Nigeria Border Closure: Winning Customs Revenue Battle But Losing War of Regional Exports Dominance

As the days go by, the Nigerian closed borders are yielding in increment different results. The Nigerian Customs Service (NCS) claims it is generating more revenue as a result of the closed borders, and there have been drastic decrease in arms smuggling among other things. There has also been an increase in rice production and local producers are selling more than ever before. To the people on this side of the story, the border should remain closed indefinitely; after all, it’s tripled the revenue generation of the NCS and encouraged local production of food items.

The argument sounds genial until you listen to some other producers in Nigeria who need to cross the borders in order to sell their products. Some of them are sending SOS to the government to open the borders because they are close to going out of business.

In a chat with Vanguard, exporters whose markets are within the West African coastline counted their losses and the gloomy future ahead of them if the borders are not open as soon as possible.

The CEO of Multi-mix Academy, an export focused institution, Dr. Obiora Madu said the situation is crippling the export business within the Ecowas region. He also said that the speed of export activities has been so slow, owing to the fact that a lot of thorough inspections now take place before cargo could leave for their destinations.

“It is definitely impacting negatively on the economy as the exports done within the Ecowas region and our neighboring countries are now in decrease. These countries that benefit from the open border, since we have closed it, even though we used to export to them before, you don’t expect to get the level of cooperation that we are getting before because they are hit hard by these closed borders.

“The fact is that it definitely has impact on volume, it will also impact on speed and it will not be as swift as it used to be because of scrutiny,” he said.

Another export executive who voiced his concern is Ofon Udofia, the CEO, Institute of Export Operations and Management (IEOM). He said Nigeria is losing more than it’s gaining since most of the country’s products have West African nations as sales destinations.

“It is a big problem. We are losing money because when we talk about exporting goods, we are not only talking about exporting it to countries in Asia, Europe or America. We are also talking about exports taking place within the West African sub-region.

“We in the private sector are victims of this border closure. Take a look at companies like Unilever, they supply goods to other countries through Nigeria and for many years, they make use of the land borders. We have lost a lot of money because of this. Even Dangote who exports cement to Benin Republic has lost a lot,” he said.

The alternative to exportation using land borders have been airline cargoes or shipping, depending on their volume. The most practical considering the weight of the goods being exported is shipping. Udofia argued that shipping is not yet a viable means of transporting goods from Nigeria through West African waters because currently, Nigeria doesn’t have any vessel that ply the routes.

He also noted that in the absence of Nigerian owned ships, the international shipping lines will have the opportunity to increase their shipping fares, and that will result in high cost of goods and services.

“Even when they say we can make use of the sea, do we have vessels? We don’t have vessels plying the West Coast or even a vessel that can carry the volume of what we are exporting.

“Even Maerskline Shipping Company, MSC, or any other international shipping line that will pick products from Nigeria and take it to these West African countries must charge extra fees.

“This is because we don’t have any shipping line. Which flag are we flying, we are just deceiving ourselves. When they said that we should use inland waterways for export, we are still negotiating on how we can partner with shipping lines and the ship is already in Nigerian waters, but we have to pay five percent duty of the cost of that vessel before it comes.

“This is not what you do overnight because we are unprepared. Shipping is not like going to a market to buy a trailer, it goes beyond that. We are talking about shipping line that will be going across West and Central which we don’t have, and its possibility is still in question,” he concluded.

The plights of exporters go beyond transportation. The closed borders have generated trade apathy toward made in Nigerian goods and services. Two weeks ago, a Ghanaian news outlet, my joyonline reported that Ghanaians are shutting shops belonging to Nigerians in anger over the closed borders.

With the African Continental Free Trade Area (AfCFTA) set to go into play in July 2020, the border closure is setting an antitrust precedent between Nigeria and other African countries. The Nigerian government seems adamant, and to other African countries, it appears like a foretaste of what is to come. The Nigerian government’s insistence to keep the borders closed is as a result of smuggling activities that have resulted in inflow of substandard goods into the country among other things.

The federal government of Nigeria has vowed to keep the borders shut until the neighboring nations find a solution to the problem. However, experts believe that smuggling activities owing to porous borders is evidence of weak customs, and cannot be solved by closing the borders.

The president of the African Export-Import Bank, Prof. Benedict Oramah, has urged Nigeria and other African countries to deploy technology in their fight against smuggling. He also expressed confidence that Nigeria will not renege on AfCFTA since it is the key to the development that the continent needs.

“Africa consists of 55 fragmented markets. AfCFTA will create one market one market in Africa. Unless we turn it to one market, the continent will remain underdeveloped,” he said.

Nigeria is encouraging local production of goods and services it has been known for importing, in view to export them in the near future. The steps the country has taken with the border closure seems more like shooting yourself in the leg when you have a thousand miles to walk.