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Counting border closure’s cost - THE NATION

OCTOBER 21, 2019

By Muyiwa Lucas

Mixed reactions have continued to greet the closure of the nation’s borders. While some say it is part of efforts to save the economy from collapse, others say it is an assault on the economy and disregard for the ECOWAS Trade Protocol, MUYIWA LUCAS reports.

For over 15 years, Moussa Qasim, a Beninoise, has been taking advantage of the trade liberalisation policy of the Economic Community of West African States (ECOWAS).

The ECOWAS Trade Liberalisation Scheme (ETLS) adopted in 1979 had opened the way for him to grow his business considerably, given the freedom of movement he enjoys among the countries. And for him, his main marketplace is Nigeria, which he says, takes up over 90 per cent of his products, ranging from agricultural, artisanal handicrafts and unprocessed products, including industrial products. In return, Qasim takes back to his country beverages, and some food items believed to be easily affordable here and more profitable in Benin Republic.

From this cross-border trading, Qasim is able to cater for his family needs, including paying for one of his children’s tertiary education in Europe. But the tide is changing. Since middle of August, when the Federal Government closed the country’s borders across four of the six geo-political zones, business has not been the same for not only for Qasim, but also for several other traders across the sub region.

 

From comercial motor cyclists, transporters, bureau de change operators, to cross-border traders, the story is the same: biting economy. There are fears that if the border  closure continues, the  Bennoise, Nigeriens and Chadians’ businesses may crumble.

ECOWAS-ETLS

The ETLS is a trade instrument designed by the Regional Economic Community. Article (3) of the Revised Treaty of ECOWAS stipulates the removal of trade barriers and harmonisation of trade policies for the establishment of a Free Trade Area, a customs union, a common market and an eventual culmination into a monetary and economic union in West Africa.

The ECOWAS-ETLS is the main framework for trade and market integration in ECOWAS as it addresses protocols on the free movement of goods, persons and transportation. The ETLS main pursuit of consolidating the free trade area is guided by the National Approval Committees that informs the member states. It is for this reason that the ECOWAS implemented a Customs and Connectivity programme to simplify the movement of goods in the region. The ECOWAS Common External Tariff has thus been operational since 2015. Moreover, member states are increasingly implementing the ECOWAS Single Customs Declaration Form for their customs administrations.

For all products covered under the ETLS, they are granted with concessions like no quantitative restrictions, total exemption from import duties and taxes, non-payment of compensation for loss of revenue for items (i) and (ii) as a result of their importation.

To qualify for admission into the ETLS, such products must originate from the ECOWAS region. The following are the three criteria for admission of products into the scheme: at least 60 percent local content of products, at least 30 percent value addition for products.

The abuse

The ECOWAS-ETLS may have been abused by the country’s neighbours – hence the decision to keep the borders shut. For instance, a top government official in the Seme-Krake border told this reporter that Benin Republic, especially, has been abusing the ETLS’ provosions.

The official, who pleaded anonymity, explained that it is a common practice for importers to bring in goods from Europe, load same back into trucks onward to Nigeria. Such consignment, he explained, are then left to enter under the provisions of the ETLS since there was no way to say they were imported.

Besides, the several cries and warnings of the Federal Government were said to have fallen on deaf ears of the government of the neighbouring country of Benin Republic. But the reluctance of the Franco-phone country can be understood.

Under its rice fortification policy, four multi-national companies and about 30 other smaller importers, including individuals, were said to have been given approval to import foreign parboiled and white rice into the country through Benin Terminal, Cotonou, and Bollore seaport- Benin Republic’s two seaports. The white rice, according to sources, are consumed  within the country while the foreign parboiled rice are exported to Niger and Chad, which in turn, are smuggled into the Nigerian market through the north and southern parts.

The Value News, an online publication,  claimed that it obtained a document showing that African Agro Foods, one of the companies owned by Pan Lebanes Group, has a mandate to ship into Benin Republic 360,000 MT, or 30 percent of the annual  parboiled rice imports; Diefezi Fils Sarl, 300,000 MT; Sonam, a company floated by the Stallion Group based in Dubai, Quatar, having the Presidential nod to import 240,000MT or 20 percent of the total  parboiled rice needed in the country. These are eventually exported to land locked countries or smuggled  into Nigeria.

