Border closure as a weapon of trade sanctions, negotiations

For many years, many neighbouring countries have thrived on the inability of Nigeria to protect its borders efficiently. The inaction by Nigeria has also led to negative consequences for its local producers. However, the federal government’s sudden decision to close its borders in the form of a drill has raised more concerns than the intended consequences. Just like the United States-Mexico migration deal, Nigeria is pushing the Benin Republic to its knees. With no end in sight, FEMI ADEKOYA writes on how the short-term action may be leading to consequences that will take longer to address.

Last Friday marked the expiration date for the 90-day deal between the United States and Mexico, which agreed to reduce migration flows across the border to avoid U.S. tariffs on its goods.

As part of the deal, Mexico expanded it’s National Guard’s reach at its own southern border as the United States dramatically increased the “Remain in Mexico” program forcing asylum seekers to await their cases in Mexico. The policy appears to be effective: In August, the number of people crossing the border declined, with the U.S. Border Patrol arresting 51,000 migrants—a 30 per cent decrease.

For Nigeria however, its latest exercise code-named, ‘Ex-Swift Response’ and tipped to last for twenty-eight days, is jointly conducted by the customs, immigration, police and other military personnel and coordinated by the Office of the National Security Adviser (NSA).

The exercise, according to some insiders is expected to check Benin Republic’s excesses and lack of will to address its ports being used as transit points for prohibited goods meant for the Nigerian market.

According to a United States Department of Agriculture (USDA) review of the agricultural situation in Benin, “Benin serves as a delivery corridor for West Africa, reaching more than 100 million people in the landlocked countries of Niger, Mali, Burkina Faso, Chad and the Northern states of Nigeria.”

Out of 184 countries importing rice from Thailand, Benin Republic has consistently been the largest, fueling the argument that the country has done great damage to Nigeria’s economy through smuggling.

Benin Republic, with a population of about 12 million people, imports more than what China does, for instance. Data obtained by The Guardian from the Thailand Rice Export Association indicates that Benin Republic has consistently been the largest importer of rice from Thailand from 2017 to May 2019.

To check continued threat to the nation’s food sufficiency agenda, President Muhammadu Buhari said that the Seme border was a major rice smuggling artery which prompted the federal government to decide to shut it down.

Buhari during his meeting with Beninois counterpart, Patrice Talon, at the Seventh Tokyo International Conference for African Development (TICAD7), in Yokohama, Japan, said the border was a major smuggling route for banned items into Nigeria.

While the Federal Government believes that the border closure would help forestall influx of harmful products and smuggling, the exercise has seen Nigerian manufacturers record colossal losses especially those who export a large chunk of their products via land borders.

Some manufacturers who have been short-changed by the impromptu policy have called on the government to open an avenue that would allow genuine indigenous manufacturers operate their export businesses.

With a minimum of five trucks from each of the manufacturers stuck at either side of the border, the operators involved in non-oil export have also lamented the weekly loss of at least $1million from the export business per operator.
Trade abuse as a lingering concern

For many countries in Africa however, there is a concern that though trade flourishes when countries produce what their trading partners are eager to buy, it is not yet the case within the continent, as many countries produce what they do not consume and consume what they do not produce.

Indeed, this has been the case when commodities and goods like rice, textiles, and others, imported into the country via neighbouring countries are put into perspective.

To this end, the ECOWAS Free Trade Area also known as the ECOWAS Trade Liberalisation Scheme (ETLS) was established as a medium for increasing productivity and market access for products originating from the Region’s domestic economy.

The concept was originally intended at benefiting the private sector in particular, and ultimately boosting the West African economy. It was also targeted at reducing the massive importation of goods, which West Africa has been known for. The ETLS’ ultimate goal targets generating employment among the member States of ECOWAS and increase intraregional trade.

Despite its enviable goals, the implementation of the ETLS has however remained shoddy with a high level of malpractices among stakeholders.

