Nigeria’s border closure doing more harm than good – CSLS
CSL Stockbrokers Limited, a member of the FCMB Group, has said the lingering closure of the Nigerian borders has done more harm than good to the economy.
The firm noted that the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said on Wednesday that the committee on border closure set up by the President would soon submit its report, indicating that the borders would soon be reopened.
The CSLS analysts recalled that last year, the Federal Government announced closure of its land borders in a bid to curb smuggling of illegal goods, and the entry of illegal persons.
“We had stated that the total closure of the border was inadequate to achieve the goal of promoting local production for as long as the local business environment remained hostile,” they said in their latest note.
The analysts noted that food inflation had been on the rise, increasing to 17.38 percent in October 2020 from 14.09 percent in October 2019 when the full border closure was announced.
They said they had noted that the consequence of the total closure would mean upward pressure on prices of goods particularly food items.
“We suggested the government limit the ban to items that were been smuggled where the country has a decent supply level to meet demand,” the CSLS said.
It said the steep contraction in the trade sector in the third quarter of this year was reflective of not only COVID-19-related pressures but also adverse trade policies such as closure of land borders.
CSLS said, “There have been both losers and beneficiaries emerging from the closure of the borders in the last 15 months. Some listed companies in food processing and agriculture such as Flour Mills of Nigeria, Dangote Sugar, Presco, and Okomu have benefitted significantly from the lack of competition from smuggled products and have seen significant growth in earnings since the border closure.
“On the other hand, manufacturers, freight forwarders and transporters, who operate across the land borders, have been negatively affected.”
The analysts noted that there had been reports that many manufacturers had closed down their export segments because of border closure.
They said, “We believe the closure of the border has negatively impacted the overall economy much more than any benefit that could have accrued to the economy.
“Overall, in our view, the most adverse effect of the border closure is the steep rise in prices of goods and services especially food prices. The Nigerian consumer’s purchasing power has been significantly stifled and an opening of the land borders would be a welcome development.”
