Nigeria-Benin trade dispute marks first test for AfCFTA

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Nigeria and Benin are embroiled in a trade dispute two months after signing an agreement to free up the movement of goods and services in Africa.

Nigerian President Muhammadu Buhari ordered the partial closing of its boundary with Benin last month to curb smuggling of rice and other commodities. The blockade has had a ripple effect across West Africa, with factories and traders struggling to import key raw materials and having to use alternative routes for their exports, according to the Lagos Chamber of Commerce.

The border restrictions come after Nigeria and Benin in July agreed to join the African Continental Free Trade Area, which targets greater economic integration through the removal of trade barriers and tariffs on 90% of commodities. The duty-free movement of goods is expected to boost trade in the market of 1.2 billion people, similar in size to India, and a combined gross domestic product of $2.5 trillion.

“Over 80% of West African cross-border trade is by road,” said Muda Yusuf, the head of the Lagos business chamber in the Nigerian commercial hub. “The cost is quite enormous and the closure is not sustainable.”

Benin is a key transit route for traders and operates a system that allows landlocked neighboring countries to use its harbors for imports.

The impact of the dispute is being felt as far afield as Ghana, which is separated from Nigeria by Benin and Togo. Manufacturers have complained about the impact on costs, John Defor, research director at the Association of Ghana Industries, said by phone. In Nigeria, units of multinational companies including Unilever NV are in talks with the government to find a solution.

Buhari defended the blockade at a meeting in Japan with Beninese President Patrice Talon at the end of last month. He said Benin and its northern neighbor, Niger, should take “strict and comprehensive measures” to curtail smuggling across their borders.

While Nigeria is committed to the African free-trade deal, the agreement “must not only promote free trade but legal trade of quality made-in-Africa goods,” Buhari said in a Sept. 20 speech, which a spokesman shared in response to questions.

A spokesman for Talon declined to comment.

Countries which have ratified the African free-trade agreement are expected to start trading with slashed tariffs from July 2020.

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