Business

Border closure: Nigeria’s loss, Asian firms’ gain

Sixteen months after the Federal Government ordered the closure of Nigeria’s 4,477 kilometres land borders to protect the economy and tackle terrorism, 98 firms have relocated to neighbouring countries to struggle with Asians exporters, BAYO AKOMOLAFE reports

Asian exporters have taken the advantage of the 16-month border closure by the Federal Government to displace Nigerian manufacturers in all the West African markets. Organised Private Sector (OPS) said the closure of the borders have brought misfortune to their businesses, noting that the manufacturers have lost about N2 trillion to the borders’ closure over their inability to meet foreign contractual agreements.

Although the manufacturers and some exporters, whose consignments were trapped at the borders, said the opening of the four borders at Seme, Ilela,Maigatar and Mfon, during the Yuletide will make the price of some goods to come down and reduce inflation in the country.

But those who spoke with New Telegraph explained that some firms are already in debts, while some workers have been laid off, thereby defeating the objectives of the border closure. Specifically, they explained that the effect and the purpose for which the borders were closed have never reflected positively on the nation’s economy, especially the manufacturing sector, as they could not export the goods they produced.

They said some buyers, who prefer Nigerian products to Asian goods in Benin, Ghana, Togo, Ivory Cost and Burkina Faso are anxious to receive the goods they ordered since 2019. Also, they lamented that they have incurred huge losses on perishable and non-perishable goods lying fallow at the various warehouses, while those perishable goods locked up in the trucks at the borders may not get to their destinations.

The manufacturing exporting firms, under the auspices of the Manufacturers Association of Nigeria Export Group (MANEG), a key sub-sector of the Manufacturers Association of Nigeria (MAN), said the decision of government to open thborders is a welcome development. According to the group, manufacturing and export sectors have been hit hard by the closure of the Nigeria-Benin border and COVID-19 pandemic on trade.

However, they are consoled by the opportunity the Yuletide provides to sell their goods. The MANEG Chairman, Ede Dafinone, who spoke with New Telegraph in Lagos on behalf of the group, explained that the larger picture of the damage caused in the last one year, has not only prevented made-in-Nigerian products from reaching the shores of West and Central African markets, but has also cut down manufacturers’ access to foreign exchange and raw materials.

He said: “The effect of border closure is the decline in export to many countries and significant losses for many exporters, as many have closed down some of their production lines since then.” Dafinone emphasised that the Federal Government’s refusal to re-open the country’s borders before now has seriously affected the country’s export sector which the government said it was encouraging in order to grow the country’s economy. According to him, there has been a significant sharp decline in the total value of the non-oil export this year.

The chairman stressed that the decline in the country’s manufacturing export can be seen in the latest National Bureau of Statistics (NBS)’s Q3, 2020 result of the Gross Domestic Product (GDP). He added that the border closure was very challenging and tough for export firms operating in the country, saying that some of them had close been closed down. “Export through the land borders has been totally stopped.

Even though the sea route is still available, this option is largely more expensive than the land borders,” Dafinone said. Another member of MANEG and Chairman, Other African Countries, Mr. Okhai Ehimigbai, said the demerits of the border closure supersede the merits economically.

Ehimigbai, who is also the export manager at Aarti Steel, noted that manufacturers were at the receiving end, saying that they were unable to get 10 per cent of their dollar needed for production since the border between Nigeria and Benin was shut. He said: “The reopening of our land borders is long over-due. This will make manufacturing exporters project and make plans for the coming year.

We have shut down our export segment because of border closure.” Speaking on the economic loss to country’s GDP and local exporters, he said: “The loss to manufacturing exporters is very enormous. From day one the border was closed, I had six trucks going to Ghana and another four to Cotonou all valued at $500,000. After six months, when there was no hope the border will be reopened, we have to shut down our entire export production line and laid off the staff in that department.

“Most Small and Medium- Scale Enterprises (SMEs) that are into export have all packed up. The only market where Nigerian manufacturing exporters have comparative advantage is the Economic Community of West African States (ECOWAS) market. With this long border closure, this market has been taken over by Asians.” On recovery from the border closure ban, Ehimigbai said that it will take a long time for Nigerian exporters to regain the market from their Asian competitors. Also, the President of MAN, Mansur Ahmed (an engineer), said that the association is of the view that a review on the status of the border closure is pertinent in line with the core objective of the African Continental Free Trade Agreement (AfCFTA) protocol which is premised on liberalisation of intra-regional trade in Africa.

