54 days after the initial partial closure of the Nigerian land borders, the Nigerian Customs Service (NCS) announced an indefinite total closure of the border to any form of import or export of goods in any category. The Office of the National Security Adviser (ONSA) remains the coordinator of this directive while the NCS and the Nigerian Immigration Service (NIS) implements the directive.
According to them, the aim of the exercise is to achieve 3 key objectives; improve security at Nigeria’s land borders, address trans-border security concerns and strengthen the economy. Furthermore, the customs explained that while all goods (both licit and illicit) have been banned from going through land borders, they could still go through the seaports. Thus, all importers and exporters have been directed to use the seaports across the country.
We recall the custom service closed the nations border in August to tackle smuggling of food & drugs and illegal weapons. The closure was temporarily reversed before yesterday’s directive. According to the official statement from the customs, much success was achieved in curbing smuggling, illegal diversion of petroleum products and arrest of importers of illegal weapons.
The NCS revealed that about 317 suspected smugglers have been arrested while goods (including rice, petrol, vegetable oil, fertilisers etc.) worth N1.4bn have been seized. Relatedly, Niger Republic, one of the destinations for illegal rice imports into Nigeria announced a total ban on the exportation of rice to Nigeria.
We note that the Buhari administration coupled with the current Central Bank regime have adopted policies to boost local industrial development particularly in Agriculture and Food Processing. This has been evident in the CBN’s forex management policies, record interventions in agriculture & food processing and more recently, restriction of imports into the country. We posit that the federal government’s decision to drive local industrial development is worth applauding given the enormous potential of the economy.
However, we express concerns around the government’s apparent focus on restricting imports alone. The biggest challenges to industrial development in Nigeria are more than external. Inadequate business & social infrastructure, huge financing gap, inconsistent government policies, weak income growth and absence of incentives to attract private capital are some of the biggest challenges to business growth in Nigeria.
Thus, we believe government policies should focus on improving the competitiveness of local manufacturers by ameliorating these bottlenecks.
In the interim, we recognize significant private investments in palm oil, sugar and flour production with concerned companies battling influx of illegal alternatives to their products. Thus, we believe a selective ban on these commodities rather than an outright ban which would ultimately result in an increase in prices of essential commodities may have been a better approach.
Furthermore, the directive for importers and exporters to transact through the seaports appears ill-thought out given that the main functional seaport in Nigeria remains hugely congested.