The effect of land border closure on business growth…study of seme border and it environment.
Price: 2000 Naira (BSC, MSC)
The title of this project is the effect of land border closure on business growth, astudy of seme border and it environment. The main objective of the study is to examine the effect of land border closure on business growth as study of Seme border and it environment. The specific objective of this study are to investigate how land border closure affect businesses significantly in Seme and environs and to measure the growth of a business base on profit and the improvement in local products such as rice. The main problem of border closure to business profit or growth for the two country is that there will not be importation and exportation of goods within the two country, therefore business within the seme border and its environs won’t have foreign goods and sell less and won’t make enough product and most business may be force to close down doing this period, thereby promoting only domestic product for business and research questions were formulated for the study which are how did land border closure affect businesses significantly in Seme and environs and does profit measure the growth of a business. Data was collected using both primary and secondary method, the population and sample size use for this study are 260 and 158 respectively. In analyzing the data collected using the questionnaire; the researcher used the simple percentages method of data analysis. The analysis was represented in tabular form for easy understanding and it consist the number of respondents and the corresponding percentage and chi – square was used as the statistical tools used for testing more than two population using data base on two independent random samples.
1.1 Background of the Study
It is pertinent to know thatborder residents between Nigeria and its immediate neighboring countries such as Niger Republic, Chad, Benin, and Cameroon were living together for harmony and brotherhood quite long before the advent of colonial masters. However, with the annexation and conquer of Africa by the then seven Colonial Masters namely:Britain (United Kingdom), France,Germany, Belgium, Spain, Portugal and Italy and following the Scramble and partition of Africa at the Berlin Conference of 1884 to 1885spearheaded and organized by the then German Chancellor Otto Von Bismark (Bashir Ibrahim and Prof. Deepali Singh, 2020). The said conference led to the demarcation of Africa with the present political boundaries known as borders among African countries.Hence, borders not only between Nigeria and its neighbors but the entire borders in Africa were artificially created by the aforementioned European countries. Closing Border in Nigeria is not a new phenomenonas each regime will come along with its policy on Trade (Cross Border Trade inclusive) and contraband which either led to Land Border Closure or classifying certain goods as contraband.Sometimes the government overlooked the consequences of such closure on the economy and the citizenry who engaged in cross border trading (Bashir Ibrahim and Prof. Deepali Singh, 2020).
The availability of road infrastructure is one of the crucial prerequisites for cross-border trade between Nigeria and its neighbors. Both formal and informal trading activities require this form of infrastructure to transport imported and exported goods from the source to the destination market. As informal cross-border trade alone is estimated to account for around 20 percent of Nigeria’s gross domestic product (GDP) (Blum, 2014), road infrastructure matters for the country’s economy. The borders are also an important source of livelihood for women, who constitute a major proportion of cross-border traders. In the western and central parts of Africa, 60 percent of traders who use border access are women (Afrika and Ajumbo, 2012). The main traded items are vegetable oil, household items, rice, and other agricultural produce.
The Seme border is named after the Nigerian border town that links Nigeria to other West African countries via Benin. It is seen as an important channel for better regional integration within the Economic Community of West African States (ECOWAS). This is because of the prominence of Nigeria, which, with its immense and steadily growing national consumer market, is becoming an attractive trade partner for neighboring countries (Blum, 2014). Additionally, major road transit routes crossing this border provide the most direct (and in some cases the only) road transport connection between the capitals of countries in the ECOWAS region (Akpan, 2014). The Seme border also is the starting point for roads connecting some landlocked countries in the hinterland, such as Burkina Faso, to ports. Most of these countries generate the bulk of their foreign exchange through transit and re-export (Golub, 2012), thereby creating a large and lucrative market, despite their geographic disadvantage. For Nigerian traders, on the other hand, the Seme border provides access to regional markets to trade agricultural products and locally made fabrics, among other products (Njikam and Tchouassi, 2011).
Because of the importance of the Seme border for trading activities of ECOWAS countries, the Nigerian government, with the support of the ECOWAS Commission, the governments of neighboring countries, and multilateral agencies (such as the World Bank), began reconstruction of the road leading to this border crossing in 2009. The objectives are to reduce trade costs that arise from illegal checkpoints and to enhance regional integration through cross-border trade. There have indeed been problems with heightened transport and insurance costs, accidents and haulage breakdowns, and illegal checkpoints, and it is widely acknowledged that some of these problems are mainly caused by poor road infrastructure (Ackah, Turkson, and Opoku, 2012; Deen-Swarray, Adekunle, and Odularu, 2012).
Nigeria has shut down its land borders, restricting trade and further compounding an uncertain outlook for Africa’s largest economy. Such a drastic move from one of Africa’s major players also casts doubt over the continent’s wider push toward free trade and cooperation. The closure, ostensibly aimed at stemming flows of smuggled goods such as rice and tomatoes, effectively severed trade with neighboring Benin, Niger and Cameroon only months after Nigeria signed the landmark African ContinentalFree Trade Agreement, which plans to establish the world’s largest free trading bloc.
Underpinning the shutdown is a shift in economic policy intended to address some of the country’s domestic frailties by driving production at the expense of imports.A recent International Monetary Fund mission to Nigeria concluded that the pace of economic recovery remains slow due to depressed private consumption and a wait-and-see approach from investors met with its West African neighbors on Tuesday over its land border closure, with the African giant insisting on levying duties on goods transiting to its country through neighboring nations to curb Nigeria’s border closure, ostensibly aimed at stemming flows of smuggled goods such as rice and tomatoes, effectively severed trade with neighboring Benin, Niger, and Cameroon.
