Manufacturers offer mixed reactions to continued border closure

Mixed reactions have continued to trail the sustained closure of the nation’s land borders, especially among operators in the manufacturing sector, with some supporting the move and others kicking against the decision.

According to insiders, while some group of manufacturers that produce locally and export to neighbouring countries strategise to explore the sea link, other operators who produce in neighbouring countries and bring to Nigeria under the ECOWAS Trade Liberalisation Scheme (ETLS) will be forced to revive their operations locally.

The Guardian had in the past, reported the exodus of some companies to ECOWAS countries like Ghana due to the harsh operating environment in Nigeria, especially as it relates to access to infrastructure like roads and power.

To those operating locally, the concerns stem from the fact that many of such manufacturers produce in neighbouring countries and label them made-in-Nigeria while bringing them through the borders, therefore giving them undue advantage and also making it difficult for competing brands to operate effectively.

The Chairman, MAN Export Promotion Group (MANEG), Ede Dafinone, told The Guardian earlier that operators in the local market were experiencing difficulty in exporting their products to neighbouring markets, as well as having their warehouses filled with unsold inventory.

“There are companies in all sorts of dire problems. Some companies that manufacture here, have 100 per cent of their products designed for exports. How are they going to survive 2 months of border closure? They will make significant losses and the business would collapse. They will still pay interest on loans, pay their staff for this period when they are not selling anything.”

“The best alternative means is the sea link that has been mentioned over the years, but that ship going across the coast is yet to be launched and we are waiting for that as an alternative, but even at that, it is still expensive, but going forward, it is the only alternative,” he added.

Specifically, the Lagos Chamber of Commerce and Industry (LCCI) stated that while some gains and benefits have been recorded due to border closure, losses in terms of job loss, rising inflation and declining rate of legitimate export within the sub-region remain a source of concern.

“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 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 labour in the Nigerian economy”, the LCCI stated in its comments shared by its Director-General, Muda Yusuf.

To address the underlying issues fuelling smuggling, the LCCI advocated the need to fix the structural, institutional and policy shortcomings that perpetuate the phenomenon of smuggling and increases vulnerabilities.