily, was also very effective in controlling the flow of human traffic into the country.

Not long after the Comptroller (Enforcement), Customs Headquarters, Abuja, Mr. Victor Dimka, claimed that the border closure had recorded “overwhelming success,” considering its benefits to the nation’s economy and security, while a few strategic objectives were still yet to be achieved, President Muhammadu Buhari approved an extension of the closure to January 31, 2020.

Since the extension was announced, local manufacturers who serve markets in the West African sub-region and access these markets by land have further traumatised as their losses and logistics challenges continue to mount.
Other than some local manufacturers, lots of petty traders, who transact in perishable consumer items, such as tomatoes, poultry product, rice and other edibles across these borders, have equally been badly hit by the border closure.

The huge losses recorded by these petty traders and manufacturers estimated to be in billions of naira, has been very devastating to these traders, most of whom are Nigerians. The Lagos Chamber of Commerce and Industry (LCCI), appreciate the concern of government with regard to security and economic sabotage, which informed the closure in the first place.

But it expresses deep concerns that “the demands of sacrifice imposed on businesses and the citizens is disproportionate and becoming unbearable.”

According to the Director General of (LCCI), Muda Yusuf, “the effect is perhaps more pronounced in the south western part of the country being the financial and commercial hub of the country and the sub-region.”On the specific ways that the border closure has affected local manufacturers who export their products to the (ECOWAS), Yusuf said, “the continued closure has the following unintended consequences.

“Complete shutdown of cross border trade (imports and exports) between Nigerian businesses and their counterparts in the West African sub-region. This has grave consequences on investments and jobs. Many industries have invested in products registered under the ECOWAS Trade Liberalisation Scheme (ETLS). These are investors, whose business models were anchored on market opportunities in the ECOWAS. These investments have been completely disrupted and dislocated.Majority of the victims of the border closure are small businesses, most of them in the informal sector. Their means of livelihood has been put in great jeopardy. This class of traders do not have the capacity to move their products by sea.

“Also, supply chain of some business have been completely disrupted, while maritime sector investors have been denied opportunities offered by transit cargo destined for landlocked countries, which normally comes through Nigerian ports.“In addition to this, the closure has triggered an unprecedented hike in prices with a devastating impact on the poor.”

On how best smuggling can be curbed without making legitimate businesses to bear the brunt of the stark failure of the NCS to do its jobs effectively, the LCCI boss said, “the government should come up with less painful ways of achieving its objective.

“We expect the Presidential Economic Advisory Council to come up with more strategic and less disruptive ways of achieving the objectives of government, especially in the economic area. The south western part of the country is the commercial and financial hub of the country, and the West African sub-region, and the effect is much more pronounced in this region.

“Meanwhile, we need to fix some fundamental governance issues as part of a sustainable solution. For instance, we need to fix our institutions for effective border management and policing; we need to review our import tariff policies for better compliance, and we need to review our foreign exchange policies to discount inherent subsidies and make the exchange rate reflect the key economic fundamentals.

“We also need to fix our infrastructure in order to build an economy that is efficient, productive and competitive because currently, infrastructure financing is grossly inadequate to make the economy competitive. We need to fix our sea ports to reduce cargo diversion. Clearing cargo at the Nigerian ports is one of the most expensive and cumbersome in the world.

“It is also important to point out that the Economic Advisory Council has a responsibility to offer sustainable and coherent policy options to government to save the economy and investors from the current painful policy choices.

Reacting to claims that the suddenness of the government’s action suggests that there might have been some intelligence reports on security concerns across the border that warranted immediate border closure, Yusuf said, “I believe we should be more strategic and tactical in dealing with problems of this nature. The border closure is a simplistic solution to a complicated, broader, deeper 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. It is regrettable that innocent citizens that are struggling to make a living are now being made to pay the price for lapses of ineffectual institutions of state. 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 exports transactions of many big firms that do business across the sub-region. The cost of this closure to businesses is evidently phenomenal and would be in billions of naira. It also has implications for the confidence of investors as well.”

Yusuf, therefore stressed the need for the government to “strengthen the capacity of state institutions at the borders. There should be greater use of technology in tackling the problem. Scanners at the nation’s borders and seaports have not functioned for over a year. We should deploy drone technology and strengthen intelligence. Above all, we need to deal with the people issues. The system should hold relevant institutions and their leadership accountable for lapses in the discharge of their duties.

“There is also a need to review our trade policy strategy and reckon with the peculiar contexts of the Nigerian economy and its institutions. In all of these building, a competitive economy is very crucial and fundamental,” he stated.