The prolonged closure of Nigeria’s borders with Benin results in a drop in customs revenue whichcould slow down economic growth. Moreover, an additional public expenditure policy in support of agri-food industries could improve purchasing power and household income (Raïmi, Guy Degla1, and Laurent, 2020).
Nigeria’s recent announcement confirming that it is closing its borders to prevent movement of all goods has been met with harsh criticism from neighbors and regional integration advocates. The Buhari administration has justified the decision as a tactic to curb the smuggling of goods of which the country wants to internally increase production, such as rice.
The border closures will have particularly negative consequences for traders, especially informal ones, along the Benin-Nigeria border, as the two economies are closely intertwined(Stephen, Ahmadou, and Christina, 2019). Indeed, this informal trade generates substantial income and employment in Benin, and Benin’s government collects substantial revenues on entrepôt trade—goods imported legally and either legally re-exported to Nigeria, or illegally diverted into Nigeria through smuggling.
The informal sector throughout West Africa, and particularly in Benin, represents approximately 50 percent of GDP (70 percent in Benin, in fact) and 90 percent of employment. Unsurprisingly, informal cross-border trade (ICBT) is pervasive and has a long history given the region’s artificial and often porous borders, a long history of regional trade, weak border enforcement, corruption, and, perhaps most importantly, lack of coordination of economic policies among neighboring countries. Notably, ICBT takes several forms, not all of which are illegal: For example, trade in traditional agricultural products and livestock in bordering countries may involve little or no intent to deceive the authorities, as peasants and herders ignore artificial and un-policed borders.
The economic relationship between the two countries, both members of the Economic Community of West African States (ECOWAS), is already asymmetric, with Nigeria exerting much more influence on Benin than vice versa. Given Nigeria’s larger population, economy, and natural resource wealth, Benin has adopted a strategy centered on being “entrepôt state,” i.e., serving as a trading hub, importing goods and re-exporting them legally but most often illegally to Nigeria, thus profiting from distortions in Nigeria’s economy. Benin’s dependence on Nigeria is not apparent from official trade statistics, as Benin’s reported trade with Nigeria accounted for only about 6 percent of Benin’s exports and 2 percent of Benin’s imports in 2015-17 (Stephen, Ahmadou, and Christina, 2019). These official statistics are very misleading, however, as they do not reflect the vast informal trade along the border.
1.2 Statement of Problems
The main problem of border closure to business profit or growth for the two country is that there will not be importation and exportation of goods within the two country, therefore business within the seme border and its environs won’t have foreign goods and sell less and won’t make enough product and most business may be force to close down doing this period, thereby promoting only domestic product for business. There will be scarcity and inflation of the foreign product in the country and also government won’t be able to generate income on importation and exportation goods.
The daily political and economic history of trade relationsbetween Nigeria and its neighbors recalls many evils such asborder disputes, fraudulent trafficking of goods, thedevelopment of counterfeiting and competition from cheaperforeign products that are likely to gangrene the flow of tradebetween Nigeria and its neighbors. On the one hand, thissituation sometimes attracts the attention of Nigerianpolitical and economic decision-makers on the securityissues of their borders and on their political stability in thesearch for offering real assets for the development of Benin-Nigeria trade. I will make known the problems traders are facing in importing goods there will also be a research on an error in computing the imported goods. The closure of the border, for example, Republique du Benin border, the border closure stop the inflow of cheaper product like rice, chicken, etc from the other country and this renders some market woman and man jobless and it causes our local product rice and other increase in price and affects all major business growth. The border closures will have particularly negative consequences for traders, especially informal ones, along the Benin-Nigeria border, as the two economies are closely intertwined. Indeed, this informal trade generates substantial income and employment in Benin, and Benin’s government collects substantial revenues on entrepôt trade—goods imported legally and either legally re-exported to Nigeria, or illegally diverted into Nigeria through smuggling.
1.3 Objective of the Study
The main objective of the study is to examine the effect of land border closure on business growth as study of Seme border and it environment. The specific objective of this study are to:
1. Investigate how land border closure affect businesses significantly in Seme and environs.
2. To measure the growth of a business base on profit and the improvement in local products such as rice.
1.4 Research Questions
The following research questions were formulated for the study:
1. How did land border closure affect businesses significantly in Seme and environs?
2. Does profit measure the growth of a business?
1.5 Research Hypothesis
H0: Land border closure does affect businesses significantly in Seme and environs.
H1: Land border closure does not affect businesses significantly in Seme and environs.
1.6 Scope and Limitations of the Study
The scope of the research is center on the effect of land border closure on business growth as the study of the Seme border and its environment.In carrying out this research many factors served as constraints: The limitation of the research title as just land border closure on business growth as the study of the Seme border and its environment, financial limitation, time factor constitutes the major limitation of this research study. It relates to the fact that the time for research work was short because it was combined with lectures, studies, and examinations and the negative attitude of respondents: the problem facing the researcher with regards to the respondents relates to the non-cooperation and uncompromising attitude some respondents in giving.
1.7 Significance of the Study
This study significant to me as the researcher by giving me an in-depth understanding of the concepts and nature of the subject matter.
It is also significant by letting the policymaker know how to curb the smuggling of goods of which the country wants to internally increase the production such as Rice.
To enable the public to know if the border closures will have particularly negative consequences for traders, especially informal ones, along the Benin-Nigeria border, as the two economies are closely intertwined.
It is significant to literature by showing the effects of border closure on national income, employment, and tax revenue.
1.8 Plans of Study
Chapter one will comprise introduction, objectives, Etc.,
Chapter two will consist of a literature review, conceptual issues,and theoretical framework
Chapter three will discuss the methodology and data collection
Chapter four will compose of data analysis, interpretation, and discussion of findings
Chapter five will focus on the summary, conclusion, and recommendation.
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