INTRODUCTION/EXAMINE THE EFFECT OF BORDER CLOSURE ON THE NIGERIA ECONOMY
Closure of land borders, seaports and other means of entering a country is not only peculiar to Nigeria but to countries of the world, who at different time decide to partially or completely close her borders for various reasons best known to the government, even despite the inter-regional trade agreement.
Several reasons had been put forward on why the country closed her border especially the closure of the Seme, Idiroko and Niger borders. The exercise, code-named, ‘Ex-Swift Response’, was being jointly conducted by the customs, immigration, police and military personnel and coordinated by the Office of the National Security Adviser. The president said the activities of the smugglers threatened the self-sufficiency already attained due to his administration’s agricultural policies:
“Now that our people in the rural areas are going back to their farms, and the country has saved huge sums of money which would otherwise have been expended on importing rice using our scarce foreign reserves and we cannot allow smuggling of the product at such alarming proportions to continue” .
Other reason given by the federal government to closure of the country’s western border was to allow Nigeria’s security forces develop a strategy on how to stem the dangerous trend and its wider ramifications. Meanwhile, the continued closure of Nigeria’s borders with her closest West African neighbours has continued to generate reactions within and outside the country. It should be recalled that on August 22, 2019 many travellers were struck by the reality of the situation when they found themselves stranded, following the sudden closure of the busy Seme and Idiroko borders, which separated Nigeria and neighbouring Republic of Benin.
According to AFP (2019), the two main commodities being smuggled were petrol and rice. Petrol was being sneaked out from Nigeria, where subsidies make the fuel half as cheap as in its neighbours, and resold. Rice, on the other hand, was being brought into Nigeria, where consumers favour imported Asian-grown varieties over the locally-grown competitor, from Benin via its port in Cotonou. The most visible winner from the closure is the Nigerian treasury, which has benefitted from the falling cost of petrol subsidies and from a rise in customs receipts
EFFECT OF BORDER CLOSURE ON THE NIGERIA ECONOMY
Below are some of the effect of border closure on Nigeria economy which has both positive and negative impact.
- Stop Smuggling: One of the primary benefit of this development is to stop all forms of smuggling and illegal exportation into the country, while will stop turning Nigeria into a dumping ground. According to the Comptroller-General of Customs, Col Hameed Ali (Rtd), the land borders will remain closed pending when Benin and other neighboring African countries stop taking Nigeria for a smuggling destination. The Nigeria Custom Service stressed that the closure would remain in place until neighbouring countries duly comply with the ECOWAS (Economic Community of West African States) protocols on transit of goods (Jude, 2019).
- Total Control of what Comes In and Out of the Country: Another benefit the country is aiming to achieve is that once all goods for now are banned from being exported or imported through our land borders and that is to ensure that we have total control over what comes in. Traders in Lagos Island, a vast market of Made in China textiles and gadgets, say the closure of the borders had crimped supplies via Benin’s Cotonou.
- End Importation Competition with Local Production: Jude (2019) writes that this policy took off because Nigeria wants indigenous rice farmers and other locally produced goods like turkey, fish etc to make hay and reap the fruits of their labour. It should be noted that Benin border became one of the world’s top importers of rice because of its Nigerian market. Almost all of the rice it imported from Thailand, Indonesia etc found its way to Nigeria through the Seme border. Thus, the move is to protect Nigerians from all sorts of substandard imported items through the land borders. This is a way of curbing the smuggling of rice from Benin because the government wants Nigeria to be able to feed itself and encourage local production of a widely consumed staple. NCS reports that there have been rotten tomatoes, vegetables and other goods on the Benin side of the border since the closure. All those goods used to find their way to Nigeria.
- Due Process Enhance and Increase in Revenue: According to the Nigeria Custom Service, there is increasement in what the Custom generates. Custom boss stressed that most of those cargoes that used to go to Benin (Republic), shipped to Benin, and then discharged and smuggled into Nigeria, now that we have closed the border they are forced to bring their goods to either Apapa or Tin Can Island and we have to collect duty on them. The Custom claimed that it revenue has not reduced; it is increasing as a result of closing the border. NCS Boss Ali adds that customs has been making between N4.7 billion to N5.8 billion daily–more than the agency used to generate before the closure.
