The Impact of Nigeria’s Border Closure on its Economy
The mandate of any nation’s customs and border control agencies is to allow licit and legal free trades, and halt illicit and illegal trades. Illicit and illegal trades involve the movement of various types of commodities and services that usually lead to the creation of numerous black markets which have been known to slowly but gradually cripple economies.
Many times in the past, Nigeria usually closed its borders because of one form of illicit trade or another. However, border closure has often led to inefficient operations within licit and legal supply chains, thus increasing costs and time delays, disrupting deliveries, and interrupting the smooth ﬂow of goods and services.
Once again, and recently in August, 2019, Nigeria—which shares boundaries with the republics of Benin, Niger, and Cameroon—closed its land border to the movement of goods. The government declared that it did so in order to halt smuggling of food and weapons into the country, especially from Benin republic.
In many instances, regardless of the situation at hand, most countries don’t often close their borders to the free trade of goods and services. Rather, they close their borders whenever their security is in jeopardy. Examples of countries that have closed their borders in the past in order to enhance national security, include: Eritrea, Kenya, Sudan, and Rwanda—amongst others.
During other circumstances, some countries usually close their borders in order to control or stop the spread of diseases (such as Ebola) that have the potential to travel across borders. It is recommendable to close borders in order to put a halt to arm smuggling; on the other hand, when borders are closed, food becomes scarcer, and inflation ensues, thereby harming the economy and citizens.
As reported in many news outlets, the current president of Nigeria, Muhammadu Buhari, ordered the most recent border closure with one main aim: to curb smuggling of rice (a staple food in Nigeria) from Benin and Niger into Nigeria—Africa’s most populous nation.
According to the government, the most recent and worrying problems that lead to another border closure included the smuggling of rice, and the illicit exportation of cheap subsidized petrol from Nigeria to its neighboring countries. In fact, according to most oil marketers in Nigeria, between 10% and 20% of Nigerian fuel is usually smuggled abroad.
The current Nigeria government, which has been strengthening its economic policies, believes that if it continues allowing importation of cheaper goods, it would be difficult for the country to increase local production and become a self-sufficient nation. Authorities reason that border closure will promote local production; on the other hand, critics argue that when demand exceeds domestic production, the country would have no better option than to fully engage in cross-border trade with neighboring countries.
The truth is that the government cannot always control demand which usually increases due to the increasing number of births and mouths that have to be fed on a daily basis. Since Nigeria doesn’t always have the local capacity to produce enough rice to meet up with the populace’s demand, any attempt to close the border and halt importation could lead to more smuggling, and increase in the price of goods for local consumers.
Any person who can recall the cases of corruption which Nigeria has experienced, would tend to believe that the smuggling of fuel and goods should be blamed on the country’s personnel who have been in charge of securing Nigeria’s borders. The sad fact is that the country’s poor citizens—who are far much more in number than the rich—are the ones who usually suffer when government personnel at the borders receive bribes and allow smuggling to take place to such an extent that the government has no better option than to close its borders.
Although it is quite true that, like all other governments, the Nigeria government has the right to close its borders. On the other hand, whenever borders are closed, it leads to positive and negative impacts on the economy and citizens, with merits and demerits alike.
Positive impact: Merits of Nigeria border closure
- Although nobody might have sufficient knowledge of the full impact of smuggled fuel, food, drugs and ammunition into Nigeria, border closure has actually helped to prevent excess ammunition and drugs from entering the country, causing economic mayhem, and destroying the futures or lives of children who can possibly become good leaders tomorrow.
- Border closure boosts Nigeria government’s pockets or revenues because more duties are being received whenever any illegal goods are forced to enter the country legally through the land ports. According the current Nigeria Customs Service boss, Nigeria has made more money since it recently closed its land borders.
Negative impact: Demerits of Nigeria border closure
- Although border closure can help control the trade of illicit drugs and weapons, the shutdown of the Benin border in particular, has already caused food inflation in Nigeria—and the inflation only continues to accelerate. For instance, since the most recent Nigeria border closure in August, 2019, the cost of buying a bag (50 kilograms) of rice has risen from N 9,000 (about $25) to N 22,000 (about $60).
- Border closure makes the poor ones in Nigeria to pay higher prices for goods, while those responsible for smuggling live comfortably. It seems that the government is not aware that most poor people don’t have the means to acquire, store, and transport and smuggle large volumes of goods and services—these are the same people that border closure harms the most.
- Whenever there is border closure, most businesses and markets that create income in border communities usually shut down, and the passage of taxis, motorcycles, trucks and passengers drastically reduces. The price of petrol usually shoots up and doubles, while motorcycle and taxi drivers triple their own prices. Small businesses that depend on cross-border trading, usually fold up. The helpless society ends up suffering because of a handful of powerful smugglers who either have ties with government officials, or ties with themselves and ordinary people who they have control over.
