Lessons from Buhari’s meeting with Queen of Netherlands
Muhammadu Buhari, president of the Federal Republic of Nigeria has been reported to have told Maxima Zorreguieta, Queen of the Netherlands, on Wednesday that Nigeria’s 16-month land border closure has benefitted Africa’s biggest economy.
The federal government had, in August 2019, shut the country’s land borders over the illegal import of drugs, arms, and agricultural products from neighbouring West African countries.
In December 2020, Buhari ordered the reopening of four land borders.
According to a statement by Femi Adesina, presidential spokesman, Buhari highlighted developmental efforts in the country, adding that his administration’s focus has been on infrastructure.
As Adesina noted, the president said the decision to close the country’s borders was to encourage farmers, “and eat what we grow”.
“People went back to the land, and this helped us tremendously. We made fertilizers available, resuscitated dams, and it all paid off handsomely,” Buhari said.
One of the objectives of the land borders closure was to stop the smuggling of import rice into Nigeria.
Statistics show that the Benin Republic imports more rice from Thailand than its population can consume. Large volumes of the surplus find their way into Nigeria.
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Benin is one of the countries that border Nigeria and has a population of about 12 million people.
From a trade perspective, data from the Thailand Rice Export Association shows that Benin has been the largest importer of rice from Thailand for some time now.
To put this in proper context, Benin imports more rice from Thailand than even the most populous country in the world, China. It is clear that Benin does not have the capacity to consume the quantity of rice she imports which means that what they import is most likely repackaged and exported to the countries closest to them.
The countries that share a border with Benin include Nigeria with a population of about 190 million, Togo with a population of about 7.8 million, and Burkina Faso with a population of about 19.19 million as of 2017 (World Bank).
Nigeria is several times the size of Benin and even the other countries bordering her which makes Nigeria the most likely destination for the rice imported by Benin. This however does not reflect in Nigeria’s import figures which provide further credence to the fact that this is most likely smuggled into the country from Benin.
A BusinessDay report of August 2020 had said that the decision by the federal government to shut the country’s land borders with its West Africa neighbours had boosted agricultural productivity and stimulated investments in rice production.
The border closure made Nigerians shift their consumption preference for foreign brands of par-boiled rice to locally produced varieties.
This made farmers and millers ramp up their production to meet the ever-increasing demand for rice – a key staple in the Nigerian diets.
Data from the Thai rice exporters association shows that Nigeria imported a total of 2,796 metric tons in the half-year of 2019 and 1,192 metric tons in the corresponding period of 2020.
This indicates a decline of 1,604 metric tons in 2020 when the policy became effective.
This means that there are some advantages to the border closure but there are many disadvantages as well.
One major advantage is the increase in government revenue collected via custom duties. Hameed Ali, the comptroller general of the Nigerian Customs had informed the National Assembly that the Nigerian Customs has been collecting an average of between 4.7 billion and 5.8 billion in daily revenue since the border was closed which is way higher than what was obtainable previously.
This is good news for a federal government in dire need of funds as can be seen in the drive to generate funds as evident in the increase in value added tax (VAT) and the stamp duty on point of sales (POS) payments above N10, 000 among other strategies.
The disadvantages of the land border closure include an increase in the price of staple foods in Nigeria especially rice which is one of the most popular foods in the country.
It is a known fact that many states in Nigeria are yet to implement the minimum wage for workers and an increase in staples or any other product for that matter will make many Nigerians worse off.
Also, local farmers were not particularly ready for the sudden increase in demand that came about as a result of the land border closure and have not been able to react fast enough to take advantage of it.
Another major disadvantage is the negative effect it has on informal trade that takes place across the land borders.
It is almost impossible to estimate the value and volume of the informal trade that takes place across the land border since there is no available data but without doubt, this will run into several millions of naira on a daily basis providing several thousand with a daily means of livelihood.
The importance of this informal trade cannot be underestimated as it is the major source of funds for many and the Federal Government is not able to provide enough jobs or opportunities to reduce the adverse effect of the land border closure.
This post was written by Stephen Onyekwelu and was first published at businessday.ng