The Guardian had earlier reported that some stakeholders in the real sector have allegedly taken undue advantage of the scheme to indulge in sharp practices by importing certain commodities from member states through round-tripping from other countries under ETLS zero duty regime.

Why we are taking this action
At the just concluded yearly general meeting of the Manufacturers Association of Nigeria (MAN), the Controller, Federal Operations Unit (FOU) Zone A Ikeja, Comptroller Mohammed Aliyu lamented that some of the products branded foreign from neighbouring countries were actually Nigerian products.

“Nigerian fruits are taken to Seme, washed and brought back. Go there and see. Try any of the supermarkets today; you would observe that the salad there is finished. MAN has been cheated. As long as these activities at Cotonou continue, Nigeria is going nowhere. This exercise would last for 28 days. After this exercise, the neighbouring nations would know the importance of what is in Nigeria”, he argued.

He observed that although rice import was prohibited via Nigerian land borders, it wasn’t prohibited in Cotonou.

“Tell me one rich man, who can afford 20,000 metric tons of rice or 20,000 Prado jeeps, they are all fronting for Nigerians. The first tramadol seizure we seized came from Benin Republic. Remember that Benin was in the former Dahomey that is under the Oyo empire, it was in Benin that they released 25, 000 ammunition that was heading to Nigeria. How can you call me your neighbour and brother, yet you are sending something to hurt me? The closure at the border is for Nigeria’s good, it is to our advantage.” he said.

Stakeholders raise concerns
The Chairman of MAN Export Group, Chief Ede Dafinone expressed displeasure that the businesses of genuine manufacturers had been stifled by the government’s move to curb the influx of harmful products.

In a chat with The Guardian, ahead of the meeting, Dafinone was concerned that the closure was don without informing manufacturers who were exporting goods to neighbouring countries.

“We have just been informed that the border closure would be for a period of 28 days. We are Nigerians and the MAN Export Group represents Nigerian companies. We are patriots and we will support anything good for the country, however, we have members that depend on export in order to make their profits. We have members whose sole business is to export to neighbouring countries via land borders. So, the closure of these borders for 28 days is going to cripple these companies

“These companies have set up industries, employed people and they have taken loans from banks. Twenty-eight days is a whole month of zero revenue. We cannot afford it. I and my members are fully in support of a prosperous Nigeria. This is not a zero-oil plan. This is not the growth of non-oil export central. I know that Customs is not responsible but manufacturers, exporters are suffering” he added.

The LCCI in its reaction stated that the government ought to be more strategic and tactical in dealing with problems of this nature.

LCCI Director-General, Muda Yusuf said: “The border closure is a simplistic solution to a complicated, broader and multidimensional problem. We should develop the culture of tackling the causes of problems, not fighting the symptoms. This is the way to solve a problem sustainably.

“One of the critical challenges we face as a nation is that of weak state institutions. This is what has manifested in the escalation of the phenomenon of smuggling. It is regrettable that innocent citizens that are struggling to make a living are now being made to pay the price for lapses of ineffectual institutions of the state.

“The truth is that government agencies at our borders have not lived up to their mandates. It is impossible for the scale of smuggling being reported to take place without the connivance of state officials at the borders. The starting point in dealing with this problem is to get the state institutions to do their job.

“Border closure does not offer a sustainable solution. It only penalizes small players in the informal sector. It also disrupts the supply chains and export transactions of many big firms that do business across the sub-region. The cost of this closure to businesses is evidently phenomenal and would be in billions of naira. It also has implications for the confidence of investors as well”.

Yusuf urged the government to strengthen the capacity of state institutions at the borders, by deploying greater use of technology in tackling the problem.

Though the closure is expected to last for 28 days or more, the noticeable effect on the firms directly involved in cross-border flows and all the service industries built around supporting these exchanges might not be realised in the short term.

In addition, the impact would be felt well beyond the border due to integrated supply chains and to the fact that Nigeria remains an important market to various global entities who prefer an effective port system in Benin-Republic to the unimpressive and bureaucratic system in Apapa ports.