Business
Pressure mounts on President Buhari to reopen borders
BY EMEKA EJERE
The urgency of reviving the ailing Nigerian economy through increased economic activities is bringing the government and the people together on the need to review the border policies that have seen the nation’s land borders shut since August, 2019.
Last week, President Mohammadu Buhari, told governors elected on the platform of the ruling All Progressives Congress (APC) in Abuja, that the nation is looking to reopen the borders as soon as possible, recalling that the closure of the borders was also an attempt to control the smuggling of weapons and drugs from neighboring countries.
“Now that the message has sunk in with our neighbours, we are looking into reopening the borders as soon as possible,” the president was quoted as saying by his spokesperson, Garba Shehu.
Nigeria first showed its willingness to re-open the border last month amid sky-rocketing food prices and increased calls for reopening of the borders. The move came on the heels of the nation falling into its second recession in five years, according to gross domestic product (GDP) data released by the National Bureau of Statistics (NBS) for the third quarter of 2020.
Many have attributed the economic recession partly to the 14-month old border closure, which, among others, has seen inflation rise to a 30-month high of 14.8 percent. Some policy experts have said that lifting the blockade will help check the recession, the nation’s worst in decades, and ease the economic hardship faced by Nigerians.
Ending smuggling
The federal government had on August 13, 2019, sealed Seme border without formal notice and subsequently extended the closure to the rest of land borders. The Seme border (between Nigeria and Benin Republic) according to investigation, is one of the bustling boundaries, and the chief course for the importation of food items such as rice, frozen chicken, and turkey into the country.
The Economic Community of West African States (ECOWAS) had, in a reaction, urged the federal government to open the borders, warning that the restriction of border crossings, which prevents the free movement of people, does not only harm economic prosperity but contravenes agreements signed by Nigeria.
But the government maintained that it embarked on the joint security measure to curb smuggling that is threatening the country’s attempt to boost local food production, and to forestall the influx of illegal ammunitions and undesirable elements.
“We cannot allow smuggling of the products at such alarming proportions to continue,” President Muhammadu Buhari had said in a statement released by his media aide, Garba Shehu, shortly after the border closure.
Gains and losses
The shutdown is pushing prices up in Nigeria, notably of rice, a major household staple. In Lagos, a city of more than 20 million inhabitants, the price of a 50 kilogram bag of local rice have increased by almost 400% from between N5, 000 and N7, 000 to between N23, 000 and N27, 000.
Prices of other foods such as palm oil, fish, meat and bread are also increasing, fuelling rapid inflation. This hits consumers hard in a country where food prices are higher than in the rest of the world at comparable levels of per capita income and approximately half of households’ budgets are spent on food.
Some are nonetheless seeing benefits in the closure. Few months after the border closure, there was reportedly 20% decrease in fuel imports, which was expected to reduce the nation’s hefty fuel subsidy bill at the time.
Also, rising consumer prices heightened profits for suppliers of locally produced goods that have significant processing and storage capacity, such as Olam, Onyx Rice Mills or Quarra rice.
But beyond these short-term effects, economic analysts doubt the ability of the closure to help the government achieve its goals in the long-run.
“The closure in itself only acts as a temporary brake on smuggling”, said Mr. Francis Peter, an economist. “Smuggling takes place because of price differentials between Nigeria and its neighbours, strong demand on Nigerian markets for foods such as rice, and ineffective or overwhelmed customs services.
“All these factors are likely to persist after borders reopen. Curbing smuggling requires sustained investments in customs capacities and collaborative work with neighbouring countries to implement unified trade regulations.
On his part, a public affairs commentator, Bar. Jide Ologun, believes that the border closure is only causing more economic hardship without achieving its objectives.
“Part of the reasons given for the closure of the borders is to check smuggling of illegal arms and ammunitions into the country, but I wonder if the nation has ever seen more of these dangerous weapons in wrongs hands than now”, Ologun said.
“Even the self-sufficiency in rice we talk about, it is quite obvious that there is no local capacity to meet the huge local demand, let alone export.”
For eminent economist and former bank CEO, Dr. Alex Otti, there was no need to shut the borders since the nation has Customs Service. What the government needed to do, according to him, was to get the Customs officers working or get rid of them.
“So for me, we apply the wrong solution. If we have a Customs service that is not doing its job we must force them to do their job, or we sack all of them”, Otti told Business Hallmark in an interview
“So, the solution is not in shutting down the borders; for how long will you have the borders shut? And the people are suffering. There are legitimate goods that should have been coming in that are not allowed to come in.
“So you punish the culprits, you also punish the innocent people. For me, I would have done it differently, and I believe this is not the solution. This is a short term measure and at the end of the day we must come back to the real issue.
“Why are the people that we have given charge over our borders not doing their jobs?”
Last month, the Minister of Finance Budget and National Planning, Mrs. Zainab Ahmed, said Mr. Buhari would soon receive a report of a presidential committee to advise on the reopening of the borders.
Mrs. Ahmed said although the committee set up by Buhari had done an assessment of the gains of the closure and had recommended to the president to reopen the borders, the report had not been submitted.
The committee has as members the ministers of finance, budget and national planning, interior and foreign affairs, she said, noting that the report would be submitted “once signed by members of the committee.
“We have made an assessment. The president set up a committee and we have made an assessment and all the members of the committee agreed and are recommending to the president that it is time to reopen the borders,” she said.
“The objective has been met in the sense that we have been able, over these couple of months, to work together with our partners in a tripartite committee and do a joint border patrol together and reinforce the sanctity of the commitments that we made to each other.
“So, each side has learnt its lessons. Nigeria has been affecting our partners in terms of businesses that we have in Nigeria as well. So, we will be expecting that the borders will be reopened very soon. The date will be decided by Mr. President.”