It further claimed that another Dubai based company, ABC Enterprises, due to its limited financial muscle was said to have been given approval to ship into that country 10,000 MT yearly. This is in addition to 29,000 MT, or 24 percent, allegedly approved for the other group of rice importers through the two seaports in the country. These, it is believed, accounts for why the tiny sub-regional country is flooded with rice. And with a small population incapable of consuming the volume of imports, Nigeria became her ready market.

Qasim, though unable to put a figure to the volume of rice import, nonetheless, revealed that in Benin, the warehouses are filled to the brim with rice, including vessels on its waters loaded with the commodity, but no patronage arising from the border closure. The smaller shops along the Cotonou road and the ones at Seme-Krake Joint Border  between Nigeria and Republic of Benin, were also said to have been filled up waiting for Nigerian buyers, who were nowhere to be seen close the border. Although there are no official cost to goods tied down at the Seme-Krake border, experts said it is not less than N750 million.

Experts and stakeholders blamed Benin Republic for allowing countries like Taiwan to dump foreign parboiled rice in their country and then re-bag such products and smuggle them into Nigeria, taking advantage of the ECOWAS protocol, which allows access to free trade within the sub region.

 

Last year, Nigeria’s former Minister of State for Agriculture and Rural Development, Heineken Lokpobiri, blamed rice smuggling on ECOWAS-ETLS protocol on free trade. He was unequivocal that the nation’s fight against the smuggling of foreign rice has been frustrated by her neighbours, particularly Benin Republic. He said the country spent up about $5 million for the importation of rice daily, but that through new policy programmes by the ministry and the intervention of partners like IFAD, the figure had reduced drastically.

Such policies like the Anchor Borrowers Programme and Nigerians answering the clarion call of this administration to go back to the farms to produce what her people will eat and eat what she produces, has made the country to be rated as the highest producer of rice and cassava in Africa. Sadly, it is believed that Benin Republic has undermined these policies through being a conduit for smuggling into Nigeria.

Long plan

But the plans to stop this economic haemorrhage had been long thought of. Weeks later, Nigeria’s former Minister of Agriculture, Audu Ogbeh, hinted of the Federal Government’s plan to shut the land border between Nigeria and a ‘neigbouring country’ to avoid smuggling of foreign rice into the country. He had explained that doing so had become necessary to encourage local production and sustain the economy of the country.  He said this also denies Benin citizens the opportunity to grow rice and benefit from the Nigerian market.

“We have engaged the government of Benin Republic, up to the presidential level. The (Nigerian) president had to invite the president of Benin Republic to engage him because we are neighbours; let’s see how we can work together and curb this issue of smuggling,” Ogbeh had said back then.

Benin Republic groans

The effect of the border closure has taken a heavy toll on the Beninoise economy, including economies of other West African countries. One of the very visible effect is the further crashing of the CFA- the currency of the Franco-Phone West African countries, against the naira. Before this period, N1,000, which exchanged for CFA 1500 before the border closure now, exchanges at CFA1650 to N1000 in Benin Republic.

The Premium Motor Spirit (PMS), otherwise known as petrol, sourced through smuggling across Nigerian  borders with the Franco-phone West African nation, now sells at CFA500 (N302) per litre. This same product sold at CFA 300 (N181) just before the closure.

Qasim said life in Cotonou is getting tougher daily, considering that all business houses related to doing business with Nigeria closed. For now, most warehouses in Cotonu are filled and overflowing with goods mainly rice and frozen food, meant for Nigeria.

 

A look across the Seme-Krake border revealed the several hundreds of trucks parked at the borders, loaded with goods destined to Nigeria, but they have not been able to cross the border to Nigeria. Findings revealed that most of the trucks trapped at the border contain goods that fall under the acceptable category of goods in the ETLS agreement.

“Generally, business is very dull – the closure has affected all ECOWAS countries. Most Benin warehouses are filled up with rice and frozen chicken. Generally, business is very dull in Benin Republic because most businesses are patronised by Nigerians-across the border and inside the country,” he said.

He warned that should the Nigerian government continue with the operation for up to six months, the economies of most West African countries will collapse as most of them depend on smuggling of foreign goods.

Niger’s sucker punch

For the Beninoise President, Patrick Talon, these may not be the best of times. Four weeks ago, his country’s economy, which is heavily dependent on rice import, received a deadly blow.

