In October 2019, Nigeria shut its borders to curtail movement of good. The decision was considered strategic as it was designed to address or curb smuggling activities that had over the years threatened Nigeria’s economy. Indeed, aside curbing smuggling, it was also one of the ways to encourage the production and consumption of locally produced goods in Nigeria.
The government announced “All goods, for now, are banned from being exported or imported through our land borders and that is to ensure we have total control over what comes in,” Hammed Ali, the comptroller–general of the Nigerian Customs Services, hinted journalists in Abuja in October. And as expected, the closure raised several economic issues, as critics predicted price rise and threat to free trade across the region.
Before the final closure in October, the federal government had earlier implemented partial closure of its borders in August to facilitate a joint operation, tagged Swift Response, involving customs, immigration, police and army officers.
Basically, the closure, according to the government, will curb smuggling of rice and illicit exports of cheaper and subsidized petrol from Nigeria to its neighbors. According to the Major Oil Marketers Association of Nigeria, some 10-20% of Nigerian fuel is smuggled abroad, which by extension increases government spending on fuel subsidy.
The development has boosted government revenues as more duties are being collected on the increased volume of goods entering the country legally through the ports. However, the fall in the supply of rice has slightly led to food price inflation, which has impacted on consumers. It has also led to shortages of materials imported from Nigerian in neighboring countries and concerns about the consequences for the liberalization of trade.
Although critics have noted that the closure will result in scarcity of food, especially imported rice and frozen food during the end of year celebration, a period where demands for foods is high, leading to increase in prices. Experts also observed that the closure was directly contravening the protocol on the free movement of goods, services and people established by the Economic community of West Africa States (ECOWAS), to which Nigeria belongs and in which it wields significant political and economic clout.
Record has it that the Nigeria’s unilateral action came two months after it reluctantly signed the African Continental Free Trade Areas (AfCFTA) which aims to remove barriers to trade and promote the free flow of goods, services and people across the continent.
“The border closure is inconsistent with the Nigeria’s multilateral commitments, including ECOWAS and AfCFTA, and is a major disruption to Nigeria’s and the entire region,” observed Ryan Musser, program officer with the Centre for international private Enterprise.
Ryan maintained that the closure policy surely frustrates the momentum of removing trade barriers in the region and across Africa. It undermines the systems agreed to and destroys trust and goodwill
However, the federal authorities said neighboring countries were not doing enough to enforce regional protocols on the transit of goods. The government of President Muhammadu Buhari, which has pursued a range of protectionist economic policies, worried that allowing cheaper imports will undermine efforts to push Nigeria towards self-sufficiency in local production. Since 2015, the central Bank has placed restrictions on the sales of foreign exchange for the importation of 41 products, including rice, palm oil, beef, toothpicks, textiles, tomatoes and cement.
Full closure, authorities thought, will promote local production. But critics argued that demand often surpases domestic production, necessitating a vigorous cross-border trade with Nigeria’s neighbors.
Taking rice, heavily consumed staple in to consideration, domestic production in 2018/19 was just 3.7m tonnes, or about half of the local demand, according to the US Department of Agriculture. Since 2015, the government has provided incentives, including credit and inputs for farmers, but supply is yet to equal demand. Instead, traders cash in on the supply gap to bring rice either officially through the ports or illegally through the land borders.
In late October the Punch newspaper reported that the price for a locally produced 50kg bag of rice rose from N16,000($44) to at least N22,500 in the major market in Lagos.
Who are the major casualties of border closure?
Nigeria’s borders are no doubt porous, allowing traders to smuggle all manner of products and escape excise duties and tariffs. And to reduce fuel smuggling, customs officials took steps to ban the supply of petroleum products to filling stations within 20km of the borders. And these measures are grossly affecting the border communities, businesses and the economies of the neighboring Benin and Niger. In fact, markets in border communities have been shut since the closure of the borders, and the steady flow of motorcycles taxis, trucks and passengers, which keep these areas buzzing reduced drastically.