For the Head of Marketing, Tower Aluminium Nigeria Plc, Mrs. Amina Kehinde, local industries negatively affected by the border closure because of the sales decline that they are experiencing.“We know that it is not everything that is produced in the country that is exported, but a reasonable percentage, maybe 50 per cent of local products make it out of the country to the neigbouring countries. Definitely, the closure has a negative effect on our sales. So far, we have not been found wanting in terms of processing our materials, or in the area of operations. We have also not increased the prices of our products because the border closure has not affected our operations since most of our raw materials are locally sourced or manufactured locally. But in the area of sales, the border closure has an effect on us because many of our customers come from Cotonou, Republic of Benin to buy cooking utensils, which they resell in neigbouring countries like Chad. A lot of people from Benin, Ghana, Cote d’Ivoire also come to Nigeria to buy our products in bulk.”

She said that through out October, her customers complained bitterly about poor sales due to the border closure, adding that factors like this have a debilitating effect on local manufacturing.The Tower Aluminium firm boss, who equally questioned the much-talked about availability of local rice and poultry products in the country in the wake of the border closure, said most farmers were incapable of mustering the kind of financial muscle that will see them excel in local food production, contrary to government’s claims.

She asked: “Can our local production match the amount of rice that is being consumed in Nigeria? The answer is no. Now, many people have stopped eating rice now because a bag of foreign rice now costs N27, 000. I also think that we ought to have started standardising our local rice before closing the border. That would have led to the government giving us sufficient time to prepare.”

Kehinde, who said that the timing for the border closure was not right, added that the closure should have been planned and executed in such a way that it would achieve maximum impact, but without adding to the sufferings of the people. “Besides, everybody thought that the closure would just last maybe for just one or two weeks, but that has not been the case with what is happening.”

The Chief Executive Officer (CEO) Agripreneur, Vicky Udomi exports garri to some West African countries, while she ­brings in coconut from Ghana.But she is now lamenting that the border closure has affected her business in diverse ways. So, I hope the borders are re-opened soon because the cost of raw of materials within the country has tripled. I import some of my raw materials from Ghana. But to get them now is almost impossible, or the prices have tripled thereby increasing our cost of production.” Even though legitimate businesses are still going on along the Seme border corridor, she admitted that a lot of them have been crippled almost by 100 per cent.

“But despite all these, we still have foreign rice and frozen foods in the country. So, I am asking, how did they come into the country after we that have been doing legitimate have been crippled? If the government wants the system to work, let it put in place all that it needs to do to monitor the border.”She, however, called on Nigerians to look at the positive side of what has happened, and how it can help us to look into adding value to our raw materials, “instead of exporting them and importing them back as finished products at exorbitant prices. Let us look at valued addition to agriculture.”

She specifically urged Nigerians to learn from Ghana saying, “cocoa is the mainstay of Ghana’s economy, and Ghanaians are now doing a lot of value addition to cocoa. That is what we should look at. Those are the things that will ameliorate the sufferings of our people.” She reiterated that to stop smuggling we should allow the system to work. All our security agents should be at their duty post to monitor the border.

While alleging that the country’s border has remained porous because Customs officials pay huge sums of money as bribe to be posted there, and they must make returns to their bosses, who sent them there, she stressed that that smuggling would continue to thrive if nothing was done about this.

“No country is without a border, and a lot of developed countries have found ways of curbing smuggling along their borders. How do they do it? We should learn from them and apply such here. We can’t afford to continue leaving our border as porous as it is,” she stated

The CEO of Teamy Engineering Limited, Rotimi Ikugbayigbe, is another businessman, whose fortune has depleted due to the border closure. Ikugbayigbe, whose firm is into manufacturing/refurbishment of power equipment and distribution of electricity transformers said the border closure has affected the industry because “we cannot bring in our raw materials, while sales has reduced by about 30 per cent and getting worse.

“Apart from my firm, I have so many friends who could not bring in their raw materials to work on transformers into the country. They ought to bring them into the country through the Apapa Ports, but for some personal reasons, they prefer to clear their goods at Cotonou Port and bring them in by road. Unfortunately, their goods are now stuck there.”

While the NCS said it has so far raked in more than N2.5t as a result of the border closure, textiles traders in the North are lamenting huge losses as a result of the policy.Speaking through their spokesperson, Alhaji Gambo Danpass, the northern textile traders said their loses may hit N3t soon if the closure persists.

