Border closure takes toll as manufacturers, exporters suffer

Dangote, Cadbury, Unilever biggest hit

The closure of Nigeria’s border with Benin Republic may be temporary, but it is hurting manufacturers and exporters who are unable to bring in raw materials or export their finished products.

The biggest hit is Dangote Group whose over 100 containers of inputs and products are stuck at Nigeria-benin border, according to sources close to the group.

Sources at Cadbury, a beverage maker, said the company has been unable to bring in chocolates from its Ghana plant and cannot export to other markets on the continent. Cadbury exports Bournvita and other beverages mainly to the African market.

Unilever, a fast- moving consumer goods firm, is also unable to bring in inputs and products and can’t export to earn foreign exchange, Businessday gathered.

Aarti Steel, a major steel exporter to Africa, has suspended its export segment till the border reopens, with huge implications on jobs and foreign exchange, a source close to the company told Businessday.

Analysts foresee a big hit on

companies’ margins in the next financial year. They say manufacturers and exporters that send goods to West and Central Africa are possibly the biggest hit.

Jobs are also in jeopardy, with analysts predicting ballooning unemployment rate by the third quarter of 2020.

“The complaint has been about preventing illegal imports. I do not know why exporters are not allowed to ship out their products,” Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Promotion Group, told Businessday.

President Muhammadu Buhari recently shut borders with Benin Republic to curb smuggling from rice to petrol, but the price of local rice has risen by over 50 percent, according to market surveys.

Nigerian exporters are beginning to mull a sea option, but the challenge remains cost of freight. It was gathered that there is only one ship that moves products from Nigeria to Ghana, but the cost could not be ascertained as of the time of going to the press. However, land movement is far cheaper than sea.

Dafinone said exporters might explore the sea option, but while big players such as multinationals can afford it, small and medium enterprises will struggle in this space.

Muda Yusuf, directorgeneral of the Lagos Chamber of Commerce and Industry (LCCI), said many industries have invested in products registered under the ECOWAS Trade Liberalisation Scheme ( ETLS) and that the border closure has hurt their investments and margins.

The ETLS enables free movement of goods and persons across West Africa.

“These are investors whose business models were anchored on market opportunities in the ECOWAS. These investments have been completely disrupted and dislocated,” Yusuf said.

“Majority of the victims of the border closure are small businesses, most of them in the informal sector. Their means of livelihood has been put in great jeopardy,” he said.

Nigeria has a 23.1 percent unemployment rate and the country is now the world’s poverty capital with slightly over 98 million people in multidimensional poverty, according to the United Nations Development Programme (UNDP) 2019 report.

Inflation rate is at 11.02 percent, representing a fall since early 2019, but food inflation is seen rising by 2020.

Olu Fasan, member of the International Trade Policy Unit (ITPU) of the London School of Economics and Political Science, said for a government that talks a lot about increasing non-oil exports, the border closure will hurt exports.

“According to one analysis, over 90 percent of Nigeria’s trade with the West African subregion is by road, with Nigeria exporting several finished products to the subregion,” Fasan said.

“Surely, closing the land borders will hurt the export trade, not to mention the possibility that other West African countries may retaliate against Nigeria, as the angry reactions in some of those countries against the border closure have indicated,” he said.

Vincent Nwani, CEO, RTC Advisory Services, said while the government said the border closure was a method of curbing terrorism in the country, it is necessary to use a more sustainable palliative measure other than the border closure.

“Before we can compare ourselves to China, we need to understand that we do not have the same ideology, innovation, infrastructure, strategy and policy that China had when it closed its walls years back,” he said.

“The border closure has consequentially increased the menace of smuggling as the border lacks the right infrastructure to function effectively,” he said.