UPDATE: Reopening of Seme border, implications to Nigeria economy – Prof Abayomi

The decision by the new administration of President Bola Tinubu to reopen the Seme border could stimulate activities in Nigeria’s automotive industry with significant implications for the nation’s economy.

The Head of Economics Department at Bingham University, Nigeria, Prof Abayomi Awujola stated this yesterday in an interview and emphasized the importance of understanding the magnitude of the policy and urged the government to conduct ongoing monitoring, evaluation, and analysis to ensure the policy’s success.

One of the immediate implications of reopening the border is an increased demand for vehicles. Importers and consumers would have easier access to a wider range of vehicle options, both new and used, from different markets. This surge in demand could stimulate economic activity in the automotive sector, benefiting various stakeholders.

Awujola said the reopening of the border would also generate revenue for the government through customs duties, taxes, and other fees imposed on imported vehicles. This additional revenue could contribute to the government’s budget and be potentially invested in infrastructure development or other public services.

The government aims to achieve a 7% average annual GDP growth rate, double the economy to approximately $1 trillion, lift 100 million people out of poverty, create over 50 million jobs, transform Nigeria into Africa’s most efficient trading nation, and deliver sustained inclusive growth.

According to Awujola “the availability of vehicles from different sources may lead to increased competition in the domestic automotive market. Local vehicle manufacturers and dealers may face competition from imported vehicles, influencing pricing, quality, and customer preferences. This could drive improvements in the domestic industry and provide consumers with more options.”

He added that the reopening of the border could create employment opportunities in the automotive sector as jobs would be generated for vehicle importers, distributors, dealerships, mechanics, and other related services. This would contribute to income generation and potentially improve livelihoods for individuals involved in the industry.

He however noted that it is essential for the government to carefully consider the potential implications of this policy.

“The reopening of the border for vehicle importation may impact the country’s trade balance and foreign exchange reserves. If more vehicles are imported than exported, it could result in a trade deficit in the automotive sector. Additionally, the importation of vehicles would require foreign currency, putting pressure on the country’s foreign exchange reserves,” he said.

“On the consumer front, increased access to a wider range of vehicles would provide consumers with more choices and potentially better prices. This could lead to increased consumer spending in the automotive sector and improved purchasing power for individuals and businesses.

The government must be mindful that policy implications can have both positive and negative effects. It is crucial to closely monitor, evaluate, and analyze these effects every six months to ensure appropriate adjustments and interventions are made to mitigate any potential drawbacks,” he added.