Danpass therefore urged the Federal Government to take cognisance of the fact that the border closure is not only about keeping rice and sundry elements at bay, hence the need for it to pay attention to the genuine struggle of other businessmen, whose genuine businesses have been grounded.He said: “In the past 15 years, we have been engaged in the genuine business of importing and exporting textile materials due to the dearth of textile companies in the country, as a result of poor power supply. So, we are not doing illegal business.

“We have over N3t products trapped at the borders, both the ones that were supposed to come in and the ones that are to be moved to other African countries, which have all been paid for. In no time, we will become debtors as the interests on the capital will continue to mount if the situation persists.”He continued: “Textile companies like the United Nigeria Textile Ltd (UNTL); Kaduna Textile Mills; Arewa Textile; Gaskiya Textile; Asaba Textile and Lagos Textiles; among others are no longer operating and their equipment have all gone bad. So, where do we get materials to sell if we do not import? That is why government must be sensitive to our feelings,” he added.

On his part, the Chairman/Managing Director A-Brett International, Chief Albert Iyorah said the issue of “border closure may be beneficial in the long-run to the country, but in the short-run it is not because our market is not competitive. There are also not enough enablers from the government like loans, and tractors for farmers to go into mass production of food items like rice. But unfortunately, people have used their money to buy those goods, which are now perishing at the border. There are a lot of perishable goods that are now wasting away at the borders. Some of them people took loans to buy, but now they are not being allowed into the country.”

Iyorah, who said some people seize the opportunity of every good and bad policy to enrich themselves, maintained that, “the border closure is not very effective because imported goods being brought into the country through the border are very expensive in the market. That is why many of my customers that used to come from neigbouring countries to buy from me are no longer coming, and you can’t blame them for that because our prices are not competitive. Some of them now have some Chinese friends, who have convinced them to go to their country and buy those goods that they used to come and buy in Nigeria.

“It is the few that are still coming to buy from us now that are facing the problem of inability to cross the border. So, the closure of border is obviously slowing down business in Nigeria.”He expressed regrets that the Federal Government keeps signing all sorts of agreements that it cannot implement with other African countries. “I keep wondering whether some people don’t want Africa to develop, or they don’t want our factories to grow. The way forward for me is for the government to open the border, but control movement in and out of it. Doing so boosts trade on both sides.

Conversely, the CEO of The Seed Project Co., Ltd, Kano, Mr. Lawan Gwadabe, is of the view that the government did the right thing by closing the borders. However, “it will take sometime before we will start enjoying the benefits because when we don’t have alternatives, we would have to make do with what we have. Come to Kano and see what is happening in the rice farming.”

“People are now buying the local rice that we produce, and they are coming from as far as Lagos, Port Harcourt, and Enugu to buy and cart them away in trucks,” he stated.

Gwadabe claimed that the N22, 000 that a bag of 50kg of local Kano rice is sold in Lagos was “not exorbitant because farmers that are producing the rice are smallholder farmers with one or two acres of land. So, there is nothing much that we can do about the price for now because we are not yet producing rice in large quantity.

“It is only when rich people start investing in rice business that the price of rice will come down. Right now, many people are investing in rice milling; they are not interested in rice production.“Dangote just bought 1, 500 hectares of land for rice farming in Jigawa State. So, when people like him start venturing into rice production, the price will come down.

“We can also produce polished rice in Nigeria if only the people can invest in buying the right machines. The problem that we have is that we depend too much on the government. I don’t believe that we must wait for the government to do everything for us. We have people, who have the money to invest in good milling machines, that would get the same standard of rice just like the imported ones,” he said.

While noting Nigerians’ preference for investing in ventures that have quick gestation period, rather than investing in agriculture, Gwadabe insisted that the border closure remains a good move, “which will take some time before we will start reaping the benefits. The governments of former Yugoslavia and China successfully closed their borders to be able to look inwards.”

One of the few local manufacturers, who appear not to be hamstrung by the border closure is the Group Chairman/Chief Executive Officer of Innoson Vehicles Manufacturing Co. Ltd, Chief Innocent Ifediaso Chukwuma.According to him, this is because “my goods don’t come in through land borders, as I ship them in through Apapa Ports. So, my firm is not affected by the border closure.”

One of the few local manufacturers, who appear not to be hamstrung by the border closure is the Group Chairman/Chief Executive Officer of Innoson Vehicles Manufacturing Co. Ltd, Chief Innocent Ifediaso Chukwuma.According to him, this is because “my goods don’t come in through land borders, as I ship them in through Apapa Ports. So, my firm is not affected by the border closure.”