The Lagos Chamber of Industry and Industry (LCCI) has described the current closure of Nigerian land borders as coming with attendant benefits and costs, the latter which require urgent measures to be addressed by the government.
The Director General of the organized private sector group, Mr. Muda Yusuf, on Tuesday stated that reports on the two-month old measure indicated that it had led to a drastic reduction in smuggling of rice, poultry products and sugar while the smuggling of petroleum products outside the country to neighboring countries has also declined considerably.
Despite the positive side of the government’s action, the industrialist said that it was important to reckon with the costs, supply chain disruptions and loses that businesses and individuals have suffered as a result of the closure.
According to him, the closed borders has turned many corporates, large number of informal sector players and individuals doing legitimate businesses across the borders into innocent casualties even in the face of the good intention of the government.
He clarified: “As we celebrate the benefits, we should also count the costs. Jobs have been lost, prices have skyrocketed, legitimate exports to the sub-region 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 sub-region.
“The economies of border communities have been paralyzed 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 re-exports 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”, the LCCI boss added.
Yusuf pointed out that all the above points were not raised to diminish the importance of security in the border management process as it is true that neighboring countries have been sabotaging government efforts to curb smuggling and check insecurity.
While restating the duty of the government to manage the situation and deploy appropriate responses, he however canvassed the need to fix the structural, institutional and policy shortcomings that perpetuate the phenomenon of smuggling and increases vulnerabilities in order to achieve the overall objectives of the measure.
Specifically, he listed some of the shortcomings of the land border closure which must be urgently addressed by government as including weak institutional capacity to policy the country’s vast borders; porosity of the borders, failure to deploy technology to manage the nation’s borders and international trade processes and weak productivity in the domestic economy which aggravates production and operating costs.
Others are, high transportation costs and weak domestic connectivity which affects domestic prices, high poverty incidence which makes majority of citizens crave for cheap products, including food items, prohibitive import tariffs which creates daunting compliance and enforcement challenges for the Nigerian customs services and also perpetuates corruption and foreign exchange policy which incentivizes imports and penalizes domestic production and exports.
The Director General also identified the unsustainable subsidy regime on petroleum products and high transaction costs, high charges, corruption, inadequate equipment at the nation’s ports making the cost of clearing cargo at the ports very prohibitive as other shortcomings of the border closure that must be fixed to have an enduring solution to the smuggling problems.
