Border Closure Responsible For Rising Inflation, FG Admits – TheNigerialawyer

* says benefits outweighs “little” inflation

The federal government on Wednesday admitted that the border
closure has contributed to a large extent to rising inflation.

This is even as it noted that the benefits of the closure for
the last three months far outweighs the little inflation.

While assuring that the measure is temporary as government
expects the neighboring countries to respect the ECOWAS protocols
on transit to enable the reopening of the borders, it said import
duties has increased by 15 percent since the closure.

Answering questions while briefing State House Correspondents at
the end of the Federal Executive Council (FEC), presided over by
President Muhammadu Buhari on Wednesday, Minister of Finance,
Budget and National Planning, Zainab Ahmed, said talks was however
ongoing with neigbours.

The nation’s annual inflation rate was said to have increased to
11.61 percent in October 2019 from 11.24 percent in the previous
month, reaching the highest since May of 2018.

It was also reported that prices rose mainly for food. Ahmed who
briefed alongside her colleague’s minister of Information and
Culture, Lai Mohammed and Minister of Works and Housing, Babatunde
Fashola said, “On inflation, headline inflation declined every
month for several months before we noticed an optic in the last two
months. And now headline inflation is at about 11:61 percent as at
the end of October. The slight increase in inflation between
September and October is due to food inflation. The food inflation
we are ascribing to prices of cereals, rice, and fish. And part of
the reason is the border closure but the border closure is very
very short and temporary and the increase is just about two basis
points. “Remember there was time inflation was nine percent and it
grew to about 18 percent in January 2017 when we were in
recession.

“The relationship between inflation, interest rates, and growth
is managed by the monetary authorities and is a management that is
tracked on a regular basis.

“So if you reduce interest rate you expect more borrowing for
investments in the real sector. But at the same time that also has
the tendency of reducing money that is used for consumption on a
day to day basis.

“So it’s a balance that we continue to watch on a regular basis,
we expect that this will be moderated as border closure impact
fizzles out and also as the monetary authorities continue to
support the MPR rate, therefore, ensuring that interest rates are
not on the high side.”

On the discussion with neighboring countries, Ahmed said: “I
need to remind us that the border closure is temporary. We have
really advanced in our discussions between ourselves and our
neigbours. We expect that the outcomes of those discussions and
agreements are that each party will respect the protocols that we
all committed to and then the borders will be open again.

“What we are doing is important for our economy. We signed up to
the African Continental Free Trade Area (ACFTA) agreement, we have
to make sure that we put in place checks to make sure that our
economy will not be overrun as a result of the coming into effect
of the ACFTA. That is why we have this border closure to return to
the discipline of respecting the protocols that we all committed
to.”

Also speaking, Minister of information and culture, added: “You
see, the issue of border closure and I think it will be quite
misleading and will not save the real purpose if our headlines
tomorrow is that inflation is as a result of border closure.

“The border closure frankly speaking is what we needed to do and
we had to do it. We cannot continue to subsidize the rest of West
Africa. And the benefits for border closure for me, I think far
surpasses the very little increase in inflation. We have been able
to save about 30 percent from our fuel consumption which means that
over time we have been subsidizing the fuel consumption of other
countries.

“Within the last three months, we have been able to increase by
15 percent duties collected from import. Within the same period and
this is very important, we have been able to drastically reduced
the volumes of arms and ammunition that have been coming into the
country through smuggling, ditto with illicit drugs.

“All Nigeria is saying, please let’s respect the protocol on
transit. ECOWAS set up a protocol on transist goods which is very
simple if a container meant for Nigeria is dropped in Cotonou, the
authorities in Benin Republic should escort the container to
customs in Seme border, and that way proper duty will be levied and
will be paid. But on the contrary, what we have seen happening… and
the protocol said, you cannot break the seal, you cannot open the
container. But what has been happening over the years is that our
neigbours, will translate the container, put about five containers
on one truck and drive it to the border as if it is only one
container that they are going to pay duties on. Worse still, less
than even 50 percent of what is meant for Nigeria will come through
the approved border.

So, what we have done and it has maximum effect is ask our
neigbours to respect the protocol on transist, if they do that the
borders will be open. But you cannot continue to play the big
brother at the expense of national security at the expense of our
national economy.”

Asked if there were no headway with the neigbouring countries
since the discussion began, Mohammed said: “Even yesterday
(Tuesday) there was a meeting between the various actors. I know
that the Comptrollers of Customs of all the three countries
involved met yesterday. As we speak today, we have not reached any
agreement but channels have been deployed, everything is going on
but our insistence is that we must all respect the ECOWAS protocol
on transit goods, we must respect the various MOUs we entered into,
so that there will be freedom of movement of goods from one country
to the other, provided those goods are manufactured in the states
that are exporting it. But what we have seen is that goods are
imported from everywhere and repackaged to look as if there are
manufactured in an ECOWAS country and they are brought into
Nigeria. This is discouraging local manufacturers, local
industry.”