The Nigerian manufacturers exporting goods to ECOWAS markets through the Republic of Benin are reeling under the weight of punitive levy imposed by the country on Nigeria goods transiting across its territory, writes Dike Onwuamaeze
This is not the best time for Nigerian manufacturers to export their products to the Economic Community of West African States (ECOWAS) through the territory of the Republic of Benin. In June 2021, the Republic of Benin imposed a prohibitive levy of N9 million per truck carrying made in Nigerian cargoes across its territory to other West African countries.
The development has been viewed as contrary to the treaty establishing the ECOWAS whose aims and objectives amongst other items include free transit of persons and goods from member states.
The treaty also provided for the, “establishment of a common market through the liberalisation of trade by the abolition, among member states, of customs duties levied on imports and exports, and the abolition among member states, of non-tariff barriers in order to establish a free trade area at the community level; the adoption of a common external tariff and, a common trade policy vis-à-vis third countries; the removal, between member states, of obstacles to the free movement of persons, goods, service, and capital, and to the right of residence.”
In view of these provisions, an Economist and the Chief Executive Officer of the Centre for the Promotion of Private Enterprises (CPPE), Dr. Muda Yusuf, told THISDAY that, “this levy is in total disregard for the ECOWAS Protocol on trade and movement within the sub-region. And has been taking a huge toll on Nigerian businesses involved in cross border trade within the sub-region.”
Yusuf said: “It is essentially a blockade of movement of trucks through the Republic of Benin border. There is the theory that this is a retaliatory action by the government of the Republic of Benin following the border closure by Nigeria about a year ago, which had since been relaxed.
“Products affected are largely those that are already registered under the ECOWAS Trade Liberalisation Scheme (ETLS), which should enjoy free passage across the sub-region.
“Regrettably, the Nigerian authorities have not responded to this development with the urgency it deserves as businesses trading across the sub-region continue to suffer. Investors would like to see a more effective intervention by the Nigerian government to put an end to this punitive and obstructionist action by the government of the Republic of Benin.
“The recurring violation of ECOWAS protocols by member states portends a great danger to the African Continental Free Trade Agreement. There should be a framework for enforcement of such protocols by member countries at regional and continental levels.”
What ETLS Says
The ETLS discouraged the imposition of “export duties,” which is described as “all customs duties and taxes of equivalent effect levied on goods by virtue of their exportation.”
Article 40 of the ETLS on Fiscal Charges and Internal Taxation, said that “member states shall not apply directly or indirectly to imported goods from any member state fiscal charges in excess of those applied to like domestic goods or otherwise impose such charges for the effective protection of domestic goods.
“Member states shall eliminate all effective internal taxes or other internal charges that are made for the protection of domestic goods not later than four years after the commencement of the trade liberalisation scheme referred to in Article 54 of this treaty. Where by the virtue of obligations under an existing contract entered into by a member state such a member state is unable to comply with the provisions of this Article, the member state shall duly notify the council of this fact and shall not extend or renew such contract at its expiry.
“Member states shall eliminate progressively all revenue duties designed to protect domestic goods not later than the end of the period for the application of the trade liberalisation scheme referred to in Article 54 of this treaty.”
The Chairman of the Export Group of the Manufacturers Association of Nigeria (MAN), Mr. MAN Export Group, Mr. Ede Dafinone, told THISDAY that the levy contravened the agreement reached by ECOWAS in putting together the ECOWAS Trade Liberalisation Scheme (ETLS).
The government of the Republic of Benin, according to Dafinone, simply imposed duties on goods that are passing through its territory from Nigeria.
Presently, the MAN Export Group has made representations to the Nigerian government and to the ECOWAS demanding that the ETLS rules should be respected.
He told THISDAY that “the levy is not in accordance with the ETLS agreements. In my opinion, they are presenting us with a barrier to trade not just with Benin but other countries further afield that we go through the Republic of Benin to reach.”
Now, Nigerian exporters desirous of accessing the ECOWAS market have been constrained to resort to transporting their goods through the sea, which is cheaper but much cumbersome, in order to circumvent the levy.
However, transporting the goods by sea is costing Nigerian exporters more in terms of time and logistics. No thanks to the legendary delay at the Nigerian ports and the double handling of cargoes where the goods had to be unloaded at the ports to be loaded on the vessels and then loaded on trucks again.
