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Wednesday, November 30, 2022

Manufacturers Express Optimism Over Reopening Of Land Borders

Stakeholders have revealed that the federal government’s reopening of more land borders will allow firms to increase their cross-border transactions with access to broader markets, raise their profit, and facilitate raw material sourcing.

As part of its protectionist stance, the federal government planned in August 2019 to seal all land borders to all goods movement in order to eliminate smuggling and establish ultimate control over what enters the country.

According to economic experts, the border closure strategy produced inflationary pressure, unanticipated losses for manufacturers, particularly those exporting their products by road to neighboring nations, and paralyzed commercial activity in bigger cities.

According to Frank Onyebu, head of the Manufacturers Association of Nigeria (MAN), Apapa section, the borders should not have been closed in the first place if they were effectively protected from smugglers’ activities.

He added that the country has very vast and permeable borders that, when used properly, provide chances.

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Because of the shutdown, he said, producers were unable to receive raw materials or export finished goods to West and Central Africa via land.

Onyebu said manufacturers “are eager to resume transactions with neighbouring countries without the fear of paying heavy tariffs, passing longer routes with stressful processing and documentation, etc.”

He said: “The reopening gives room for manufacturers to explore other markets, expand their businesses and even diversify their portfolio.

“The manufacturing sector is at the brink of collapse as stakeholders deal with rising production costs, FX shortages, supply cuts, and tax burdens, among other issues; this will serve as a relief in this trying period.”

He advised that those manning the borders must be more effective and efficient in carrying out their activities to avoid another closure.

Anthony Ajulo, executive director at Colton Group of companies, told BusinessDay that during the period when borders were shut, moving goods from Nigeria to neighbouring countries was extremely difficult, adding that transit countries capitalised on that to exploit exporters.

“We tried to move some products to Ghana and we saw hell before it got to its destination; we also paid heavy tariffs to transit countries where the goods were subjected to constant checks,” he said.

Following the border closure, MAN reported that many local manufacturers exporting products across the border spent eight weeks as against eight days before the closure because they had to take their goods through a longer route with great cost implications.

Ajulo expressed hope that following the reopening of the borders, retaliatory and unfriendly policies of neighboring countries would be discontinued and export activities into other African countries would improve.

In the fourth quarter of 2020, BusinessDay reported that Cadbury Nigeria could not bring in Hot Chocolate drinks from Ghana nor could the company export Tom Tom, Buttermint and cocoa intermediaries to West and Central Africa.

The confectioner reported a 14.42 percent decline in revenues from export sales to N3.3 billion in the nine months to September 2020 due to COVID-19 and the closure of the land border.

Data from the National Bureau of Statistics (NBS) revealed that in the fourth quarter of 2020, Nigeria earned N551 billion from exports to other African countries, down from N949.4 billion in the same period of 2019.

Following the partial reopening of four land borders in December 2020, exports to other African countries hit N773 billion in the same period of 2021.

The country’s imports from other African countries dropped to N105 billion in the fourth quarter of 2020 from N113 billion in the same period of 2019. By 2021, it improved to N161.4 billion.

“I don’t know what controls have been implemented to avoid a recurrence of the problems like smuggling, dumping, etc. However, I believe the impact of the reopening will not be immediate, probably in the next two months,” Usman Imanah, managing director and CEO of Friska Farms Limited, said.

He said regardless, this opens another opportunity for manufacturers to benefit from a larger market with fewer restrictions.


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