The president said the export group of the association has suffered huge losses due to logistics issues occasioned by the closure as it takes an average of eight weeks for the carriers to ship and truck goods within countries in the same region visà- vis trucking through the land border, which takes an average of seven to 10 days.

He said: “The implications of these are that manufacturers in Nigeria have continued to lose and are still losing market share on a daily basis in the West African corridor as export of manufacturers’ products has become less competitive.”

In August, 2020, New Telegraph gathered that no fewer than 98 manufacturing companies have relocated from Nigeria to other West African countries. The Managing Director of Sceptre Consult, Jayeola Ogamode, a cargo consolidator, noted that Nigeria has become the hub of smuggling despite joint patrols by various security agencies. According to him, the essence of border closure has been defeated in view of arm robbery, smuggling of banned goods and arms around the borders. He said that foreign rice, maize, and palm oil are still entering Nigerian market after one year of the border closure.

The managing director explained that while the other countries in the West African region depend on Nigeria, the Federal Government has not taken the full advantage of its various policies to boost the economy regardless of the coronavirus pandemic. He noted that Nigerians have not seen the impact of ban on rice, maize, and palm oil on the local agricultural produce which the government was trying to protect.

He said: “Apart from Lagos, go to other states, Nigerian markets and stores are still filled with imported rice, wheat, vegetable oil and other agricultural produce. What is the essence of border closure if we can still see foreign rice one year after?” Ogamode said over 1,000 trucks laden with export goods were detained at the borders since August 20, 2020, while foreign goods were entering the country through various borders across the states with impunity.

He advised the Federal Government to review the land border closure policy in the interest of the Nigerian economy. Meanwhile, records by the Nigeria Customs Service (NCS) revealed that the service has seized over N17.5 billion of goods through the various land borders. In the first seven months of the closure, it explained that that 86,602 of 50-kilogram bags of parboiled foreign rice, bags of NPK fertiliser, vehicles, engine boats, drums of groundnut oil and other contraband valued at N7.35 billion were impounded from smugglers.

The seizures were made through a joint border patrol codenamed ‘Exercise SWIFT Response,’ from the North-West, North-Central, South-West, and South-South geopolitical zones of the country.

The NCS public relations officer stressed that the exercise, which has continued to yield positive results, has saved the country huge resources and enhanced national security. He said: “As at 6th March 2020, 697 illegal migrants have been arrested while seizures include 86,602 50kg bags of parboiled foreign rice; 695 bags of NPK fertiliser; 1,172 vehicles; 2,997 drums filled with Petroleum Motor Spirit (PMS); 16,771 empty 200-litre drums of PMS; 90 engine boats; 68 drums of groundnut oil; 26 trucks (33,000 litres) of PMS; 14,604 jerrycans of PMS; 656 motorcycles; 15,089 jerrycans of PMS, vegetable oil; among other items.

The estimated monetary value of the seizures is N7,350,818,657.70.” Also, the service’s Federal Operations Unit (FOU), Zone A in Lagos, intercepted some new and used vehicles as well as rice with Duty Paid Value (DPV) of N10 billion at the weekend Ibadan, Oyo State. Its acting Customs Area Controller, Usman Yahaya, said the seizures were made on Ido-Eruwa Road, Ibadan in Oyo State in one day.

He noted that despite stiff resistance from the smugglers, who engaged the support of hoodlums, the Customs operatives were able to display high level of professionalism to impound the contraband. According to him, all the seizures were already taken to Customs warehouse in Lagos. The unit’s Public Relations Officer (PRO), Peter Duniya also explained that the contraband comprised 34 fairly used and new vehicles which were laden with second-hand clothes, Indian hemp and foreign parboiled rice. Last week, President Muhammadu Buhari ordered the immediate reopening of the four borders at Seme, Ilela, Maigatar and Mfon.

This followed the submission of a report by the committee led by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, to examine the implications of the closure. After the Federal Executive Council (FEC) meeting on Wednesday last week, the minister listed the borders as Seme, Ilela, Maigatar and Mfon. According to her, others will be reopened before December 31, 2020.

Business activities were yet to pick up between Nigeria and Benin Republic border, Seme, 72 hours after the Federal Government opened the four borders. Travellers were denied entry by the Nigerian Immigration Service, while clearance of cargoes had not commenced by the NCS. An official of the NCS, who spoke with our reporter on the telephone, said that no agency of government had received directive formally from the government to commence business activities. He said: “There is a procedure; we cannot just commence business like that. Formal directive must come from our head office.”

•Additional report by TAIWO HASSAN

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