The Federal Government has admitted that the current rising inflation in the country was due to the closure of the nation’s land borders.
However, the Minister of Finance, Mrs. Zainab Ahmed who disclosed this on Wednesday, insisted the borders would remain closed until the country’s neighbours learnt to respect trade protocols.
Recall that the federal government had closed the borders in August on grounds that the smuggling of goods into the country from its neighbours was hurting the nation’s economy.
But since the border closure, headline inflation rose to 11.61 per cent as of October from the 11.24 per cent recorded in September.
Addressing State House correspondents on Wednesday, Ahmed stated that inflation rose due to hikes in food prices arising from the closure of the borders.
Answering questions after the day’s Federal Executive Council meeting presided over by President Muhammadu Buhari, the minister reiterated that the border closure was a temporary measure by the government to protect the economy against trade malpractices by neighbouring countries and would be reopened when all of Nigeria’s demands were met.
She said: “On inflation, headline inflation declined every month for several months before we noticed an optic in the last two months. And now, headline inflation is at about 11:61 per cent as of the end of October.
“The slight increase in this inflation between September and October is due to food inflation. The food inflation relates to prices of cereals, rice and fish. And part of the reason is the border closure.
READ ALSO: Border Closure ‘ll Have Long Time Positive Effects On Nation’s Economy – Banker
“But, the border closure is very, very short and temporary and the increase is just about two-basis point. Remember, there was a time inflation was nine per cent and it grew to about 18 per cent in January 2017 when we were in recession.
“The relationship between inflation, interest rate 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.
“So, it is 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, monetary policy rate, therefore ensuring that interest rates are not on the high side.
“What we are doing is important for our economy. We signed up to the African Continental Free Trade Area Agreement, ACFTA; 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 ACFTA.
“That is why we have this border closure to return to the discipline of respecting the protocols that we all committed to.”
The Minister of Information and Culture, Mr Lai Mohammed, on his own part, explained that the gains of the border closure outweighed any other fallout, saying that Nigeria was subsidising the rest of West Africa.
Mohammed disclosed that up till Tuesday this week, Nigeria and its neighbours were still discussing why it was important for all the parties to respect the ECOWAS trade protocol on transit of goods.
He said, “The border closure, frankly speaking, is what we needed to do and we had to do it. We cannot continue to subsidise the rest of West Africa. And the benefits for border closure for me, I think far surpass the very little increase in inflation.
“We have been able to save about 30 per cent from our fuel consumption, which means that over time we have been subsidising the fuel consumption of other countries. Within the last three months, we have been able to increase by 15 per cent, duties collected from imports.
“Within the same period, 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 is, please, let’s respect the protocol on transit. ECOWAS set up a protocol on transit of 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 the 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 over the years is that our neighbours will put about five containers on one truck and drive them to the border as if it is only one container that they are going to pay duties on.
Worse still, less than even 50 per cent of what is meant for Nigeria will come through the approved border.”
