Obinna Chima

heimpactofthedecisionbythe federalgovernmenttocloseall its land borders two months ago to tackle smuggling is one of the most-talked-about issues in the sub-region today. Reports show that those in the business of smuggling have continued to suffer huge losses.

Even though commentators have continued to weigh the merits and demerits of the government’s action, both the fiscal and monetary policy authorities strongly believe that it would positively impact the Nigerian economy.

This is just as it has been disclosed that since the borders were closed, the government has seized over N2.3 trillion worth of contraband.

The exercise, code-named Exercise Swift Response, is being coordinated by the Office of the National Security Adviser, the Nigeria Customs Service, the Nigeria Immigration Service, the Nigeria Police Force and the Army.

Clearly, monetary policy transmission mechanism in Nigeria is inhibited due to numerous factors, especially the menace of smugglers. For instance, despite efforts by the Central Bank of Nigeria (CBN), through its development finance activities to raise domestic production, especially in rice production, the menace of smuggling has continued to affect local production.

On the other hand, the activities of smugglers have negative implication on Nigeria’s quest to raise the badly-needed non-oil revenue to finance its budget.

According to a recent BBC report, the action of the federal government is affecting trade across the sub-region. The report further disclosed that that the bustling borders have come to a standstill, with goods rotting and queues of lorries waiting at checkpoints in the hope the crossings will reopen.

It pointed out that Nigeria’s neighbours are angry, saying the smuggling of rice mainly prompted the federal government’s action.

“It seems Nigeria was fed up about the flouting of its ban on the importation of rice over its land borders. Smugglers bringing in rice from Benin appeared to be making a killing. The biggest contraband route was between Cotonou, Benin’s biggest city, and Nigeria’s commercial hub Lagos, which is just a few hours’ drive away,” the BBC report added.

According to the World Bank, Benin’s economy is heavily reliant on the informal re-export and transit trade with Nigeria, which accounts for about 20 per cent of its GDP, or national income.

And about 80 per cent of imports into Benin are destined for Nigeria, the bank had stated.

“Nigeria is only allowing in foreign rice through its ports - where since 2013 it has imposed a tax of 70 per cent. The move is intended not only to raise revenue, but also to encourage the local production of rice. But smugglers have been taking advantage of the fact that it is cheaper to import rice to Nigeria’s neighbours.

“And Nigerians’ appetite for rice is almost insatiable in a country where the grain is a staple. There was a time was when it was considered an elitist meal consumed only on Sundays. But now its affordability - plus the love for jollof rice - has made it a national dish,” it added.

Furthermore, the BBC report pointed out that the Nigerian government’s action was not just about rice, saying, “Benin is also a major corridor for second-hand cars to Nigeria, where there is a ban on importing cars that are more than 15 years old.”

Official figures are difficult to come by, but Luxembourg-based shipping company BIM e-solutions says an average of 10,000 cars arrive at the Cotonou port from Europe monthly, it stated.

Ghana’s Foreign Minister, Shirley Ayorkor Botchwey, said the country’s traders had incurred huge losses because their goods had been detained for weeks at the Nigeria-Benin border.

Also, Benin’s Agriculture Minister Gaston Dossouhoui, described the situation as “a distressing sight” when he visited markets in the town of Grand Popo.

“It’s very difficult for our producers. It’s a disaster,” he was quoted by the AFP news agency as saying.

In an effort to mollify its powerful neighbour, Niger has since imposed its own ban on the exportation of rice to Nigeria.

The Comptroller General of the Nigeria Customs Service, Col. Hameed Ali (rtd.), recently said tax revenues had gone up as cargo destined for Benin was now arriving at Nigerian ports.

“One day in September, a record N9.2 billion was collected, which had “never happened before”, he said.

“After the closure of the border and since then, we have maintained an average of about N4.7 billion to N5.8 billion on a daily basis, which is far more than we used to collect.”

Boost for Domestic Product

To the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, the gains of the border closure include boosting domestic trade, job creation and enhancing Nigeria’s economic policies.

Though he said he was not an advocate of permanent border closure, Emefiele added that before the borders would eventually be re-opened, affected countries must be effectively engaged with a view to agreeing on certain terms and conditions.

Answering questions from State House correspondents in Abuja after a meeting with President Muhammadu Buhari before the president’s departure to Saudi Arabia recently, Emefiele illustrated how some businesses, which he said had almost collapsed before the border closure, suddenly became productive barely a week after the closure.

He narrated the experiences of rice millers and members of the Poultry Association of Nigeria whom he said had before the closure called him to lament about low sales, only to witness a sharp