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Business News

Border Closure: Ghana begs Nigeria to open its borders

The Republic of Ghana has begged Nigeria to re-open its borders through its Foreign Minister and Regional Integration, Shirley Ayorkor Botchwey.

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Shirley Ayorkor Botchwey, Ghana

The Republic of Ghana, through its Foreign Minister and Regional Integration, Shirley Ayorkor Botchwey, has begged Nigeria to re-open its borders. Ghana said it had been heavily affected by Nigeria’s decision to close its borders.

Botchwey stated that Ghana was determined to make Nigeria rescind its decision by exploiting diplomatic avenues. She was optimistic that Nigeria would re-open its Western borders for free flow of goods from Ghana to the subregion.

She made this plea during a meeting with Nigeria’s High Commission to Ghana, Olufemi Michael Abikoye on Tuesday.

As we speak, Nigerian goods are entering Ghana without any problem and I think that we should find ways of isolating the issues and the countries that you have problems with so that Ghana’s exports can enter your market without being lumped up with all these issues that have emerged,” she said

[READ ALSO: Border closure affecting revenue and Nigeria is not food sufficient – So Fresh co-founder, Olagoke Balogun]

Why this matters: Nairametrics gathered that members of the Ghana Union Traders Association (GUTA) recorded huge losses owing to the closure of the border.

  • Several truckloads of goods were detained at the Seme border between Benin and Nigeria for weeks and returning to use seaports to transport the goods would only complicate the issues.
  • Further investigations by Nairametrics disclosed that Nigeria ranked highly as one of the major export destinations for Ghana, in ECOWAS. Also, Nigeria’s decision to close its southern borders is a contravention of the ECOWAS treaty on trade and exports of goods and services, according to President of GUTA, Dr. Joseph Obeng.
  • If this border closure continues, Ghana can lose its trade market which will affect its role in the African Continental Free Trade Agreement (AfCFTA).
  • Besides, border smuggling is one of the ways the Ghana Export Promotion Authority utilizes in boosting Ghana’s exports, particularly non-traditional ones.

The agony of the Benin farmers: Benin Republic is also affected by the border closure. According to farmers, dozens of baskets of tomatoes, pineapple and other fruits and vegetables have gone bad due to the border closure.

seme border

Biggest Gainers: The biggest gainer of the border closure is Nigeria. While food prices have gone up, Nigeria may be able to boost local production of food items and manufactured goods.

The Nigeria Customs Service also seems to be enjoying this closure as they described it as the most successful and effective measure so far adopted, in terms of curtailing the influx of smuggled rice and other goods to the country.

The Comptroller-General of the NCS, Col Hameed Ali, revealed that the agency’s revenue rose to over N5bn daily, since the closure. He also added that more than 200 illegal immigrants were apprehended across the border and thousands of bags of rice and other contrabands confiscated.

On his part, Nigerian High Commissioner, Olufemi Abikoye promised to sort the situation even though he noted that Ghana wasn’t the reason why the border was closed.

At the end of it, we’re helping our economies”, he stated.

[READ ALSO: Border closure: Manufacturers lament losses incurred daily]

Backstory: Recall the Federal Government of Nigeria ordered the complete closure of the Nigerian border, placing a ban on both legitimate and illegitimate movement of goods in and out of the country.

Jaiz bank

This is coming after the President announced the partial closure of the Nigeria-Benin border on August 20th with the exercise code-named, ‘Ex-Swift Response’. The measure was taken to restrict the massive illegal importation of rice into Nigeria and ensure trans-border security issues.

Reincarnated as a lover of stocks, Angel investors, seed funds, and anything aligned to tech or startups raising money, Joseph's work at Nairametrics involves following the money to wherever it leads. Before joining Nairametrics, he won an investigative journalism fellowship with ICIR, appeared in several national dallies, with hard-hitting opinions, features and investigative pieces. He has also engaged in content marketing and copywriting for a top e-commerce firm in Nigeria.

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      Coronavirus

      FG denies report on reintroduction of Covid-19 restrictions, clarifies position

      The FG has denied media reports that it has reintroduced new Covid-19 restrictions as part of measures to curb the spread of the new India variant into the country.

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      FG publishes list of suspended passports for refusing post-arrival Covid-19 test

      The Federal Government has denied media reports that it has reintroduced new Covid-19 restrictions as part of measures to curb the spread of the new India variant into the country.

      The government explained that it was only maintaining the curfew under phase 4 of the phased restriction of movement adding that it never relaxed the curfew imposed earlier under phase 3 of the eased lockdown.

