BORDER CLOSURE; CAUSES AND IMPLICATIONS TO THE ECONOMY
It is no longer a news that the Federal Government of Nigeria has directed that its border should be closed from other countries. We can bear witness that this has caused the citizens some distress, it has reduced the purchasing power of individuals as goods in the economy are now expensive.
Has this really affected Nigerians? Will this be for the long or short term? Is this the right decision for the government to make? How will this decision benefit Nigerians?
HOW IT STARTED
President Muhammadu Buhari started this policy in June 2015, weeks after he resumed office as the President, he restricted the importation of rice in order to encourage local production. He did this by providing unfavorable foreign exchange rate to discourage importation.
This actually achieved its purpose as local production increased but brought about an increase in smuggling of goods into the country making this method quite ineffective. Other methods were used but on August, 2019, he declared that the time had come to end rampant smuggling across the Benin border.
He then imposed a partial closure of the borders while short-listing about 45 products from the ECOWAS trade liberalization scheme and created a joint operation involving customs, immigration, police, and army officers on those borders, which it code-named Swift Response. According to the Minister of Information and Culture, Alhaji Lai Mohammed, the decision to close the borders was taken to secure the country which had been confronted by numerous trans-border economic and security challenges from economic and security sabotage.
These challenges range from banditry, kidnapping, smuggling, illegal migrants and proliferation of light weapons, among others. There is also the need to stop theillegal export of subsidized petrol from the country to the neighboring countries.
SHORT TERM OR LONG TERM POLICY?
Many have been wondering when the border closure will come to an end as President Muhammadu Buhari says he has not given any date for the reopening of Nigeria’s land borders. The question remains if this closure will be for a short term or long term. Situations that evolved before and during the border closure suggests that the policy will be for a short while.
Nigeria, being one of the members of the Economic Community of West African States (ECOWAS) and a recent member of the African Continental Free Trade Agreement is binded by the principle of free movement of goods and services. At Nigeria’s default, the nation will loose its good relationship it has with member states, especially if this goes on for a long time. The president however said that the border will remain closed until the situation has improved.
According to him, the reopening of the border depends largely on the “neighboring countries ability to comply with the rules governing cross-border trade”.
IS THERE AN IMPROVEMENT?
In terms of our economy, the border closure has facilitated domestic production of rice. According to the Rice Miller Association of Nigeria, the production and milling of Nigerian rice has enhanced over time and this has provided revenue to businesses and to the federal government.
The Minister of Information and Culture, Alhaji Lai Mohammed, claimed that since the border closure, the country has recorded over 30 percent increase in revenue – with the Customs recording daily revenues of between N5bn and 8bn compared to the N4.5bn it recorded daily before the closure.
The argument here is that the move has boosted government revenues because more duties are being collected on the increased volume of goods entering the country legally through the ports than before and has also helped in the diversification of our economy from an oil dependent economy.
The Minister of Agriculture recently announced that Nigeria will start the importation of rice in the next two years.The president also said consumption of fuel has dropped sharply by 30% since the borders were closed.
In terms of security, Alhaji Lai Mohammed claimed that since the border closures, bandits and terrorists finds it hard to procurearms and ammunition and that there has been a reduction in cases of cattle rustling, kidnapping and armed banditry.
The two main aim of this policy- to encourage domestic production and to reduce the security challenges of the nation has been achieved and this shows that there is an improvement.
SIDE EFECTS OF THE POLICY.
The border closure has some positive impacts to the nation, however, the policy brought some dis-benefits to the citizens. The pursuit of domestic production has brought about hike in the prices of goods, not just rice alone but for most foodstuffs.
The government had an assumption that the rice production in the nation can sustain the whole citizens, even as it is a heavily consumed product. The assumption was based on the fact that incentives in form of credit facilities have been provided for rice farmers by the government.
However, demand is still more than supply and this has caused a hike in prices of goods.
Also, Nigerians export their products to other countries through this closed border and this has limited their sales. The sudden decision made by the government didn’t let the stakeholders brace up for it and left them in economic shock.
It is important to ask if the benefits outweigh the welfare of the citizens. Shouldn’t the government wait till Nigeria is self-sufficient in the production of rice before it adopts this policy.When demand exceeds supply, there would definitely, be an increase in price especially for a highly consumable product like rice.
Before the border closure, many couldn’t afford the basic necessities of life which includes food, with an increase in the price of rice which have affected most food products has left quite a number of Nigerians in poverty. Following the closure of the border, inflation rose to 11.6% year on year which was driven by food prices.
Also, from observation, many have complained about the Nigeria rice; its quality of production is low- easily gets soft when cooked, difficult to wash and has some stones in it. Most businesses have been greatly affected as some can’t export their products, some can’t bring in their goods while some goods have been seized by customs officers. This has led some business owners in frustration as it has greatly affected their sales and revenue.
Looking at the effect on a nation as a whole, the closure of borders will really affect Nigeria relationship with other countries. Benin’s economy is hinged on trade with the Nigeria economy and this border closure had a devastating effect on Benin’s economy.
Also, last week, Ghana shut down over one thousand shops over border closure. The general standard of living will fall as individuals have to suffer the hike in prices in a bit for the government to generate more revenue but of what use is the increased revenue when the cost of living is high?
In conclusion, china is one of the top producers of Rice in the world. it started its production when a visitor came for a one-month tour in the country and provided China with rice seeds. One beautiful thing China did was to go into research to see how viable; how production will meet their own supply and possibly global supply.
They did a thorough research and established a Rice Research Institute. With just seeds given to them by a visitor, they now produce different types of rice and are the top producer of rice in the world. They are also the country with the highest consumption of rice. This is to say that one can never neglect the importance of research.
The Nigerian government has done well in providing credit facilities to local farmers but very little work has been done on research. The local farmers need to be enlightened on how to meet up with the high demand even at a reduced cost using the various technologies availablewhile producing a top quality rice. The Minister of Agriculture said we will soon start the importation of rice.
However, we haven’t solved the local demand problem and nothing is being said about it yet. I believe the government shouldn’t loose focus. In as much revenue generation is key to every nation, thewelfare of the citizens remains paramount.
Written by Oladele Abigail
E-mail: [email protected]
Mobile number: 08163547036
Oladele Abigail, an economics graduate of Bowen University who applies her passion for writing to her career path.
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