The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) has disclosed that the recent closure of Nigeria’s land border with neighbouring countries has resulted in galloping inflation, as the country has been an import dependent economy.
The National President of NACCIMA, Hajiya Saratu Iya-Aliyu, was quoted as saying this in an interview, noting that the border closure has been more of a double-edged sword for the association’s members and local Nigerian businesses, stressing that it came with the advantages and disadvantages associated with the shocks and dislocations.
Iya-Aliyu said: “In the short run, it has resulted in galloping inflation since we are an import dependent economy. However, since most of these imports were through the informal channels, the positive benefits of the boarder closure will be felt in the medium to longer term.
“This is evidenced by the improved security, drastic fall in local petroleum products consumption, and increase in customs revenues by N5b monthly as a result of more formalisation of the trade.”
The leader of the OPS pointed out that Nigeria is now the largest producer of rice in Africa with significant multiplier benefits for the members of the OPS, and local businesses along the entire value- chain.
According to her, despite the low quality, the price of rice has gone up due to the demand and supply gap.
She added that the quality has greatly improved in the last few months with less stones and impurities in our local rice.
“It is also expected that as more actors/investors and operators get involved in the value chain, supply will increase to bridge the shortfall and prices will gradually come down and stabilise at bearable levels. This is because the invisible forces of trade which is the forces of demand and supply will come to play out,” she stressed.
Commenting on the continued border closure, the NACCIMA boss noted that the African Continental Free Trade Agreement (AfCFTA) has a rules-based mechanism for promoting intra-African trade, saying that the OPS is hopping that Nigeria will conclude the process of ratification, so that the country can join the negotiating table in other to ensure that its interests, particularly those of National security that warranted the closure of the land-borders between Nigeria and the neighbours are adequately covered by the AfCFTA mechanism.
Commenting on the increase in the Value Added Tax, Iya-Aliyu said; “Nigeria’s VAT rate is among the lowest around the neighboring counties and the increase will definitely boost government’s revenue. This analysis and comparison should not be done in isolation of other fiscal and monetary differences between Nigeria and these other countries.
“The present proposal to increase the VAT rate from 5 percent to 7.25 percent is not timely, as it will result in a cost-push inflation which will negatively affect the purchasing power in the economy. This could lead to less consumption which in turn could result in filled stores and warehouses due to unsold stock, ultimately leading to retrenchments and increased unemployment with the attendant social implications.”
- Media Report