African free trade crashes with Nigerian Seme border closure

by on September 26, 2019

The Lagos Chamber of Commerce, Benin Republic, Niger Republic and Ghana are feeling the heat of Nigeria’s border closure with neighbouring countries.

The border restrictions came after Nigeria and Benin agreed in July to join the African Continental Free Trade Area, which targets greater economic integration through the removal of trade barriers and tariffs on 90 per cent of commodities. The duty-free movement of goods is expected to boost trade in the market of 1.2 billion people, similar in size to India, and a combined gross domestic product of $2.5 trillion.

But, Nigeria has limited the entry of cargo from its borders with Benin

“Over 80 per cent of West African cross-border trade is by road,” said Muda Yusuf, the head of the Lagos Chamber of Commerce and Industries (LCCI). He added: “The cost is quite enormous and the closure is not sustainable”.

The impact of the dispute is being felt as far as Ghana, which is separated from Nigeria by Benin and Togo. Manufacturers have complained about the impact on costs, John Defor, research director at the Association of Ghana Industries, said on telephone. Units of multinational companies including Unilever NV, are in talks with the Federal Government to find a solution.

Traders and smugglers in Benin have taken advantage of Nigeria’s protectionist policies to import and re-export goods to their bigger neighbour, said Ahmadou Aly Mbaye, an economics professor at Cheikh Anta Diop University in Senegal’s capital, Dakar.

Rice is a good example. Benin, with a population of 11 million that is barely five per cent of the Nigerian population is the biggest buyer of the grain from Thailand, the world’s second-largest exporter. Official shipments from Thailand to Nigeria have dwindled to almost nothing from more than 1.2 million tons in 2014, while those to Benin have increased by more than half.

“Benin is basically importing for Nigeria,” Mbaye, who is a senior fellow at the Washington D.C.-based Brookings Institution, said: “Protectionism is difficult to implement in a globalized world, because people find ways around it,” he added.

Buhari defended the blockade at a meeting in Japan with Beninese President Patrice Talon at the end of last month. He said Benin and its northern neighbor, Niger, should take “strict and comprehensive measures” to curtail smuggling across their borders.

While Nigeria is committed to the African free-trade deal, the agreement “must not only promote free trade, but legal trade of quality made-in-Africa goods,” Buhari said in a Sept. 20 speech.

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