- Border closure negatively impacts Nigerian businesses that focus on exporting goods and services. The impression most people would get from statements made by Nigeria government is that border closure works only one way—on importation; it seems the government hasn’t looked enough at the other side—on exportation. It has to be noted that Nigeria, which is actually a net exporter through borders, can also affect its exportation whenever it closes its borders. In fact, a recent report made by FSDH Merchant bank clearly stated that some textile firms in northern Kano city closed down because they could no longer export goods across the border with Niger republic.
- Border closure has been giving Nigeria a negative impression in a committee of nations like ECOWAS. Why? Because it breaches the accepted protocol on the free movement of services, goods, and people. There is a protocol, or an understanding established by the Economic Community of West African States (ECOWAS), to which Nigeria belongs. Nigeria’s position on border closure reveals how less concerned it is about making free trade as free as it has agreed that it should be. Border closure undermines and devalues agreements, and could destroy any trust, understanding and goodwill.
- With intermittent or temporary border closure around the “giant of Africa”, it might be much more difficult for pessimistic critics to agree how free trade would increase intra-Africa trade to 60% by 2022, as has been earlier projected. Border closure has raised concerns about the type of free trade that is being practiced in West Africa, especially as it has been known to cause shortages in supply of materials that have been imported from Nigeria to neighboring countries.
Recommendations to Nigeria government
It can be complex and extremely demanding to manage and facilitate legitimate and legal free trade while concurrently preventing illicit trade—but it can be done! Experience has proven that border closure, on its own, will not be able to solve the problems that arise as a result of smuggling.
Also, a porous border could be indirectly reflecting the corruption of some unknown or hidden Nigeria government officials, and the failure of the Nigeria Customs Service to carry out its duties in an efficient manner.
Nigeria government officials argue that Nigeria’s porous borders allow people to smuggle goods and services and still not pay tariffs and excise duties. Instead of closing the borders intermittently and causing untold hardship for border communities, and businesses of neighboring Benin and Niger, the Nigeria government should take a critical look at its personnel—the ones who are in charge of securing its porous borders. A strong inquiry should be made in order to find out whether the personnel are actually doing the work they ought to do. Are they fulfilling their duties on behalf of the nation? A nation usually reflects the qualities and characteristics of the people who work for it.
The influence that unquestionable cabals and powerful interest groups have on political decisions, would make an ordinary citizen have no belief in any type of border closure, especially when it has been ineffective in the past. The following are recommendable:
- the Nigerian government should take a critical look at its customs service personnel and remove the inefficient ones; if it doesn’t do so, each time it reopens its borders, the same old smuggling activities could still rise up and continue because of the presence of corrupt personnel. In many cases, Nigeria needs a competent customs service, not intermittent or temporary border closures.
- the Nigeria government should modernize or improve the state of its customs service by using more information technology and applying more formal management procedures which can improve accountability and transparency which are the cornerstones of incorruptible societies. Whatever the case may be, the Nigeria government should honor its free trade agreement with ECOWAS, and still improve its existing port logistics; in addition, it should construct and properly link all known and yet-to-be-discovered railway lines and road infrastructures. Reliable evidence-gathering techniques should be considered and employed, such as undercover operations and electronic surveillance.
- after leaving farming and relying heavily on fuel for decades, the Nigeria government should be patient and use as many years (as it left agriculture for fuel) to invest in farming; and it should do so to such an extent that it won’t make the poor masses suffer whenever there is border closure—or whenever border closure becomes to necessary, especially for security reasons. Although it is true that border closure could help to boost local food production, it should also be noted that food—especially rice, its staple food—takes time to grow; it also needs extra time to be harvested, processed and sold. Moreover, the country’s struggling farming industry cannot keep up with the huge increase in its citizens’ demand for a staple food like rice. Generally speaking, in the present-day, Nigeria is not yet sufficient enough to close its borders without making its citizens suffer for it.
- whenever it becomes necessary to close borders, border closure should go hand-in-hand with strategies that can build economic growth and address a range of social needs, including health, education, social security, job opportunities and environmental stewardship.
- the Nigeria government should promote shared responsibility: it should increase public-private dialogue on the issue of border closure and promote partnerships with organizations and governments that can help address the global nature of illicit trade which border closure hopes to prevent. Public and private organizations do have evidence-based work programs that can effectively address and halt illicit trades.
- the Nigeria government should strengthen its legislation by actually penalizing people who conspire and participate in smuggling. Nigeria security agencies, which are widely known for taking bribes and allowing offenders to get off the legal hook, should be compelled to act better than they have been doing.