Border closure: IMF backs Nigeria, urges speedy resolution of issue

The International Monetary Fund (IMF) has backed Nigeria’s
closure of its borders with some neighbouring countries over issues
bordering on illegal trade.

Mr Abebe Selassie, the Director of the African Department at the
IMF, gave the position at a media briefing on the sidelines of the
World Bank/IMF Annual Meetings in Washington.

He was responding to a question on whether the closure negates
the African Continental Free Trade Agreement (AfCFTA).

Selassie said although free trade was critical to economic
growth of the continent, it must be legal and in line with
agreements.

On the border closure in Nigeria which has been impacting Benin
and Niger, our understanding is that the action reflects concerns
about smuggling that has been taking place.

“It is about illegal trade, which is not what you want to
facilitate,’’ Selassie said.

He said the IMF was hoping for a speedy resolution of the issues
as the action was already taking a toll on the economies of the
country’s neighbours.

“We are very hopeful that discussions will resolve the
challenges that this illegal trade is posing.

“If the border closure is to be sustained for a long time, it
will definitely have an impact on Benin and Niger which, of course,
rely quite extensively on the big brother next door,’’ he said.

On Wednesday, the Minister of Finance, Budget and National
Planning, Mrs Zainab Ahmed, said the borders were closed to curb
illegal trading activities by Nigeria’s neighbours.

Ahmed said the closure would remain in force until the country
secured the commitment of its neighbours to trade agreements and
treaties signed with them.

Meanwhile, the IMF director said the AfCFTA was one of the most
exciting policy developments in the region in recent months.

Selassie said analyses by the Fund showed that the initiative
had a “tremendous potential to facilitate higher economic
growth’’.

The News Agency of Nigeria (NAN) reports that the IMF projected
a region wide economic growth of 3.2 per cent in 2019.

Selassie said the “hard task’’ before African nations was making
sure the AfCFTA was fully implemented “to facilitate the trade that
we need to see between countries in the region’’.

The IMF director also commented on the continent’s high debt
burden, especially from China, resulting largely from borrowing to
balance budget deficits.

He explained that the Fund was not particularly wary of China,
which he said “has been a very important development partner for
many countries in sub-Saharan Africa’’.

“There are some counties that have borrowed extensively, and
this is not just from China but from all other sources of financing
either through Euro bond, domestic markets or other sources of
capital.

“Yes, there are countries that have borrowed beyond what they
can quickly pay, but it is important that we get this story
straight.

“China has been a very important partner for many countries and
remains so.

“Our concern really is more about overall debt level, not just
about debt but some other things.

“One is, once you have borrowed money to invest in
infrastructure, health and education, it is important you are able
to capture the rate of return on that investment so that the debt
can be serviced.

“What you put the debt to and how effective the investment
projects that you are undertaking is really the important part of
the equation,’’ Selassie said.

He added that it was also important for countries to address
their “tremendous development needs avoiding debts becoming
unsustainable’’. (NAN)

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