In August 2019, the Nigerian government closed land borders with neighbouring Benin, Cameroon, Chad and Niger. Because the justification was for improved security, many gave the policy a “fair pass” that it could solve the insecurity which is essentially bankrupting the nation.
Within weeks, some manufacturers which essentially served these secondary markets, beyond Nigeria, started complaining. What happened? They have lost access to their markets. A kinsman who produces wine in Aba for exclusive export to Southern Cameroon saw his business severely economically wounded because he lost access to his major market. Pockets of Lagos manufacturers suffered the same fate.
There is an implication there: Nigeria was losing pockets of foreign earnings as all these countries always pay in US dollars. Sure, not many are formalized as some load items from Lagos and drive across the border to supply, and return with US dollars. But those were dollars and they helped supply on the streets of Lagos!
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Besides, some MNCs have always served some smaller neighbouring countries from Nigeria through their distributors as they anchor from Nigeria.
But when the land borders were closed, that source of foreign currencies dried up and magically other countries came and picked our positions in these markets. Morocco developed better linkages and Nigerian manufacturers saw massive redesign. A friend left this message.
Unfortunately, since we re-opened the border, we are still struggling to readjust the equilibrium point. Some of those traders that used to come to Onitsha, the largest market in Africa, for years do not come anymore. They used to arrive in Nigeria from other West African countries with foreign currencies; today, not many are coming.
Across many dimensions, with insecurity still ravaging the nation, the land border policy could be the economic policy nuclear reaction, in a fission state, messing up the Nigerian Naira. You can call it an own-goal, scored against the Naira.
In this piece, I quoted an email from a friend in Senegal:
“Ndubuisi – your country Nigeria is losing its position in West Africa. As a government worker here in Senegal, I have been involved in four meetings where most other West African countries gathered with no Nigerian representative. The land border closure is the root cause of the decisions. Nigeria has imagined that any West African country has the magic wand to smuggling and can help protect its borders. Our big brother failed to understand that we are all victims at different levels.
The post-Nigerian era in West Africa has started and everyone is looking for alternatives. It is painful that unlike before where meetings began with Nigeria, no one cares anymore. My uncle’s seven trucks are trapped in Nigeria for months, for going there to bring in legal goods, purchased from a Nigerian factory. Nigeria will not allow the trucks to return even empty. Because the goods were prepaid, and the consignments since gone bad, the man is now depressed. He wished he bought from China, not from his friend of 30 years in Nigeria.” From a friend in Senegal.
Yes, Nigeria scored an own-goal against the Naira and Naira’s team is losing badly.
Fighting for Naira
After this policy, Nigeria has been battling how to protect the Naira like a ravaging wildfire as the currency loses value: “Economic and Financial Crimes Commission (EFCC) has stated that bankers who collude with criminal elements to collect foreign exchange should be reported. The agency also directed that banks should not provide foreign exchange to consumers who do not intend to travel outside Nigeria.” This is a follow-up to the big shaming which was also introduced as a policy instrument.
“Always report Bank officials who collude with criminal elements to collect foreign exchange. There are very strong indications that it is happening; go back and sensitise your staff, to ensure that they always do the right thing because ‘doing the right thing’ has become the new normal; therefore, proper verification of documents presented by customers for forex must be done. Again, the Commission will not entertain excuses, and will no longer look away when Banks fail to do their due diligence.”
Accordingly, commercial banks are informing their customers on the need for compliance. Below was sent by a commercial bank to its customers.
Kindly be informed that customers who contravene the guidelines on FX purchase for Personal/Business Travel Allowance will have their names and Bank Verification number (BVN) published on our website . This is in line with the Central Bank of Nigeria (CBN)’s mandate and takes immediate effect.
The directive affects customers who purchase FX via fraudulent means such as presenting fake travel documents or cancellation of flights after buying PTA/BTA and failing to return same within 2 weeks, as stated in the customer declaration form signed by them.
Beyond having their names published on the website, such customers may also be liable to criminal prosecution.
We are committed to partnering with the CBN to ensure a transparent, efficient and stable FX Market that meets the needs of all legitimate users.
The banks have to be super-diligent as they can lose their license for the lucrative FX market, and many will not want that to happen. The apex bank made the threat on the license in a circular on Sept 10, 2021 titled, “Observations of due diligence in the processing of foreign exchange translations” signed by Dr. O.S. NNAJI, Director of Trade and Exchange Department of the CBN.
“In line with the continuing close surveillance of our financial market in general and the FX market in particular, the CBN wishes to remind all banks that it is their responsibility to not only Know their customers but know their customer business.
“We wish to reiterate that the FX operations licence of any bank or banks that are found culpable with the ongoing investigation would be suspended at least for one year.“
Some West African Countries Plot Post-Nigerian Dependency Playbook
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We all don’t have short memories, we questioned and scrutinised the rationale behind the thoughtless land border closures, but the same gang who are always in the business of defending every decision this depraved regime has made, found ways to justify it. The same way they are delivering lectures on why we need a naval base in Kano, but they are always wrong, they have been wrong all the time.
Our one dimensional thought leaders are never wrong, even when they are fully buried inside the ground, they will remain stubborn, while promising you great life from their graveyards.
People who are incapable of thinking straight will always be the ones to tell you why a warped and horrible policy is a great one, of course when you don’t know what you are talking about, every nonsense sounds great to you.
I asked back then who quantifies losses resulting from bad decisions and poor judgement? Nobody has been able to explain. They will tell you how Buhari is laying foundations for a great Nigeria, even when his failure far outweigh his successes, but you can’t win arguments that are ideological anyway. The people defending bad policies are drowning too, only that they have no clue on how sad their lives have become.
Many of the things we are suffering today are self-inflicted, we wanted to grow rice production and fight insecurity, and after our long land border closure, we are no better, even the price of the rice is going north.
We even closed fuel stations near the borders, because our subsidised petrol is smuggled to neighbouring countries, but now nobody even questions the number of litres we consume daily, our all conquering NNPC simply has a column for ‘under recovery’, and that takes care of all the wastage, no questions!
Let those who like spinning continue to spin, we know who did what and level of damage each of them caused the land, and trying to wish them away will never work.