Can Benin Escape the Crushing Weight of its Border Blues?
WHY YOU SHOULD CARE
When a region’s power stumbles, the shock waves reach beyond its border.
By Eromo Egbejule
Beninese trader Francis Wangnemenou’s rice and vegetable oil retail shop used to be a mini-warehouse, with the unmistakable background noise of haggling customers. Located near the popular Seme border between Benin and its much larger neighbor Nigeria, Wangnemenou’s shop catered to not just his compatriots but also to Africa’s largest market. Now, he reminisces sadly, gesturing to the empty space in front of his shop where a queue of customers used to stand.
On the Nigerian side of the border, Isaiah Fosowere has sold phones from a small kiosk for the past two years. The 6-foot, slender and light-skinned salesman speaks Yoruba and Egun, popular languages on both sides of the divide. But they’re of little use at the moment. He has had to let go of boys who worked for him, searching for customers on the street. Selling a single phone these days, he says, is a struggle.
People are suffering.
Isaiah Fosowere, trader along Benin-Nigeria border
Wangnemenou, Fosowere and the border trade that for decades has served as economic oxygen for Benin are all victims of the worst recession to hit the Nigerian economy in over 25 years. Officially, Africa’s largest economy exited the recession in September 2017 after five successive quarters of contraction. But the struggle hasn’t eased up at the Seme border. Between 2014 and 2017, Nigeria instituted a series of regulatory measures to try to prop up its slowing economy — higher import tariffs, restrictions on imports in multiple sectors and the devaluation of the country’s currency, the naira. Those steps have hit border trade, and so Benin, hard — and none have been reversed. For Nigeria, managing border trade with Benin is just part of a larger economic challenge. For tiny Benin, with an economy 50 times smaller than Nigeria’s, it is a battle for economic survival, and a reminder of the risks that come with living in the shadow of a stumbling giant.
“People are suffering,” says Fosowere, as he launches into a high-pitched rant — he has few customers to attend to.
Benin’s economic fortunes have long hinged on Nigeria — the larger nation’s policies, trade and the demand from its 180-million-strong market. That dependence has wreaked havoc in the past. In 1985, Benin suffered its own economic depression after the border was closed for a 23-month period under Nigeria’s then-military administration of Muhammadu Buhari, who returned as a civilian president in 2015. In 2003, millions of dollars in revenues were lost when the border was briefly closed by Nigerian president Olusegun Obasanjo after a series of carjacking and other transborder crimes orchestrated by Hamani Tijani, mastermind of a crime syndicate.
But unlike those previous instances, Benin is suffering this time despite a border that is officially open for trade, and after a period — since 2003 — when it has gained significantly from an open border with Nigeria. Most of Nigeria’s ports are barely functional, so the country turned to Benin’s commercial capital — and only port — Cotonou as an auxiliary gateway. By recording Nigeria-bound imports as domestic consumption goods, Benin hides the scale of business it conducts with Nigeria and earns revenue through value-added taxes and other fees. The transit of those goods meant more business for border traders like Wangnemenou. “Those were stressful days, but the good kind,” he recalls.
That changed in 2014, when the Nigerian customs service increased the tariff on secondhand vehicles entering the country to 70 percent from 22 percent. The volume of trade at the Seme border has dropped drastically. Then, in 2017, Abuja, Nigeria’s capital, announced a total ban on import of such vehicles, to promote made-in-Nigeria goods. It also imposed restrictions on the import of 48 items, including packs of cigarettes and bags of rice. The Central Bank of Nigeria artificially pegged the value of the naira high, setting off a chain of economic events leading to the devaluation of the naira against Benin’s currency, the CFA. A year ago, 10,000 naira were worth 30,000 CFA. Today, they are equivalent to 15,500 CFA, so Beninese goods are nearly twice as costly for Nigerian consumers than a year ago — a major deterrent.
Along the border, that reduced demand has killed several businesses owned by Lebanese, Nigerians and Beninese, with owners relocating to Cotonou or Benin’s capital, Porto Novo. On both sides, general-purpose merchants are trying to sell inventory for cheap, stocking fewer perishable goods and encouraging their remaining customers to preorder goods.
Predictably, smugglers are benefiting. In September 2017, Nigeria’s minister of agriculture, Audu Ogbeh, conceded that while the country’s import restrictions had dramatically cut the volume of rice Nigeria buys from other nations, Benin’s import of the grain had increased significantly over the same period. Most of Benin’s imported rice was coming to Nigeria illegally, Ogbeh acknowledged. According to the World Bank, goods worth $5 billion are smuggled annually into Nigeria from Benin — a country with a total GDP of $8 billion. Beninese officials too concede, in private, the smuggling challenge — though customs departments on both sides insist they are keeping a close watch.
But the smuggling is no substitute for formal trade, and is hurting Benin’s economic prospects, says Marie Ousmanah, a Cotonou-based research analyst. “This form of income is not only terrible for the country’s long-term economic prospects but it also encourages large smuggling operations and undermines anti-smuggling efforts across the region,” she says.
At the border, though, thinking about the long term is a luxury. The air is sullen and people drift lazily around. Goods, vehicles and people pass through in a trickle, unlike before. In parking lots, imported secondhand vehicles remain locked up, with few buyers. Officially, Nigeria’s economy is growing again — but at a paltry 0.55 percent, it will be awhile before the costs of the recession are overcome. It may already be too late for many along the border. Fosowere is contemplating driving for Uber or emigrating abroad. “Keeping a shop here is not cheap,” he says. “I can’t afford it anymore.”
- Eromo Egbejule, OZY AuthorContact Eromo Egbejule