Border Closure and Pains of Legitimate Business Owners

Today makes it the 83rd day since August 21, 2019 when Nigerian government shut its border posts in the four geo-political zones of the country.

The action has reverberated throughout the country, rippling through other neighbouring countries, especially Benin Republic, Ghana and Togo.

The closure has had and still having maximum impacts from whatever perspective one may look at it.

Government claimed that the action, which purportedly was to stop smuggling of rice, ammunition and other contrabands across the borders to the country, has begun to yield results.

Hameed Ali, the Customs Comptroller-General claimed that the border closure has increased cargo throughput at the ports as most of the goods that would have otherwise been smuggled are now being diverted through the ports.

This has increased Customs revenue to an unprecedented N5 billion daily, so he claimed.

Ali said since the border closure, Nigeria had made about N3.5 trillion from the seized rice and other contraband.

On the flip side of these outlandish claims by Ali is the untold hardship the closure has foisted on average Nigerians.

Prices of staple foods have skyrocketed, thus compounding the misery of poor Nigerians.

The closure has therefore generated mixed reactions among Nigerians.

While some aligned with government position, others have seen it differently.

For us at nigeriamaritime360.com, the border closure was a prescription to treat the symptoms of a chronic ailment but which cannot lead to its cure.

No doubt, smuggling is a cancerous ailment that has a corrosive effect on the economy.

But we dare say that border closure will only bring temporary relief to the scourge in as much as we do not deal with the root cause of smuggling, especially of rice.

At the risk of sounding monotonous and boring, we want to reiterate our oft-repeated position that what breeds rice smuggling in Nigeria is its high demand compared with its local short supply.

Anybody with the basic knowledge of economic theory of demand and supply will know that Nigeria, with its high population, has a humongous taste for rice consumption which the local capacity can’t meet.

To bridge this gap, people have to resort to foreign supply.

Even when government banned importation of rice through the land borders and slammed higher duties and tariffs on those allowed to come through the ports, without building and enhancing local capacity to meet local consumption, the only attractive alternative is smuggling.

So, with the closure of the borders, government can only temporarily stem the tide of smuggling as long as our local production capacity cannot still meet the rapacious taste of Nigerians for the product.

The scourge can only resurgent with fury after the siege on the borders is over.

So, let government close the border for 100 years, smuggling of rice will still continue as far as Nigerians don’t see local alternatives.

Unfortunately, we are yet to see any serious efforts from government to grow indigenous capacity for rice production, notwithstanding the CBN Anchor Borrowers Programme.

Some apologists may want to make reference to scores of locally produced rice that are not only scarce but with prohibitive cost.

As long as we do not despise the little beginning, the present local capacity is still like a drop in the ocean.

Our argument is that government needs not resort to border closure to discourage rice smuggling, which is still going on, though at a reduced rate.

What is needed to be done is to aggressively pursue the empowerment of indigenous rice millers to meet local production.

Then make the locally produced rice available and easily accessible with reduced prices while the existing policy on rice importation is maintained and strictly enforced.

Gradually, foreign rice will lose its attraction to Nigerians while those who still prefer it will be made to pay heavily for it as it will then become a luxury item.

Until this is done, the border closure will be like water poured on the back of a duck in terms of fighting smuggling of rice.

Having closed the borders, our main concern is that the exercise is stretched too far which may result to unintended consequences effects of which will continue to reverberate long after the action is wound up.

The closure is gradually but steadily incapacitating legitimate trans-border businesses.

The proponents of the policy not only meant to stop smuggling of contraband items into the country, but in the process, wanted to cripple the businesses of Nigerians in the informal sector of the economy who engage in trans-border trade.

Why is border closed against this set of people? Are they part of smugglers of rice and other illicit items which government intends to stop?

Why would the owners of legitimate businesses in the country bear the wrath of government on smugglers?

Ironically, through this policy, government is inadvertently killing the very sector it ought to grow and protect.

Operators in this sector have cried out that their businesses are suffering and most of them may go under due to the unintended consequences of the closure.

The National Union of Chemical Footwear Rubber Leather and Non-Metallic Products Employees (NUCFRLANMPE) said the border closure was threatening over 200,000 jobs in the sector, as many companies are threatening to downsize.

The Nigeria Employers’ Consultative Association (NECA) as well as Lagos Chamber of Commerce and Industry (LCCI) have all expressed reservations over the crushing effects of the policy on legitimate businesses.

Most of these traders have heavily invested in the production of goods that they intend to export under the ECOWAS Trade Liberalisation Scheme (ETLS) but are now stranded due to the border closure.

Unfortunately, most of the owners of these small businesses lack the capacity to export through the ports.

The Northern Textile Traders have also claimed that the textile industry which government is willing to revive to create more jobs, is coming down under the harsh conditions of border closure.

Alhaji Gambo Danpass, one of the textile manufacturers, said the sector may lose an estimated sum of N3 trillion if the closure persists.

“The textile companies like the United Nigeria Textile Ltd (UNTL), Kaduna Textile Mills, Arewa Textile, Gaskiya Textile, Asaba Textile and Lagos Textiles, with several others, are no longer operating and their equipment have gone bad. Where do we get the materials to sell?”.

This shocking revelation of one of the operators in the sector sums up the damage which the border closure has ironically wrought on the industry which government wishes to use to jump start job creation in the country.

We can only wish government will see reason to either review the scope of the policy by loosening the knots that are now strangulating legitimate businesses or end the siege on our borders.

It is unfortunate that President Muhammadu Buhari and his National Security Adviser have left initiatives on this policy to Hameed Ali, the CGC, who now dictates the terms and conditions on the reopening of the border which he has tentatively fixed for January 31st, 2020.

We dare say that the CGC is having a tunnel view of the whole issues of border closure which he has reduced to rice smuggling.

He is unaware or rather immuned to the pains of legitimate business owners whose factories are on the verge of being shut.

He is not mindful of the thousands of jobs that will be lost as a result of this policy.

He probably doesn’t care about the millions of Naira worth of legitimate goods that are trapped either in the warehouses or borders that are now rotting away.

Probably the CGC is not aware that a lot of Nigerians with legitimate businesses who engage in trans-border trade are going bankrupt as a result of this obnoxious policy.

We only hope government will realise that it not advisable to throw away baby with the birth water.