West Africa: Daily Trust Board of Economists - Nigeria Has Not Flouted ECOWAS Pact Over Border Closure

Seme Border used to illustrate the story.
4 November 2019

Nigeria has not violated the free movement of people guaranteed under the Economic Community of West African States (ECOWAS) Treaty over its decision to close land borders to reduce crime, especially smuggling.

This was part the resolutions of the Daily Trust Board of Economists emergency meeting in Abuja contained in a communiqué signed by the Chairman of the board, Prof. Nazifi Abdullahi Darma.

The recent border closure, pronouncement by Federal Government to restore national development planning, review of the crude oil Production Sharing Contract Act, Nigeria's power challenges and concerns over debt to revenue ratio dominated discussions at the meeting.

On border closure, the board recognised that although Nigeria is a signatory to ECOWAS treaties with respect to open borders and free trade, it has been used as a transit point for cross-border transactions of all types, resulting in security breaches which are contrary to ECOWAS free trade protocols of importation based on documentation.

The board said the border closure would have been avoided if not for the parlous state of Nigeria's seaports, which is a great cause for concern as it is a disincentive for importers and exporters, some of who have resorted to the use of land borders.

The board posited that, "Successive governments have apparently handled Nigeria's main seaport in Lagos State with much levity, and Apapa remains a symbol of inefficiency and chaos due to the almost total collapse of infrastructure, perennial logistics nightmare and duplication of functions in the goods clearing process."

It emphasised the need to open up, develop and standardise other ports within the nation while providing complementary infrastructure and linkage required for their efficient functioning.

The board further posited that, "As our land borders remain closed, the spike in the price of domestic rice has indicated domestic policy failure in the area of food production contrary to the claims by the authorities. This is evident in the fact that the price of local rice has spiked from N12,000 to N18,000 in the last one month."

The board has, therefore, called for the investigation and punishment of Nigerians who are involved in smuggling, as well as provision of additional support and funding for increased local rice production and processing to fill current supply gaps.

It further recommended that the current closure should be used as a negotiation tool with neighbouring countries going forward given that under Article 13 of the AfCFTA, there is a provision that a country may refuse entry of goods with dubious rules of origin.

Meanwhile, the recent decision of the Federal Government to elevate National Development Planning above short-term projections was part of the discussions.

The board reiterated that the economy needs a substitute plan for the Economic Recovery and Growth Plan (ERGP), as well as a national plan that will lead the economy on the trajectory of sustainable growth and development.

While expressing concern over the merger of the Federal Ministry of Finance and the Federal Ministry of Budget and National Planning, the board called for the revival of the National Planning Commission (NPC) as a stand-alone agency to coordinate national development plans for the country and their effective implementation.

The board, therefore, recommended that, "The law establishing the commission is extant and therefore in line with our previous recommendations. We urge Mr. President to appoint a competent economist as the Chief Economic Adviser to the President to head the National Planning Commission as vice chairman, with the vice president as chairman."

On power challenges, the board described the power sector of the economy as "chaotic" and in need of review.

It said, "We notice recurrent bickering and blame games among the regulator, the power generators and the distributors. There is therefore an urgent need to revisit the power architecture to improve electricity supply in the country."

While it recommends the strengthening of the capacity of the Nigeria Electricity Regulatory Commission (NERC) towards performing its functions and meting out punishment for violations and infractions, it also called for a forensic audit of management and finances of the Generating Companies (GenCos) and Distribution Companies (DisCos) to at least protect its investments and shareholding in those companies.

In addition, the economists said although the current global framework for debt sustainability is based on a comparison with the Gross Domestic Product (GDP), such framework may be misleading and problematic for Nigeria.

"Even though debt to GDP ratio is a globally accepted protocol, continued and unquestioning reliance on such an index could be misleading and has led to a problematic debt situation for Nigeria," the board said.

It recommended that government should continue to target improved revenue generation to provide a cushion for the increasingly precarious debt situation and to drive down the currently high debt to revenue ratio.

"We believe that debt to revenue ratio should be the focus for Nigeria's debt sustainability, as it provides a clear framework and linkage for resource usage between debt servicing and other social services provisions, especially health and education," the board said.

With regard to the review of the Petroleum Production Sharing Contract Act, the board urged vigilance to avoid the sabotage of the implementation.

It said, "We reiterate that the nation should continue to authenticate the cost of production of a barrel of crude oil, onshore and offshore, in line with international benchmarks."

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