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FG BLAMES RISING INFLATION ON BORDER CLOSURE

but insists benefits outweigh pains

The Federal Government on Wednesday agreed with many Nigerians that the closure of the nation’s borders has been responsible for recent hike in inflation figures in the economy.

While no date is certain for reopening the borders, the government, through the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, and Minister of Information and Culture, Lai Mohammed, insists that the benefits gained in protecting the national economy outweigh the pains suffered by Nigerians.

The borders were shut against Benin Republic, Cameroon, Niger Republic and Chad since August by the Nigeria Customs Service on the orders of President Muhammadu Buhari, as part of measures to check unfair trade practices by the neighbours and dumping of goods in the country.

Government has since insisted that these countries, which have crowd against the action, must respect validly signed trade agreements and ECOWAS protocols on trade before the borders will be reopened.

Briefing State House correspondents at the end of the Federal Executive Council (FEC), presided over by Buhari, Mrs. Ahmed noted that the nation’s inflation rate increased to 11.61 percent in October 2019 from 11.24 percent in the previous month, reaching the highest since May of 2018; and that prices rose mainly for food.

According to her, “headline inflation declined every month for several months before we noticed an uptake 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 this 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 basic points.

“Remember there was a 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.

“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.”

Reiterating the conditions for reopening the borders, the Minister added that “the border closure is temporary. We have really advanced in our discussions between ourselves and our neighbours. We expect that the outcomes of those discussions and agreements is 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 (AfCFTA) 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 AfCFTA. That is why we have this border closure, to return to the discipline of respecting the protocols that we all committed to.”

Adding his voice to the issue, Lai Mohammed, further explained that the border closure was necessary as Nigeria could not afford to continue to subsidize West African countries’ economies.

“I think it will be quite misleading and will not serve the real purpose of 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 subsidized 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 imports. Within the same period and this is very important, we have been able to drastically reduce 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 transit 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 is that while the protocol said, you cannot break the seal and you cannot open the container, over the years our neighbours 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 neighbours to respect the protocol on transit.

“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” he said.

Written by ExpressDay

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