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How Nigeria’s border closure affects manufacturing sector

By Charles Nwaoguji

Nigeria recently partially closed its border with Benin in an effort to stem the smuggling of rice. It then  we on to close its borders to the movement of all goods from Benin, Niger and Cameroon, effectively banning trade flows with its neighbours.

Nigeria’s actions raise important concerns about the seriousness and prospects of regional integration in Africa.

Nigeria acted just three months after it had signed the African Continental Free Trade Agreement. With 55 member countries, a combined GDP of $2.4 trillion and a total population of 1.2 billion, the agreement will create the world’s largest free trade area. Its aim is to promote intra-Africa trade, which is abysmally low at I6 percent.

To restrict trade flows so shortly after this momentous feat is a major blow to integration efforts. It also shows how unprepared African countries might be for free trade. It’s hard to see how the free trade deal can increase intra-Africa trade to 60 percent by 2022, as projected, when it is being undermined from the start.

The stakeholders who spoke to Daily Sun, recently, said the  local manufacturers are claiming to have suffered huge losses and incurred major lapses in financial transactions since the border closure, just as production lines are shutting down and worker are being laid off.

Findings showed that foods and beverage manufacturers are the most hit owing to their inability to import already purchased raw materials while goods meant for the ECOWAS sub-region and Trans-Saharan markets have been prevented from leaving the shores of Nigeria via the country’s land borders.

The President of the Manufacturers Association of Nigeria, Engr. Mansur Ahmed, also lamented the situation, saying that members of the association had been affected on all fronts of the manufacturing facets.

While advising the government to arrest the importers of illegitimate goods into the country in order to allow legal trade flourish, Ahmed told Saturday Telegraph that MAN was already in crucial talks with government to reverse or make some amendments on its stance, in order to enable the export of some locally-made goods.

Ahmed also pleaded with the government to relax its decision and allow manufacturers bring in their raw materials, while noting that the closure had impacted negatively on individuals who were into legitimate trade and improving the nation’s economy.

“We have approached the relevant agencies like the Ministry of Industry, Trade and Investment, Nigeria Customs Services and others to find a way of improving our security in a way that will not affect the manufacturing sector and prices of basic food items in the market.”

In the same vein, the President of the Lagos Chamber of Commerce and Industry (LCCI), Engr. Babatunde Ruwase, said that the border closure by government was wrong in all ramifications.

Ruwase, who noted that the excuses raised by the government were not enough to shut down the borders, said all the sectors of the economy were already feeling the pains of the closure, just as he decried the decision of the Federal Government, saying that it was negatively impacting on people conducting legitimate businesses.

“Is it the closure of borders that will solve Nigerian problems? I will say no, because what is happening is that people are still crossing and goods are still finding their ways into the country and those that are doing legitimate business are the ones suffering.

“Those who are producing rice in Nigeria today cannot meet up with the consumers’ demand. So, government has not done the right thing by saying rice should not come in. We should build up the capacity.

We should catch up the demand before we close the borders.” He said that people would find their way to smuggle rice into the country because of shortage and consumer demand, as he stressed that some companies would close down if the government failed to reverse its decision.

Also, a Council Member at LCCI, Sade Young, explained that the country has breached some trade treaties under the ECOWAS Trade Liberalisation Scheme (ETLS), which could affect the country’s bilateral trade with other African countries and the economy.

Young said: “I want to appeal to the Federal Government on the ECOWAS ETLS goods, because we cannot get away with it. There are Protocols that have been drawn up, revived, harmonised, with other sub regional states and we cannot just ignore these protocols.

The Managing Director of Sonny Continental West Africa Limited, Mr. Sunday Ezenagu. said government is creating an environment that imported products will be more price-competitive, thereby jeopardising the local industries. Also we’ve had apprehensions about increasing the list of the items not valid for foreign exchange. Whilst we support government’s efforts at backward integration, which we call ‘resource-based industrialization,  we say that there has to be caution, there has to be a process. There is the need to sit down with relevant stakeholders, so that we can determine how to progress in that direction. If you do not take them along, you’ll be scuttling their projections and you may be creating artificial scarcity, because in some of these cases you would have the situation where they are not locally available in the right quantity, and even if you are going to incenticise their production or their local availability, it has to be done over a reasonable period, which we enjoy the cooperation of both government and the private sector operators. So, by and large, industries are looking forward to brighter future. The ease of doing business should now fully be on course, especially the elevation of the secretary to the level of senior adviser to Mr. President. So we expect that that would give her more presence in terms of effects, and we look forward to a reduction in cost of doing business. Another issue that has disturbed us is the recent increase in electricity tariff. Amidst dwindling supply, you are having an increase, to the extent that we are not certain that this will lead to an increase in supply. It is not a welcome development. There should be a corresponding improvement in supply before you can make any justification for that.

One of the sources, who confided in our correspondents on the condition of anonymity, explained that some locally manufactured goods are produced mainly for export, and as such, 80 per cent of the revenue bases of such people are from export materials. Noting that perishable goods stocked in some warehouses are now spoiled, expired or damaged due to heat, the sources further explained that some companies are now unable to bring in raw materials already paid for, which were purchased from neighbouring countries, for local production.

A manufacturer, referred to simply as Ola-Oluwa, said she could not afford to keep her workers on the payroll, not knowing when business would pick up, as such, some of her factory workers had been asked to stay off due to low capacity utilisation.

But she is not alone, as another of her colleague, Omo-Ade Afonkara, revealed that, except for the major industry players, most organisations affected by the closure had put their workers on the alert because they were set to downsize. “It is an unfortunate situation.

We don’t know how long this will remain in force, so we can’t continue to keep our workers. They were our staff and they understand why we are asking them to go home. If things get better, we will call them back, but for now, that is the situation”, he said.

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