Love Thy Neighbour?
The Economic Community of West African States (ECOWAS) has called upon Nigeria to review its protectionist stance. After weeks of partial border closures with Benin, Niger and Cameroon, the regional body has emphasised the fact that the closures undermine the Protocol on Free Movement of Persons within the economic bloc, at a time when the continent is actively working towards a borderless system, through the African Continental Free Trade Agreement (AfCFTA). The Nigerian government says its motivations for the closures are related to security and the economy: to stem the flow of illegal immigrants and weapons and to boost local rice production by closing the door to cheap imports. But there is reason to believe that the policy is also political, with the government seeking to shore up political capital among rice producers. Arguably the desire to find sustainable solutions to illegal migration, smuggling and small arms proliferation, as well as boosting local agricultural production is valid. Yet, the partial and sudden closures are problematic for a number of reasons, three of which we’ve outlined below:
Wide-reaching supply chain disruptions: Nigerian traders who move across the Seme border in the south-west of Nigeria do not only seek to sell into Benin, but this border is the gateway to the second and third largest regional markets too - Ghana and Cote d’Ivoire, respectively. The reverse is also true. 70% of Benin’s exports are destined for the ECOWAS region, with Nigeria at the top of that list, while landlocked Niger relies heavily on Nigeria for its cattle trade. Merchants to and from Cameroon have also been affected by partial closures in the border town of Ikang, close to the disputed Bakassi Peninsula. The dramatic partial closures have been in place for over a month in some cases and according to the Retired Col. Hameed Ali, the Comptroller General, Nigeria Customs Service (NCS): “… there is no specific time for opening the borders. However, if they agree with us tomorrow on the existing laws, then we sign and update the existing protocol of transit, that’s all.” The closures have had a concomitant effect on food prices particularly in border towns, increasing by between 10% and 30% because of the scarcity of supply.
Boosting rice production needs a multi-pronged approach: The government’s stated aim of boosting local rice production is understandable, given that Nigeria is the continent’s largest rice consumer and importer. Nigeria also leads the way in rice production according to the Food and Agricultural Organisation (FAO) but its supply is still dwarfed by demand. However, strengthening the rice value chain would require a joined-up approach with an emphasis on areas such as access to finance, irrigation and improved agricultural practices to empower the small scale farmers who currently sell some 80% of total production. The change won’t be overnight either because rice gestation takes 4-6 months, so if government does not relent, it could be a while before local consumers are relieved. This is despite some of the recent efforts to boost the rice industry.
Wrong messaging for AfCFTA: Under pressure from local manufacturing and producer organisations, Nigeria was one of the last countries to sign up to the AfCFTA, amid concerns around the impact on locally-produced goods. Nigeria’s initial position, echoed by the presidency and a panel set up by President Muhammadu Buhari to assess the AfCFTA’s merits, was that the deal could lead to dumping, smuggling and a practice of disguising non-African imports as if made in Africa in order to evade tariffs. However, President Buhari accepted the panel’s positive recommendation and signed the agreement in July 2019, reasoning that the prospects for Nigerian manufacturers to expand their scale across the continent outweigh the perceived negative consequences. But Buhari’s stance vis-a-vis the border closures is reminiscent of the reticent position by the unions, with the Nigerian Labour Congress arguing at the time that competition arising from the deal would put Nigerian jobs at risk and hurt domestic production in infant industries.
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In 2018, Nigeria’s GDP was USD 397bn; Ghana’s was USD66bn and Cote d’Ivoire’s was USD43bn according to the World Bank