By Yemi Olakitan
The Federal Government of Nigeria, not too long ago,
closed her border with the Benin Republic in an effort to stop rice smuggling from
that country. It later closed land
borders to the movement of all goods from the Benin Republic, Niger and Cameroon. Nigeria’s decision to close her borders with
these countries has effectively nosedived trade flows with her neighbours. This
decision negates the position of various
advocates of African trade integration, who feel that African nations have a lot
to benefit economically from mutual
border opening and free trade. AN24 looks at the implications of this
development not only to Nigeria but to the African continent as a whole.
This is not the first time Nigeria has closed her
borders but this time Nigeria’s actions raised serious concerns on the
prospects of regional integration and the development of Free Trade in Africa. The
decision to close Nigeria’s border was made just three months after Nigeria had
signed the African Continental Trade Agreement with 55 member countries and a
combined GDP of $2.4 Trillion with a total population of about a 1.2billion. This
agreement will create the world’s largest free trade centre and promote
intra-Africa trade which today is terribly low at 16%.
This border closure has serious implications for
Africa as a whole. Nigeria is a major leader in Africa, reputed to be the most
populous black African nation in the world. When Nigeria sneezes the world
notices it. Now, restricting trade flows so shortly after a momentous fit is
achieved is a major blow to integration efforts in the African continent. It is difficult to see how Intra Africa trade
can increase to 60% by 2022 as projected when it is being undermined from the
beginning. It sends solid signals about
the unpreparedness of African nations to bilateral trades considering the
posture and position of Nigeria.
In a chat with Chief
Bayo Ogunmupe, Economist and social commentator, he said, the border closure is
bad news for the African continent especially her neighbouring countries.
According to him, Ghana, Togo, Benin Republic and Cameroon are currently
battling with their economies as a result of Nigeria’s border closure. He opined that it is however good for Nigeria
to close her border for a time, only for a time, so as to allow her to develop her
own resources, both agricultural and manufacturing.
‘‘This will put
Nigeria in a better bargaining position, economically with other countries. So
that they will buy from Nigeria just as Nigeria buys from them, our country
will stop being a dumping ground for every nation. These countries were feeding
off Nigeria before the border closure. Nigeria must learn from other developed
countries such as Japan and China who worked similar paths in the past. It
will give Nigeria the needed time to diversify her economy and deliver herself
from over-dependence on crude oil.
Nigeria needs to do this for her own good.’’ he said.
AN24 asked Chief
Ogunmupe whether this will not hinder the African Continental Trade Agreement
of which Nigeria is a signatory. He said, ‘it will not, because eventually
Nigeria will open up its borders. This closure is only a temporary measure to
enable Nigeria to develop her capacities to produce her other exportable products
apart from oil. You can imagine if all we have to export is crude oil and other
nations can bring all kinds of products to Nigeria. That is not good for us,’’
he said.
However, reports do
not support Chief Ogunmupe’s arguments to some degree as Africa accounts for
only 13% of Nigeria’s exports and 4% of Nigeria’s imports. These statistics show that Nigeria’s major imports
are not from neighbouring African counties and it proves that Africa is a
dispensable market to Nigeria.
The economy of Nigeria
declined in 2015 and further contracted by 1.6% in 2016 due to a global drop in
the price of crude oil in 2014. Foreign
investments also dropped by 55% and a shortage in foreign exchange have made
matters worse. Nigeria depends on crude
oil for 90% of her exports and foreign exchange earnings; neglecting other
sectors such as cocoa, groundnut, timber etc which have contributed to her economy in the past.
Since the late 1960s
Nigeria has neglected its agricultural sector which has contributed to the
recent oil crisis in the country caused by the global fall in crude oil prices.
Although the country has decided to focus more on agriculture, it seems
however that some things cannot be rushed; they take time and to develop.
Nigeria plans to
deepen investments in agriculture and increase the sector’s contribution to
economic growth in the country from a mere 5% in 2017 to 8.4 % by 2020. The aim
is to develop local agriculture and save money on food imports which are slated
at $22billion a year. It is this line of
reasoning that necessitated the border closure; the government wants to save
local farmers from cheap imported food. The result is that Nigerian farmers are
happy but the consumers are crying as local production cannot meet the demand.
For example, in 2017, the demand for rice reached 6.7 million tons, doubled the
3.7 million tons produced locally. The price of a bag of rice is now N22, 000
naira.
Furthermore, the problem of subsidized
petroleum being smuggled out of Nigeria and sold in neighbouring countries is a
big issue in the border closure discussion. The difference in prices makes it lucrative to
smuggle fuel from Nigeria to other neighbouring African countries. Fuel
smuggling means that public funds are used to subsidize fuel in other countries
aside from Nigeria. Since the border closure
fuel sales and delivery have dropped significantly in Nigeria. This means that
fuel demand is high in Nigeria because it was being bought and smuggled out to
other countries. A positive argument for
Nigeria’s border closure.
Nigeria border closure
shows that African countries have different economic problems and therefore
require different solutions and strategies to solving these problems. The huge
number of African countries within the free trade agreements is going to make
the implementation of the agreement more difficult than expected.
While Free trade has
enormous benefits for all the countries involved, regional organizations such
as African Union, AU, ECOWAS need to come up with strategies to solving these problems as they may
kill the idea of free trade before it even begins.
No one can blame Nigeria
for desiring to protect her borders if she feels that its opening does not
guarantee her economic prosperity. The
closure may be the first of its kind since the free trade agreements were
signed. There are fears that many other African countries may follow the
example of Nigeria; after all, she is the giant of Africa. It could also reduce
other countries’ commitment to economic integration in Africa.
Experts agree that the
border closure issue may be beneficial to Nigeria but it is bad news to her
neighbours. It may also be good news to her only for a time since the free
trade agreements have far-reaching benefits for all concerned. The closure should also be settled as soon as
possible since it is diverting attention from matters that can promote free
trade especially from other areas of mutual economic benefits to the continent
such as infrastructure, trade data capture and border protection.
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