Border closure: Manufacturers lose N2bn daily

Posted by Bayo Akomolafe and Taiwo Hassan | 6 October 2019 | 2,375 times

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As the nation’s income watchers jubilate over the silver lining statement of the Comptroller-General of the Nigeria Customs Service (NCS), Col. Hameed Ali (rtd), that the revenue base of the organisation has astronomically risen to N5 billion per day since the closure of Nigerian borders, there seems to be turbulence on the other side of the divide, as local manufacturers are said to be losing over N2 billion daily.

Although observers and economic analyst have raised hope in the financial sector, saying that the new deal seems positive as it is going to shore up the federation account, they are quick to add a proviso that there may be dire consequences for the nation at the end of the day.

This is because local manufacturers are claiming to have suffered huge losses and incurred major lapses in financial transactions since the border closure, just as production lines are shutting down and worker are being laid off.

Findings showed that foods and beverage manufacturers are the most hit owing to their inability to import already purchased raw materials while goods meant for the ECOWAS sub-region and Trans-Saharan markets have been prevented from leaving the shores of Nigeria via the country’s land borders.

Coys tranded at border

Saturday Telegraph investigations revealed that the inability of some manufacturers to meet up with the orders in the Letter of Credit (LC) from foreign partners has put them in trouble as they have failed to comply with ECOWAS protocols, owing to the closure.

As such, some companies are finding it difficult to service the loans they secured to import some consumable goods and raw materials, which has adversely affected their business relationship and financial transactions.

Sources within the Manufacturers Association of Nigeria (MAN) disclosed to one of our correspondents that since the closure, goods meant for the ECOWAS sub-region and trans-Sahara African markets had been prevented from leaving the country through the land borders.

Worst hit by the border closure are companies such as Unilever, Nestlé, Cadbury, Flour Mills, Honeywell and PZ, among others, as some of their trucks had been trapped at the Seme Border since August 19.

NCS to rake in N650bn by December, N1tr in 2020

However, with Ali’s recent revelation, the Service is expected to realise over N650 billion as revenue by December 31, calculating from August 19, 2019, the day the closure took effect. Although, the Service said it generated N115 billion in September, its revenue is expected to rise to N155 billion by the end of October, if the situation at the nation’s borders remains same.

Going by the pronouncement that the income at times exceeds N5 billion as over N9 billion was earned in a particular day, it is forecast that NCS could be earning between N150 and N200 billion monthly, and the purse of the organisation may grow in excess of a trillion naira in the first quarter of 2020, if the borders remain shut.

MAN, LCCI kick

One of the sources, who confided in our correspondents on the condition of anonymity, explained that some locally manufactured goods are produced mainly for export, and as such, 80 per cent of the revenue bases of such people are from export materials. Noting that perishable goods stocked in some warehouses are now spoiled, expired or damaged due to heat, the sources further explained that some companies are now unable to bring in raw materials already paid for, which were purchased from neighbouring countries, for local production.

A manufacturer, referred to simply as Ola-Oluwa, said she could not afford to keep her workers on the payroll, not knowing when business would pick up, as such, some of her factory workers had been asked to stay off due to low capacity utilisation.

But she is not alone, as another of her colleague, Omo-Ade Afonkara, revealed that, except for the major industry players, most organisations affected by the closure had put their workers on the alert because they were set to downsize. “It is an unfortunate situation.

We don’t know how long this will remain in force, so we can’t continue to keep our workers. They were our staff and they understand why we are asking them to go home. If things get better, we will call them back, but for now, that is the situation”, he said.

The President of the Manufacturers Association of Nigeria, Engr. Mansur Ahmed, also lamented the situation, saying that members of the association had been affected on all fronts of the manufacturing facets.

While advising the government to arrest the importers of illegitimate goods into the country in order to allow legal trade flourish, Ahmed told Saturday Telegraph that MAN was already in crucial talks with government to reverse or make some amendments on its stance, in order to enable the export of some locally-made goods.

Ahmed also pleaded with the government to relax its decision and allow manufacturers bring in their raw materials, while noting that the closure had impacted negatively on individuals who were into legitimate trade and improving the nation’s economy.

“We have approached the relevant agencies like the Ministry of Industry, Trade and Investment, Nigeria Customs Services and others to find a way of improving our security in a way that will not affect the manufacturing sector and prices of basic food items in the market.”

In the same vein, the President of the Lagos Chamber of Commerce and Industry (LCCI), Engr. Babatunde Ruwase, said that the border closure by government was wrong in all ramifications.

Ruwase, who noted that the excuses raised by the government were not enough to shut down the borders, said all the sectors of the economy were already feeling the pains of the closure, just as he decried the decision of the Federal Government, saying that it was negatively impacting on people conducting legitimate businesses.

“Is it the closure of borders that will solve Nigerian problems? I will say no, because what is happening is that people are still crossing and goods are still finding their ways into the country and those that are doing legitimate business are the ones suffering.

“Those who are producing rice in Nigeria today cannot meet up with the consumers’ demand. So, government has not done the right thing by saying rice should not come in. We should build up the capacity.

We should catch up the demand before we close the borders.” He said that people would find their way to smuggle rice into the country because of shortage and consumer demand, as he stressed that some companies would close down if the government failed to reverse its decision.

Also, a Council Member at LCCI, Sade Young, explained that the country has breached some trade treaties under the ECOWAS Trade Liberalisation Scheme (ETLS), which could affect the country’s bilateral trade with other African countries and the economy.

Young said: “I want to appeal to the Federal Government on the ECOWAS ETLS goods, because we cannot get away with it. There are Protocols that have been drawn up, revived, harmonised, with other sub regional states and we cannot just ignore these protocols. (New Telegraph)

 


Source: News Express

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