      This clarification was made by the Secretary to the Government of the Federation (SGF) and chairman of the Presidential Steering Committee, (PSC) on Covid-19, Mr Boss Mustapha, on Monday, saying that it was erroneously reported.

      Mustapha said the announcement by the National Incident Manager, Dr Mukhtar Mohammed, during the PSC press briefing was taken out of context because the federal government did not relax the curfew imposed earlier under Phase 3 of the eased lockdown.

      What the SGF is saying

      Mustapha said, “Under the Fourth Phase of restriction of movement, night clubs, gyms and others will remain closed till further notice; while all citizens will also ensure that mass gatherings outside work settings do not exceed a maximum of 50 people in an enclosed space.

      These restrictions have been in existence under the Third Phase but are being maintained under Phase Four of the phased restriction of movement.’

      He further said because people had been violating the safety protocols, they had forgotten that the protocols were never relaxed in the first place.

      The SGF said, “Therefore, the PSC hereby reiterates that there is no newly introduced lockdown. There is no need for the panic that followed the announcement of the Fourth Phase of the phased restriction of movement.

      Hotflex

      We will continue to appeal to members of the public to comply with these restrictions because they are necessary safety measures against contracting the dreaded coronavirus, which is still ravaging human populations across the world.’

      Also, the Minister of Information and Culture, Alhaji Lai Mohammed, at a meeting with Online Publishers on Tuesday, in Lagos, denied reports on the introduction or even reintroduction of new restrictions on Covid-19.

      Alhaji Lai Mohammed said there were no new restrictions, adding that the PSC on Covid-19 only reiterated existing regulations to control the spread of the disease. He said the only thing that was newly introduced was that anyone, including Nigerians travelling from Brazil, Turkey or India, must go through compulsory quarantine.

      In case you missed it

      It can be recalled that there were media reports that the Federal Government had reintroduced Covid-19 restrictions across all 36 states and the Federal Capital Territory (FCT) following the disturbing resurgence of the coronavirus pandemic with the new India variant.

      President Muhammadu Buhari had approved the transition of the Presidential Task Force (PTF) on Covid-19 to PSC on Covid-19, with effect from April 1, 2021, with a modified mandate to reflect the non-emergent status of Covid-19 as a potentially long-term pandemic.

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      Financial Services

      Inflationary concerns may lead to higher rate; Why 3 CBN MPC members want rates hiked

      Despite the slight push back, the MPC decided to hold the rates, owing to the supply factor and the weak economic recovery of Nigeria.

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      CBN forex restrictions on food itemsCBN approves new cheque standard for banks

      Three members of the CBN’s Monetary Policy Committee proposed a rate hike citing several factors including Nigeria’s galloping inflation rate. Their decisions contradict those held by other members of the committee who voted for a continuation of the current monetary policy rate of 11.5%.

      This was contained in the personal statement of members of the  Monetary Policy Committee (MPC) in the meeting held on the 22nd and 23rd of March 2021. The decision to hold the rate steady was not unanimous as three out of the nine members voted to increase rates. These disconnects from the majority took their stand as a result of inflationary concern facing the Nigerian economy.

      According to the Central Bank of Nigeria Communiqué No. 135 Of The Monetary Policy Committee Meeting, the members who were in support of hiking rates are namely; OBADAN, MIKE IDIAHI; SHONUBI, FOLASHODUN A.; and ADENIKINJU, ADEOLA FESTUS. The prime reason was the risk of high inflation on the economy.

      Despite the slight push back, the MPC decided to hold the rates, owing to the supply factor and the weak economic recovery of Nigeria. The CBN governor Godwin I. Emefiele and five others were in support of maintaining rate despite unstable inflation postulating that supply factor is fundamental to healthy recovery especially as a result of the pandemic.

      Emefiele said: “Supply constraints remain the key driver of both the inflationary pressure and the weak growth that we observe today. The weak GDP recovery provides an argument for further policy ease to support growth, but rising inflationary expectations justify a tightening. My inclination today is for a more balanced and cautious approach to monetary impulses.”

      Even though Emefiele admitted that inflation rate could rise in the near term, he feared that an adjustment of the MPR could worsen Nigeria’s “conditions” especially with the tepid recovery we are still experiencing.

      “I reiterate the imperatives of targeted lending to productive sectors to sustain growth without undermining our core objective of price stability. Based on the near-term inflation expectations and growth outlook, my position is to maintain the current stance of monetary policy and intensify our interventions. An adjustment today could in my view, destabilize the fragile recovery and worsen domestic conditions.”

      However, some members who did not share the view and speculation about higher inflation may affirm this stand OBADAN, MIKE IDIAHI postulated that the CBN should put more pressure on deposit money banks to comply with the LDR scheme, according to him.

