How is Nigeria's border closure affecting trade?

Author:Games, Dianna
Position:Special Report: Nigeria
 
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Nigeria's closure of its land borders to goods has resulted in rising inflation and distortions to regional trade. However, there have been upsides for the economy as well, as Dianna Games reports

When Nigeria suddenly closed the road borders with its neighbours in August last year, there were some raised eyebrows, given that the country had signed the African Continental Free Trade Area (AfCFTA) just weeks before.

The move also violated the spirit and the letter of the Economic Community of West African States (Ecowas), which mandates the free movement of goods and people. The bloc is dominated by Nigeria by dint of the size of its economy and its regional influence.

But to the Nigerian government, and many others in the country, the move, which aimed to end rampant smuggling of goods into Nigeria, had been a long time coming. It was a reaction to years of problems with neighbouring countries that have undermined Nigeria's competitiveness and its ability to diversify its economy.

Benin has become the main staging post for smuggling activities into Nigeria. A porous 800km border and strong informal cross-border ties makes smuggling almost impossible to police.

A similar situation exists with its other neighbours --Niger, Chad and Cameroon--but Benin's competitive advantage is the proximity of its port to the megacity of Lagos.

Halting smuggling

The main catalyst for the shutdown was the smuggling of rice from Asia in contravention of a ban imposed in 2004 to stimulate the local production of the crop. And food self-sufficiency has become a key platform for President Muhammadu Buhari. In 2015, he directed the central bank to restrict access to foreign exchange for the importation of 41 products, including food products.

As the Brookings Institute points out, while smuggling is difficult to measure given its illicit nature, the situation can be deduced by looking at imports into Benin. "Imports per capita into Benin of certain products such as cars, cloth, rice, and poultry--all heavily protected in Nigeria--are far too large to be explained by Benin's domestic consumption," it says.

According to the World Bank, in 2018, Benin, a country of 11m people, was the sixth largest importer of rice in the world and the largest rice importer from Thailand. As Benin's rice imports have risen, Nigeria's have been falling at a similar pace, it says.

Staple foods are not the only problem. The local production of consumer goods that have been protected by...

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