Determined to persuade the Nigerian government to reopen the borders, the Republic of Niger President, Issoufou Mahammadou, bows to pressure  from both official and unofficial quarters  to ban the export of foreign rice from Republic of Benin to the country.

Issoufu, it is believed, may have taken the decision, as demanded by Nigeria’s President Muhammadu Buhari, to stop the smuggling of foreign parboiled rice into the through the northern frontiers. Nigeria and Niger share common borders in the north west geo-political region comprising Kano, Jigawa, Kano, Katsina, Sokoto, Zamfara and Kebbi states.

Since June 2015, rice imports in Benin Republic had soared, when the Central Bank of Nigerian (CBN), under Godwin Emefiele   created a list  of 41 products, which were later increased to 44 with the addition of textiles  for which importers  do not have access  to discounted foreign exchange.

Fruitfulness

For now, the closure seem to have been a fruitful initiative. The Comptroller-General of the Nigerian Customs Service (NCS), Hameed Ali, said: “When we closed the border, my fear was that our revenue was going to drop. To be honest, our revenue kept increasing. There was a day in September that we collected N9.2 billion in one day. It has never happened before.

“This is after the closure of the border and since then, we have maintained an average of about N4.7 billion to N5.8 billion on a daily basis, which is far more than we used to collect.

“What we have discovered is that most of those cargoes that used to go to Benin (Republic) and are then smuggled into Nigeria now come to us.

“Now that we have closed the border, they are forced to bring their goods to either Apapa or Tin Can Island and we have to collect duty on them.

“If that (border closure) would continue, to us, it is a welcome situation. Our revenue has not reduced. As a matter of fact, it is increasing as a result of the closure of the border.

“About 10.2million litres of fuel have been cut down from what we assume, we have been consuming,” Ali prided.

Yet, commendations has continued to trail the closure. For instance, the President of National Council of Managing Directors of Licensed Customs Agents (NCMDLCA), Mr. Lucky Amiwero, is of the opinion that while the border closure is against international treaties and protocols Nigeria entered into willingly, but the action has so far proved to be the most potent approach to tackling the several years of massive smuggling of goods from Nigeria’s neighbouring countries into Nigeria and smuggling of Nigerian fuel to those countries.

Amiwero, who noted that smuggling has been a major challenge to the Nigerian economy, submits that: “if this operation is sustained till at least the end of the year, the Nigerian economy will feel the impact in a very positive way while the West African countries which over the years depended on allowing their countries to be smuggling routes in and out Nigeria will be forced to re-strategise on ways to ensure the survival of their economies,” he said.

According to him, there is no need to lose sleep over the hundreds of trucks of ETLS goods trapped at the borders because those goods attract just one per cent duty payment to the Federal Government, and therefore do not constitute any major economic loss to the country. “Most of those goods are ETLS goods, but in reality are not produced in those West Africa countries purportedly exporting them to Nigeria. They just gather the goods from different parts of the world, repackage and re-export to Nigeria as ETLS goods. That in itself is smuggling,” he said.

For him, the closure is a blessing to the Nigerian ports in disguise. “If the operation is sustained, most of the people importing goods they want sell in Nigeria, but had been patronising Benin and Togo ports will have no other option than to start to route their import to the Nigerian seaports. They don’t have option; their market is here,” he said.

No retreat, no surrender

The National Security Adviser (NSA), Maj.-Gen. Mohammed Babagana Monguno (rtd), has also hinted that the closure would not end soon.

The exercise, tagged: ‘Exercise ‘Swift Response’, he said, therefore, would be in place “until the neighbouring countries can ensure that their countries will no longer serve as transit routes for smuggling of goods into and or destination of smuggled Nigerian fuel’’.

“There is no going back on the border closure  with  the  neighbouring  Republic of Benin and Niger. The countries share boundaries with Nigeria in the north west, north central, southwest and south-south geo-political regions till the  countries bow to government demand to stop  smugglers from using their countries as base to turn Nigeria  into  a dumping ground for prohibited goods, particular , foreign parboiled rice from the Asian country of Thailand. Harmful products, mall and light arms including foreign rice were smuggled into the country through unapproved routes  from the north and  southern part of the country,” he added.

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