The Lagos Chamber of Commerce and Industry (LCCI) has said that the closure of Nigerian land borders for close to two months now has come with benefits and costs adding that there are upsides and downsides.
The Director General, LCCI, Mr. Muda Yusuf who made this observation in a statement in Lagos on Tuesday stated that reports indicated a drastic reduction in smuggling of rice, poultry products and sugar even as smuggling of petroleum products outside the country to neighboring countries had also declined considerably.
He added that while LCCI noted and appreciated those outcomes, it was important to reckon with the costs, supply chain disruptions and loses that businesses and individuals had suffered as a result of the closure.
He noted that corporates, large number of informal sector players and individuals doing legitimate businesses across the borders had become victims of the border closure which according to him posed a dilemma.
In his words, “The government means well, but there are many innocent casualties. As we celebrate the benefits, we should also count the costs. Jobs have been lost, prices have skyrocketed, legitimate exports to the sub-region have been halted, intermediate products for some manufacturers have been cut off, some multinationals companies have been de-linked from their sister companies in the sub-region.
“The economies of border communities have been paralyzed with consequences for unemployment and poverty. Over 90% of Nigeria’s trade with the West African sub-region is by road. We export manufactured products as well as agricultural products – detergents, toothpastes, plastic products, steel products, kitchen utensils, grains, ginger, onions, among others. We also undertake many re-export to the sub-region. These are sources of livelihood of Nigerians doing legitimate businesses. There are also thousands of transporters who make a living from these legitimate trading activities. These are costs that would run into hundreds of billions of naira. We must weigh the costs and benefits. Most often we do not count the cost of government policy on the citizens and businesses.
“We should not underestimate the contribution of trade and commerce to the economy of the country. Distributive trade sector accounts for about 15% of the nation’s GDP, which is estimated at 20 trillion naira. Traders play a major role in the value chain of the real sector activities in the economy. The trade sector is perhaps the largest employer of labor in the Nigerian economy.”
The LCCI Director General opined that this was not to diminish the importance of security in the border management process noting that it was also true that neighboring countries had been sabotaging government efforts to curb smuggling and check insecurity.
“The government has a duty to manage the situation and deploy appropriate responses”, he added.
He however harped on the need to fix the structural, institutional and policy shortcomings that perpetuate the phenomenon of smuggling and increases vulnerabilities.
The DG said that unless those shortcomings were addressed, it would be difficult to put an end to the problem of smuggling.
Yusuf identified some of the shortcoming to include; weak institutional capacity to police the country’s vast borders across the country, porosity of nations borders because of the expansive nature of the borders stretching over four thousand kilometers of land borders and 853 kilometers of coastline, failure to deploy technology to manage our borders and international trade processes, weak productivity in the domestic economy which aggravates production and operating costs, thus impacting adversely on domestic prices and competitiveness as well as high transportation costs and weak domestic connectivity which affects domestic prices.
Others according to him include; high poverty incidence which makes majority of citizens crave for cheap products, including food items, high and prohibitive import tariffs which creates daunting compliance and enforcement challenges for the Nigerian customs services and also perpetuates corruption, foreign exchange policy which incentivizes imports and penalizes domestic production and exports, unsustainable subsidy regime on petroleum products and high transaction costs, high charges, corruption, inadequate equipment at the nation’s ports making the cost of clearing cargo at the ports very prohibitive.
Photo: LCCI DG, Mr. Muda Yusuf.
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