- Exportation of Nigeria Subsidized Petrol: Benin used to also serve as a prime destination for the diversion of Nigeria’s petrol by greedy marketers. This explains why there are quite a lot of petrol stations around Benin’s border with Nigeria. Benin is not the only nation affected by Nigeria’s decision to shut its land borders, however. Niger, Cameroon and Togo are also reeling from the effect of the policy. The Nigerian government says as soon as these countries prove that they are willing and ready to curb smuggling, the borders will be reopened for legitimate business.
- Food Price Inflation/Increase: The closure of the border and banned on goods imported via land borders especially food items has pushed up food prices especially rice and pummeled neighbouring Benin’s economy (Aljazeera, 2019). Nigeria is heavily reliant on imports to feed its booming population of some 190 million, but the government is seeking to bolster domestic agriculture as it looks to diversify the oil-dependent economy. The closure has had a devastating effect on Benin, Nigeria’s neighbour to the west, which has been a key exporter of foodstuffs to Africa’s most populous country while it has also pushed up prices for staples such as rice at markets around Nigeria. The annual inflation rate has edged up to 11.24 percent in September, while food inflation ran at 13.51 percent.
- Documentation and Record Generation: One of the purposes of the border closure is to ensure that all goods coming and going out of the country is properly track, monitor, documented for policies formation, control and forecasting. The NCS said all imports should now come through the country’s ports where they can be monitored more easily and generate much-needed revenue.
- Small Arms and Ammunition and Illegal Immigrants: The exercise was aimed at checking the unbridled influx of smuggled goods, small arms and ammunition, as well as illegal immigrants, to Nigeria which according to the National Security Council has reduced the illegal smuggling of arms. Also, NCS said more than 200 illegal immigrants were apprehended across the border and thousands of bags of rice and other contrabands confiscated.
- Unemployment: If we rely on imported goods and service, there will be more increase in the number and rate of unemployed people as companies that supposed to employ people are no longer functioning. A company that supposed to employ hundreds will find it difficult to even employ 10 people because they sell little or they are already going into an extension. The more we import. The more unemployment and the more we consume local commodities the more employment we open.
- Importation of Disease and Illness: Through importation of turkey and other items, lots of diseases and sickness are equally imported into the country. Nothing is good as fresh chickens, turkey and others. Instead to produce them locally and make money we import these items. The country did not only lose money, they also buy diseases.
It is safe to conclude that the federal government has promised that the closure will remain until the neighboring countries ready to comply with fair trade. Meaning that the closure is not permanent as it will affect inter-regional trade agreement signed by 53 out of 54 countries in Africa through the Africa Union. It is noted that as long as this effort is being sustained, Nigeria will continue to face some kind of inflation on some food items because at present, a bag of foreign rice now sold for about 25000-27000 while that of the local once is sold between 17,000-20,000.
- This paper urged the federal government and its agencies to intensify actions that will regulate price of commodities
- Nigerians should not take advantages of border closure to inflate the price of goods that are not being imported into the country.
- The government as a matter of necessity should create the enabling environment that would generate a favourable business climate.
Aljazeera (2019). Nigeria’s land borders closed to all goods, official confirms. Retrieved from https://www.aljazeera.com/ajimpact/nigeria-land-borders- closed- goods- official-confirms-191015191736317.html
Jude, E. (2019). 5 things you should know about Nigeria’s border closure. Retrieved from https://www.pulse.ng/news/local/5-things-to-know-about-nigerias-border-closure-pulse-explainer/zr1e5cv
Punch (2019). Emerging gains and losses of Nigeria’s border closure. Retrieved https://punchng.com/emerging-gains-and-losses-of-nigerias-border-closure/