Lagos Chamber of Commerce and Industry has said that the closure of Nigeria -Benin Border has come with a cost mainly to the informer sector doing business across the subregion. In a statement issued in Lagos and signed by the Director General Mr. Yusu Muda, the Chamber said “The closure of Nigerian land borders for close to two months now has come with benefits and costs. There are upsides and downsides. Reports indicate a drastic reduction in smuggling of rice, poultry products and sugar. The smuggling of petroleum products outside the country to neighbouring countries has also declined considerably. We note and appreciate these outcomes.
“But it is important to reckon with the costs, supply chain disruptions and loses that businesses and individuals have suffered as a result of the closure. Corporates, large number of informal sector players and individuals doing legitimate businesses across the borders have become victims of the border closure. This poses a dilemma. The government means well, but there are many innocent casualties. As we celebrate the benefits, we should also count the costs. Jobs have been lost, prices have skyrocketed, legitimate exports to the subregion have been halted, intermediate products for some manufacturers have been cut off, some multinationals companies have been de-linked from their sister companies in the subregion. The economies of border communities have been paralysed with consequences for unemployment and poverty. Over 90% of Nigeria’s trade with the west African sub region is by road.
“We export manufactured products as well as agricultural products – detergents, toothpastes, plastic products, steel products, kitchen utensils, grains, ginger, onions, among others. We also undertake many reexports to the sub region. These are sources of livelihood of Nigerians doing legitimate businesses. There are also thousands of transporters who make a living from these legitimate trading activities. These are costs that would run into hundreds of billions of naira. We must weigh the costs and benefits. Most often we do not count the cost of government policy on the citizens and businesses. We should not underestimate the contribution of trade and commerce to the economy of the country. Distributive trade sector accounts for about 15% of the nations GDP, which is estimated at 20 trillion naira. Traders play a major role in the value chain of the real sector activities in the economy. The trade sector is perhaps the largest employer of labor in the Nigerian economy.
“Meanwhile, this is not to diminish the importance of security in the border management process. It is also true that neighboring countries have been sabotaging government efforts to curb smuggling and check insecurity. The government has a duty to manage the situation and deploy appropriate responses. However, we need to fix the structural, institutional and policy shortcomings that perpetuate the phenomenon of smuggling and increases vulnerabilities. And unless we address these shortcomings, it would be difficult to put an end to the problem of smuggling. Some of these shortcomings include: weak institutional capacity to police the country’s vast borders across the country; porosity of nations borders because of the expansive nature of the borders stretching over four thousand kilometers of land borders and 853 kilometers of coastline; failure to deploy technology to manage our borders and international trade processes; weak productivity in the domestic economy which aggravates production and operating costs, thus impacting adversely on domestic prices and competitiveness; high transportation costs and weak domestic connectivity which affects domestic prices.
Others are high poverty incidence which makes majority of citizens crave for cheap products, including food items; high and prohibitive import tariffs which creates daunting compliance and enforcement challenges for the Nigerian customs services and also perpetuates corruption; foreign exchange policy which incentivises imports and penalises domestic production and exports; unsustainable subsidy regime on petroleum products; high transaction costs, high charges, corruption, inadequate equipment at the nation’s ports making the cost of clearing cargo at the ports very prohibitive. All of these are fundamental domestic policy, structural and institutional challenges that we must fix for an enduring solution to be achieved” he said.