“We are really suffering here, Steve Owolabi, a resident of Ogun state, located along Idiroko road. According to Owolabi “we used to buy frozen food, rice and other imported goods from importers and resell them to earn a living, but since the government closed the borders, we are suffering because there is no business for us to do. Most of us were selling secondhand clothes, used cars, but as I speak with you, there is nothing coming in from the neighboring countries”
Critics have said that the closure of all borders is not of itself a solution. Residents of communities near the borders with Benin told local newspaper they still buy smuggled rice, even though this comes at a higher price.
Mrs Bunmi Adetayo, a businesswoman who sells secondhand clothing expressed her displeasure, she said “ this border closure is partial because the government is not sincere. People in the North are still smuggling goods(we see them using Okada to cross borders) in to the country, but nobody is talking about it or stopping them. Is the North not part of Nigeria? She asked
And such development was traced to porous borders, which reflect a complete failure on the part of the Nigerian Customs Services to effectively carry out its duties.
Despite the official closure of Nigeria’s land borders, where places like Badagry and people living in the Ogun state axis are feeling the direct impacts of borders closure, as people in those environments no longer have access to smuggled good, Nigerians in the Northwest region of the country are deeply engaged in illicit trans-border trade relying on Okada riders and compromised customs and immigration officers who take bribes to allow passage through illegal routes.
But while the policy on restriction of petroleum supply to border towns is effective, smuggling still continues, investigation reveals in the northwestern borders. The petroleum products were brought from outside the border towns. For Illela, it could be from as far away as Marmona or Gwadabawa.
The okada riders who operate the illegal routes disclosed to a reporter who posed as a smuggler who wanted to take petrol to the Niger Republic – that they could carry up to 12 cans and each would cost N500.
“This is because there are three checkpoints to bribe (Immigration and Customs) officers,” one rider said, speaking Hausa. “We will go through the bush.”
Report has it that Illela Forte Oil retail station has become a hub for illicit movement of petroleum products, using Okada riders to arrange the goods for sale across the border.
In Katsina, where Nigeria also shares border with Niger Republic, the situation is barely different.
Okada riders, stationed about 30 metres to the base of the immigration and customs operatives at Kongolam, about 18 kilometres to President Buhari’s hometown of Daura, would haggle price with clients transporting goods to Niger.
Two Okada riders, Mutari and Shefiu, said they could help smuggle petrol to neighbouring towns through bush paths for N300 per can.
“That is if you have many cans like up to 10,” said Mutari, with Shefiu further explaining that “normally a can is carried for N500 if it’s just one or two.”
“Don’t worry, we’ll settle the officers who would allow us to pass,” Mutari added.
In Niger, the okada riders said, a litre of petrol is sold for N250, much higher than the N143 price in Nigeria. It is this high margin that motivates the smuggling of the products to neighbouring countries.
Meanwhile customs unit leader in Illela, who only identified himself as Mukaila, said the border closure policy was effective. He, however, admitted that smuggling could still be taking place.
“There is no perfection,” he said. If you are lucky, you are free, but if you are caught, it is 21 years in prison.”
Meanwhile, the impact of the petrol restriction policy is not considered significant in the border towns.
Shefiu Mohammed, who sells petroleum products in bottles at Illela, said since the ban in November, he has been selling a litre of petrol at N200. It used to be N150 and N143 at stations.
He said he now sources the products from Gwadabawa, 50 kilometres away, and even farther towns such as Marnona.
However, in other border towns, the petrol supply cut has exposed residents and visitors to exploitation from security operatives and hardship. reports revealed.
Customs Compromised in the Northwest?
Joseph Attah, spokesperson for customs and joint border operations involving other agencies, said customs have not been compromised, but stressed that people involved in smuggling would still devise strategies to beat border security measures despite the closure.
“We can’t even claim 100 per cent effectiveness,” Mr Attah noted “If we have 99 per cent, the remaining 1 per cent can be exploited by smugglers because we are talking about a criminal act and human beings. ”
He blamed sabotage, stating that, “some Nigerians serve as informants to the smugglers. They watch movements of customs and feed smugglers on how to escape from the law enforcement agencies on duty. Unfortunately, these are people whom we are acting for their security and benefit.”
To this end, Nigeria needs to strengthen its borders by increasing the capacity of border agents to do their job well and enforce laws and regulations effectively. And this requires professionalizing staff, creating systems of accountability that discourage corruption among borders officials and pushing for the implementation of a common external tariff among ECOWAS states, Ryan concludes.