The attention of the Lagos Chamber of Commerce and Industry [LCCI] has been drawn to the extension of the border closure till 31st January 2020.
The Chamber appreciates the concern of government regarding security and economic sabotage which informed the closure in the first place. But the demands of sacrifice imposed on business and the citizens by the border closure is disproportionate and becoming unbearable.
The effect is perhaps more pronounced in the south western part of the country being the financial and commercial hub of the country and the subregion.
The continued closure has the following unintended consequences:
Complete shut down of cross border trade [imports and exports] between Nigeria business and their counterparts in the west subregion.
This has grave consequences for investments and jobs. Many industries have invested in products registered under the Ecowas Trade Liberalization scheme [ETLS]. These are investors whose business models were anchored on market opportunities in the ECOWAS.
These investments have been completely disrupted and dislocated.Majority of the victims of the border closure are small businesses, most of them in the informal sector. Their means of livelihood has been put in great jeopardy. This class of traders do not have the capacity to move their products by sea because of the modest scale of their operations.
Supply chain of some business have been completely disrupted.
Maritime sector investors have been denied opportunities offered by transit cargo destined for landlocked countries which normally comes through the Nigerian ports.
The closure has triggered an unprecedented hike in prices with a devasting impact on the poor. This implies further aggravation of the poverty situation in the country.
Meanwhile, we need to fix some fundamental governance shortcomings as part of a sustainable solution. Some of these are as follows:
We need to fix our institutions for effective border management and policing.
We need to review our import tariff policies for better compliance. Current tariffs and charges are prohibitive.
We need to review our foreign exchange policies to discount inherent subsidies. Besides the exchange rate should reflect the key economic fundamentals.
We need to fix our infrastructures in order to build an economy that is efficient, productive and competitive. Current infrastructure financing is grossly inadequate to make the economy competitive. High production cost remains a fundamental problem for the economy.
We need to fix our seaports to reduce cargo diversion. Clearing cargo at the Nigerian ports is one of the most expensive and cumbersome in the world.
We need to urgently reform the oil and gas sector to free resources for infrastructure development and promote investment in the sector.
The recently inaugurated Economic Advisory Council should live up to the high expectations of Nigerians by offering sustainable and coherent policy options to government to save the economy and investors from further disruptions and dislocations arising from inappropriate policy choices.