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Border Reopening and the AfCFTA Will Provide Relief for Nigeria Manufacturers in 2021
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Border Reopening and the AfCFTA Will Provide Relief for Nigeria Manufacturers in 2021

On December 16, 2020, President Buhari gave the directive to reopen the Seme, Ilela, Maigatari, and Mfun borders after sixteen months of shutting them down to curb the smuggling of goods and arms into the country.

The border reopening came when the country’s food inflation rate and consumer price index (CPI) had already increased by 6% and 4.5% respectively, signaling how the economy was in a full-blown recession with an obvious shortage of goods and products in the market. Now that the country is experiencing an economic recession and high inflation, it has become overwhelming for Nigerian manufacturers to produce goods. However, with the massive border reopening and AfCFTA’s full implementation in 2021, manufacturers will receive some economic advantages like:

Increased Access to Raw Materials and Means of Production

Nigeria’s tomato processing factories have experienced a shortage of raw materials in the third quarter of 2020 because of security issues in Northern Nigeria, with the increase in production costs leading to high prices of tomato paste across the country.

Now, the border reopening, along with the AfCFTA, will revamp trade agreements that will give manufacturers better access to tomato products or massive importation of tomato paste products into Nigeria. Other manufacturing sub-sectors will also have unfettered access to resource-rich African countries for raw material inputs and alternatives to production.


New Markets for Finished Products

Nigerian manufacturers and entrepreneurs may also be able to increase their market values since the AfCFTA promises zero tariffs on over 90% of goods traded between African countries. This means manufacturers can produce goods locally and sell them in markets beyond Nigeria without paying any duties. As borders reopen and the AfCFTA becomes effective,
manufacturers will also be able to export surplus products without worrying about tariffs or the movement of goods.

A Decrease in Labor Issues for Manufacturers

Undoubtedly, reopening borders will revamp job opportunities within the logistics and insurance industry, but the AfCFTA implementation will also help manufacturers solve HR challenges.

The AfCFTA’s goal is to improve the free movement of goods and services, opening up 54 African markets comprising over a billion people. This gives Nigerian manufacturers access to the labor needed for production processes, packaging, transportation, and distribution of goods across the continent.

Easing Importation Bans and FOREX Restrictions

Implementing the AfCFTA agreement may also require the Nigerian government to revise its policies on importation bans and foreign exchange controls. This includes FOREX restrictions, which will reduce production costs and lessen the effects of the economic recession.

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