According to local media reports, the Comptroller General of Customs, Col. Hameed Ali has ordered that petroleum products should no longer be supplied to filling stations within 20 kilometres to all Nigerian borders.
According to the reports, the number of filling stations within 20 kilometres radius of Nigerian borders were more than the number of filling stations inside the towns suggesting that they were being used as conduit pipes to smuggle petroleum products outside the country. Residents of those areas have however expressed concerns that the decision will cause them hardships.
The borders were first closed in August following a presidential directive under an operation named “Border Green””. The operation was focused on the prohibition of fraudulent export of petroleum products and fighting against the importation of second-hand vehicles, rice and some other products through land borders.
As of today, several trucks of major consumer goods companies remain stuck at the border hoping to move goods into neighbouring regional markets. The border closure is also hurting manufacturers and exporters who have been unable to bring in raw materials or export their finished products.
According to the reports, many Nigerian exporters are reluctant to use the sea option due to high cost of freight as land movement is far cheaper than sea and the fact that ship for movement of these goods are not readily available. Listed companies such as Dangote group, Cadbury and Unilever are reported to be taking some hit as a result of the border closure as they are unable to bring in inputs nor export products to earn foreign exchange.
We retain our view that the decision to shut the borders completely is an inappropriate mechanism to solve our border challenges as this would hurt legal exports and imports, impact foreign exchange availability and dampen the prospect of attracting foreign direct investment.
Although policies like the border closure are designed to engineer local industrial capacity development, we believe structural and systemic bottlenecks in Nigeria’s operating environment would continue to hinder significant investments in local production. This ultimately would lead to creation of artificial scarcity, pushing the prices of basic necessities higher, hurting an already depressed consumer base. Notably, food prices have seen tremendous increase since the border closure.
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