Business News of Sunday, 12 January 2020
Nigeria’s closure of its border with Benin is essential to improve tax collection and ensure a level playing field ahead of the implementation of the African Continental Free Trade Area, Flour Mills of Nigeria chairman John Coumantaros told The Africa Report in an interview.
“If you don’t enforce tariffs and borders, you’re penalising local manufacturers and industry,” Coumantaros said.
The border closure is “just asking the neighbours to play by the rules they agreed to. That issue will become even greater,” when the free trade area comes into effect, he said.
Nigeria’s closed its borders with Benin in August in a bid to stop the smuggling of food and other goods. The country’s customs service has said that the closure will last until at least the end of January.
The closure is seen as an obstacle to the implementation of Africa’s free trade agreement, which comes into effect on July 1.
Benin risks being “a dumping ground, a VAT-free zone,” leading to “a completely uneven playing field,” Coumantaros said. “We support the government’s initiative.”
“Of course foreign producers would all love to have access to the Nigerian market and not pay VAT and customs duties,” he said. “We’re the dummies with the worst roads” that are the result of poor tax collection. Flour Mills of Nigeria’s (FMN) own food production in the late-2019 down season period was higher as a result of the border closure and the lack of smuggled produce, he added.
The poor condition of the roads around Nigeria’s ports is an obstacle for FMN, which has used its own money to fund repairs. The company in 2017 spent about $3m to help repair the Apapa Wharf road with Dangote.
Many more road repairs are still needed, as well as investment in rail, Coumantaros said.