The border closure a panacea to the smuggling and security challenges? Will it help the economy or hurt the economy? Will the gains outpace the pains? Will local manufacturers be protected by the closure? What is the direct impact on the economy? Will it help our manufacturers? These and more are the questions I’ve been ruminating on since the borders were shut.
I personally don’t think the border closure will solve our poor manufacturing problem. Even the little manufacturing capacity we have is being hurt by the closure.
I’ll give a few examples. About 40% of the plastics manufactured in Nigeria go to the West African coast through the land borders- plastic buckets, coolers,chairs, slippers, etc.
At the moment, plastic manufacturers can’t sell. They are holding on to stock. Stock that remain unsold is bad news to any manufacturer. That implies that your cash conversion cycle is longer.
Most of them have loans from banks. There is the risk of default. And a serious pressure on the banking sector looms. NPLs will go up. We may create another round of toxic assets. And then AMCON has to mop it up.
From default, there is the risk of laying off staff. Unemployment will increase. An average plastic company with just 2 lines can have up to 50 staff. Then look at the value chain- the truck that loads the items, the distribution network, etc. Those are real people being hurt by the closure.
As unemployment increases, crime increases. More kidnapping. Violent crimes. An idle hand has to be employed- either by humans or by the devil.
Likewise so many other companies affected by the closure. Those making Pampers transport them to other countries using the land borders. Aluminium ingots makers. Scrap sellers. Agriculture produce. Our yams are taken from Nassarawa to Ghana by land. From Ghana they are exported to Europe. Since we don’t have rail, they depend on land borders. And these are exporters. They bring in the much needed foreign exchange. A significant portion of non-oil exports is threatened.
Is the closure all negative? Not really. There are some temporary gains- substandard products won’t find their way in. Some local farmers or manufacturers will make bigger margins. Also addresses the security concerns on light arms. However, what products do we have locally as substitute to those now stopped from being brought in? How many local farmers have the capacity to step into the gap created? Or even manufacturers? With over 1,400 illegal borders around the country, how many are effectively shut?
Cutting the head can never be the cure for headache. What needs to be done is a more intelligent policing of the border. How do those goods get in in the first instance? Use more technology.
In a global village, you can’t restrict freedom of goods. No one ever got rich or grew capacity by shutting their borders. Shutting our borders cannot be a strategy for making us food sufficient. Shutting our borders is not a panacea. It will only cause more hardship for the masses.
Nkemdi C. Kenneth for Nkemdi Mordi Development Initiative(NMDI) Bringing Hope, Lighting Lives