Hundreds of Trucks Parked At Borders Stall African Trade Pact

Hundreds of trucks have been parked at Benin’s border for more than a year since its eastern neighbor Nigeria abruptly curbed imports. To the west of Benin, officials in Ghana’s capital have shut Nigerian-owned stores to comply with a law that curbs foreign participation in its retail trade.

Such actions embody the hurdles that must be overcome if Africa is to fulfill its vision of instituting a continental free-trade agreement. For now, protectionism remains the name of the game for West Africa’s economic powerhouses, whose governments are preoccupied with overcoming the devastation wrought by the coronavirus.

Hundreds of Trucks Parked At Borders Stall African Trade Pact

“We’ve lost more than 60% of our business in Nigeria because of the border closure,” said Francis Holly Adzah, international business development director of Kasapreko Co., an Accra-based producer of herbal alcoholic drinks. The free-trade deal is “a useless venture. What is the value when one country chooses to defy all the protocols and close its borders for more than a year and nothing happens?” he said.

While Nigeria’s decision to close its land borders with Benin, Niger, Chad and Cameroon has weighed on its trade throughout much of the region, it says the measure was necessary to curtail the smuggling of rice that was sabotaging local production and an inflow of illegal weapons. Businesses in Ghana have been among the worst affected, because Nigeria is its biggest regional trading partner, importing about $4 billion worth of goods in 2019, according to the International Trade Center.

Nigerian traders, who dominate the retail and distribution of goods across much of western and central Africa, have in turn been hard hit by Ghana’s trading restrictions. Under a law passed in 2013, foreigners must invest a minimum of $1 million and employ a specified number of locals to participate in the retail industry -- a measure the government says is necessary to assist struggling local businesses and create jobs.

The African free-trade accord, which has been agreed to by all 55 African nations bar insular Eritrea, aims at lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for a continent-wide customs union. It will also create a liberalized market for services.

With Ghana playing host to the secretariat that’s overseeing the accord’s implementation and Nigeria the dominant player in West Africa’s economy, the need for them to sort out their differences is becoming increasingly pressing as its provisions begin to take effect from next year.

“Barriers to trade erected by both Nigeria and Ghana are counterproductive to regional integration,” said Joachim MacEbong, an analyst at Lagos-based SBM Intelligence. “Nigeria in particular, by closing its borders, even though it is responsible for 70% of West Africa’s gross domestic product, is not setting a good example.”

Hundreds of Trucks Parked At Borders Stall African Trade Pact

Simmering anger over the respective curbs threatens to escalate into a full-blown diplomatic row. Ghanaian President Nana Akufo-Addo visited his Nigerian counterpart Muhammadu Buhari on Sept. 20 in a bid to end the standoff, but no statement was issued after their talks -- suggesting they failed to find common ground.

Geographically separated by Togo and Benin, Nigeria and Ghana have a shared history of having been ruled by Britain in a region predominated by former French colonies. Their relationship since independence has oscillated between being adversarial and cooperative.

In 1969, Ghana issued an alien expulsion order that affected mostly Nigerian nationals. Nigeria issued a similar order in 1983 after international oil markets crashed and tens of thousands of Ghanaians who’d found work in the industry during a 1970s boom streamed back home, an exodus that made for dramatic television footage.

Tensions flared in June when a partially constructed building inside the Nigerian High Commission’s compound in Accra was destroyed after a local businessman claimed rights to the land where it was being erected. Akufo-Addo apologized and ordered an investigation, and two men were arrested.

It is incumbent on the two nations to resolve the current deadlock over the respective border closures and business curbs as soon as possible, according to MacEbong.

“It is in the national interest of both Nigeria and Ghana to embrace trade instead of seeking to stifle it,” he said.

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.