Border Closure won’t sell Nigeria’s Agricultural Produce
By: Akinyemi, Muhammed Adedeji
In August 2019, President Buhari ordered the partial closure of Nigeria’s land borders to prevent smuggling and grow the Nigerian economy through local production. This model, according to Comptroller General of the Nigerian Customs Service –Col. Hammed Ali (rtd)– was used by China to elevate her economy for 40 years successfully. This statement is not a fact; neither is it sustainable and, if left unchecked, will spell doom for Nigeria’s agricultural sector.
What this means for local traders and consumers
According to Eustace Iyayi, the Registrar and Chief Executive Officer of the Nigeria Institute of Animal Science (NIAS), “Before the border closure, the poultry industry in the livestock sub-sector was badly hit. Nigeria consumed about two million tonnes of poultry meat annually, 70 per cent of which was imported.” Eustace noted that Nigeria’s poultry sector has been able to save N50 Billion ($137 million) since the border closure.
But the song is different for rice farmers who are the primary target of the policy. According to the US Department of Agriculture, Nigeria is currently producing 3.7 million tonnes of Rice annually, even though the country needs 7 million tonnes. Local farmers have been beneficiaries of local and international aids to boost production, and there is still a large deficit that is yet to be met by the country. But it is not just the availability of financial aids or low-interest loans that pushes the sector; it also needs infrastructural growth to thrive.
In an interview with BBC, Suwe Bah, a Rice farmer, aptly explains that “the milling machine works well and we produce up to 50 bags of Rice per day, except for days when there are power outages. We still can’t mill enough bags brought in by farmers…” Production of Rice is also as important as processing the produce. According to the Spectator Index, Nigeria can be named the second-worst country in the world by the power supply, delivering barely 6000 MW, whereas the country needs at least 12,000 MW. These challenges hinder Nigeria’s Rice processing and portend a risk for rising food insecurity in the country.
Consumers of Rice –basically, every Nigerian household– have groaned at the increment in the price of Rice by almost 100%. A 50-kilo (110-pound) bag now sells between N20,000 ($55) — N30,000 ($82) from N13,000, which is the estimated monthly income of over 87 million Nigerians living in extreme poverty. A kilogram of Chicken used to sell for N1,00 but has recorded a 50% increment to N1,500. The annual inflation rate also increased to 11.24%, as food inflation rate rose to 13.51%.
These are pointers to how unsustainable the closed-door border system is for Nigeria. As the model continues to be a clog for economic advancement locally, there is even more trouble abroad.
Effects on the regional and continental economy
Barely two months after reluctantly signing the African Continental Free Trade Area (AfCFTA), Nigeria announced its border closure policy. The AfCFTA is a continental agreement that will cover a market of 1.2 billion people and a gross domestic product (GDP) of $2.5 trillion across all 55 member states of the African Union. In terms of numbers of participating countries, AfCFTA will be the world’s largest free trade area since the formation of the World Trade Organization. Closing Nigeria’s borders after signing the AfCFTA will take effect fully from July 2020 will smear Nigeria’s trans-national alliance, especially with neighbouring countries like Benin, which has suffered massively from the border closure.
The closure is also inconsistent with Nigeria’s 44-year commitment to the Economic Community of West African States. It violates the ECOWAS protocol, which promotes “liberalization of trade by abolition, among member states, of customs duties levied on imports and exports, and the abolition, among member states, of non-tariff barriers to establishing a free trade area.”
Nigeria’s protectionist policy doesn’t work only in one direction; the closure also affects exports from Nigeria to other countries. FSDH Merchant Bank in a report revealed that some textile firms in the northern city of Kano had closed shop because they cannot export to clients across the border with Niger.
What Nigeria should do instead
Smuggling has been the primary motivation for Nigeria’s closed-door policy to build a sustainable agricultural sector. Closing the borders may reduce theft, but will not stop it; this will only encourage more smuggling from consumers and traders who are unable to keep up with the price hike and food insecurity. Nigeria should work with regional Governments sharing its border to redefine border security towards enhancing effective bilateral relations. The AfCFTA also has provisions to tackle smuggling activities across the continent, and this will be beneficial to all signatories.
Nigeria should reduce tariffs on goods shipped by air or sea from neighbouring countries to encourage more legitimate importation. The constant increment will discourage foreign traders and will force other governments to increase their importation tariffs for goods coming from Nigeria.
Nigeria’s infrastructural deficit continues to hinder local production and should be tended to, for Nigeria to reach its domestic food production need, and promote to being net exporters.
If Nigeria must sustain a business model fashioned towards location production, it must consider a wide range of options asides closing its borders for foreign exchanges.
Akinyemi, Muhammed Adedeji is a Nigerian journalist, Op-Ed writer, and graduate of Law, with interests in Governance, Education, and Economy. He tweets @theprincelyx.