      OBADAN stated that, “We are faced with the dilemma of low and fragile growth that needs to be reversed, accelerating inflation also needs to be tamed because it is Classified as Confidential and has a negative impact on people’s welfare and macroeconomic stability which is required for enhanced investment and production. Orthodox policy instruments available to the Bank are not capable of achieving the desired goals of strong growth and inflation control simultaneously without sacrificing one for the other. Stability needs to be brought to bear on the policy-induced drivers of the current inflation acceleration, while the MPR can be raised marginally with three objectives in mind: to signal the sensitivity of the Bank to address any possible monetary influence on inflation.”

      A skeptical and more hawkish Obadan also suggested that the recent inflation rate was also due to monetary policy reasons such as increased lending due to CBN’s LDR Policy, depreciation of the naira and a lower interest rate environment which drives people into assets that provide a hedge against the naira.  He also suggested that more efforts should be geared towards attracting foreign portfolio inflows.

      “The factor of monetary influence on inflation cannot be ruled out completely. It interacts with other factors to drive inflation, perhaps, in a limited role. Against the backdrop of the Loan-to Deposit Ratio (LDR) policy, I do not expect the MPR adjustment to adversely affect the volume of lending significantly. To this end, we should put more pressure on the deposit money banks to comply with the LDR policy. Marginal upward adjustment of the MPR can also signal the desire of the Bank to tackle the phenomenon of negative real interest rate. Finally, in the short term, it could be a signal to foreign private investors while we implement measures to ensure stable sources of external reserves accretion in the medium term. Yes, foreign portfolio investment flows are indeed hot monies that tend to be very volatile. However, under conditions of improving growth, such flows could play a stabilising role in the economy. So, my vote is: raise MPR by 50 basis points and leave the other parameters as they are.”

      SHONUBI, FOLASHODUN A., on the other hand, emphasized inaction was not an option considering how weak and fragile the economy currently is.

      “Clearly, not doing anything will portray the Bank as abandoning its mandate of price stability. In as much as growth remains weak and fragile, we cannot afford to pull the brake to avert a more damaging reversal of the trend in output growth. Notwithstanding that the present inflationary pressure is largely attributed to non-monetary factors, its persistence, and reversal of the moderation in month-on-month growth stresses the need for the Bank to take immediate action. Whereas it may appear unfeasible to deploy the conventional monetary policy to pursue growth and tame inflation simultaneously, the Bank cannot abandon either of the objectives at this time.”

      He also called for the continued intervention in key sectors of the economy postulating that this will boost economic growth.

      “I believe the Bank’s interventions through the aggressive provision of credit should continue as a complement to the ongoing effort by the fiscal authority to boost economic activities. As the Government acts more decisively to discourage bad behaviour and restore orderliness, we must collectively work to overcome the insecurity challenges. At the same time, we must begin to tighten to deal with the subtle monetary component of inflationary pressure and curb spiraling inflation, without suffocating economic growth.”

      Jaiz bank

      Adenikinju, the last of the trio emphasized on the need for the CBN to focus on addressing higher inflationary environment. He also explained that addressing inflation will signal to economic agents that the central bank is keen on stabilizing prices thus curbing the demand for forex.

      He stated that the persistently high inflation rate is cause for concern and that the CBN should begin refocusing its efforts to counter it, signaling to the wider economy that the CBN’s top priority would help to minimize foreign exchange market excesses, reduce liquidity-induced inflationary pressures on the economy, and protect fixed-income earners.

      “The rising global commodity prices, plus the depreciating exchange rates and relatively high costs of shipping and clearing of goods at the Nigerian ports have all contributed to high imported inflation and reduced the extent to which imports could have mitigated the impacts of high domestic food prices in the short term. However, the weak economic growth, rising unemployment and poverty also mean that we cannot aggressively pursue strict price stability at a time we are slowly crawling out of recession. I see the CBN intervention credit as complementary and not a substitution to credit from the deposit money banks. Also given the focus of capital expenditure of the government this year, it then means that we can focus on growth and tackle inflation at the same time. However, I believe the persistently high inflation rate is concerning enough for CBN to start shifting its focus to address it. Signaling to economic agents that price stability remains the focus of the CBN will also curb some of the excesses in the foreign exchange market and reduce the liquidity induced inflationary pressures on the economy and protect fixed income earners.”

      Bottom line

      Whilst the trio may not have gotten their wish, we believe the CBN might raise rates to cool off the galloping inflation rate. The CBN has gradually raised rates on its short-dated securities, a clear indication that it is worried about widening the negative real interest rate emanating from rising inflation.

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