Economy: FG restates commitment to border closure

Yesterday, the Minister of Information and Culture, Alhaji Lai Mohammed reaffirmed the government’s plan to keep the border closed implying there is the possibility that the Jan 31 deadline may be extended. This is coming as many critics of the decision continue to point to the rising cost of food staples in the country and the inability of many legal businesses to bring in raw materials or export finished goods.

However, in defence of the government’s decision, the minister listed some of the positive results achieved thus far due to the border closure. On the economic front, he said the partial closure of the border had helped curb the smuggling of rice and other prohibited items resulting in increased production and milling as reported by the Rice Millers Association of Nigeria.

Also, he explained that revenue accruing to the government has improved as importers now pass through legal procedures to ship in products through the seaports while diversion of imported petroleum products has been curbed.

Furthermore, he highlighted the significant impact the border closure has had on the security of the country. According to the minister, about 95% of illegal weapons used in banditry, kidnapping as well as by Boko haram fighters come through the border. He claimed the closure of the border has helped to significantly curb the influx of these illegal weapons. He noted that 296 illegal immigrants have been arrested while several materials for manufacturing explosives have been intercepted.

In addition, he stated that Nigeria is currently working through every available diplomatic channel to engage neighbouring countries to comply with ECOWAS protocol on transit. He highlighted that several goods (such as poultry products and vegetable oil) which typically come in from these countries are on Nigeria’s prohibition list. He noted that talks with these countries are producing results with Niger, for example, issuing a circular banning exportation of rice in any form to Nigeria.

Despite the many positives recounted by the minister, we note that the border closure has led to several unintended consequences with the jump in food inflation being the most obvious despite this being the harvest season. Several companies, particularly in the cocoa beverage sector such as Nestle and Cadbury, have struggled to bring in raw materials (cocoa and cocoa powder) from Ghana.

These materials were imported into the country via the land borders. Bringing in the raw materials through the seaports will only result in an increase in the cost of such goods and a drop in sales volumes for these companies as the hard-pressed Nigerian consumer cannot pay more for such goods.

We maintain our view that temporary closure of the border will not solve Nigeria’s border insecurity nor as history demonstrates, help drive local industrialisation. Rather, the government should focus on creating an enabling business environment that encourages innovation, investment and desire to take business risks.

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