“The problem is a bit beyond Nigeria and we need to get to ECOWAS to resolve it. I know that our government has made representation at many levels to the government of Republic of Benin. Our ambassador to ECOWAS in Abuja has continued to fight that battle on behalf of the country. I have met him twice on this issue. The first time I met he was at the border within 24 hours.
“I want to say that our government is responsive. But clearly, there is more politics that surround this issue than it appeared from the surface. I can only tell you what I see from the surface. I am not aware of the goings-on below the surface. At the surface level, we are seeing additional costs and burdens on our exports and members. I see it as being a political problem because clearly there are lots of agreements for us to have free passage once we have the ETLS Certificate. I have to assume that it is not an economic issue but more of a political issue,” Dafinone said.
Suffering Nigerian exporters
He lamented that the Nigerian exporters had been suffering losses at both ends of the scale; be it the closure of the borders by the Nigerian government in 2019 or the current imposition of the levy by the government of the Republic of Benin.
The group was also unhappy that the government could not state its reasons for closing the border or announce to the business community the benefits derived from that exercise.
He said: “That transparency and announcement will give exporters better confidence in the system. It will be good for an exporter to have a clear explanation from his government so that he can turn to his investors and say yes the border was closed; yes we lose a lot of money but these were the benefits to the country and have the confidence to ask for more investments from them.”
The ECOWAS Commissioner for Private Sector, Mr. Kalilou Traore, was at a noisy function on Sunday when THISDAY contacted him for his response. He pleaded that he could not grant an interview in such an environment.
But the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ambassador Ayo Olukanni, stated clearly in his response to THISDAY’s questionnaire that “the current protocols of the ETLS do not account for a transit levy, which makes this development quite worrisome.”
Olukanni, who was formerly a carrier ambassador, believed that the levy “is a backlash of Nigeria’s policy of border closure, which may have been seen by our Beninoise counterpart as ‘economic sabotage.’”
He added, “the development does not bode well for Nigerian manufacturers with markets in the West African region, as Nigerian goods will now be more expensive and will lose market share. Domestically, this will translate to loss of revenue and perhaps loss of jobs in an economy that is already facing high unemployment rates.”
He said that the Joint Nigeria-Benin Commission, which was put in place to discuss the needs and challenges of both countries with respect to their shared border must focus on a win-win implementation strategy, rather than the submission of demands and counter-demands as is currently the case, “otherwise, the private sector of both countries will be in for tough times,” adding that “this situation provides an opportunity to test the articles of the AfCFTA, with respect to what is on paper versus what is being implemented.”
ECOWAS Agreement Violation
Similarly, a Professor of Economics and former Director-General of West African Institute for Financial and Economic Management, Professor Akpan Ekpo, also told THISDAY that the move from the Republic of Benin violated the ECOWAS agreement of free flow of goods and services without tariffs.
Ekpo insisted that, “the levy does not make sense and the Nigerian government has to get involved and call the Republic of Benin to order because once this is allowed to stand other countries might start to impose one form of condition or the other.”
He pointed out that the Republic of Benin has declared economic war on Nigeria and has shown that it does not want to obey any of the ECOWAS agreements.
Therefore, “Nigeria must look for ways to punish the Republic of Benin. We will look at the things they need from us and use them to punish them. It is a small country and we can threaten it militarily, claiming that we are enforcing the ECOWAS agreement,” Ekpo said, adding that “this is one of the reasons we have been calling for the revision of our trade policy. Government should find a way to stop it or find a way to punish Benin.”
But a Professor of Political Science and former Director-General of Nigeria Institute of International Affairs, Professor Bola Akinterinwa, told THISDAY that the question might not be as simple as it seemed.
Akinterinwa said that two factors are important and worthy of consideration. One is the need to establish the origin of the goods on transit to ascertain that they did not originate from a third-party country that is not a member state of ECOWAS. The second factor is compliance with international transit procedures (ITP) as required by the ECOWAS treaty, which said: “Where a member state exports its product to another member state through another member state such exportation shall be in accordance with international transit procedures (ITP),” which demanded that the truck and the goods and must be insured. Furthermore, the goods must not be a contraband item in the Republic of Benin and the driver must have an identity. “These are factors that are easily ignored,” said Akinterinwa.
He, however, warned that the steps being taken by the Republic of Benin might likely backfire on the country. “Benin should be wary of starting a diplomatic row because Nigeria could retaliate with a cobra for a rat released by the Republic of Benin,” Akinterinwa said.
Credit: This Day