Nigerian policy-makers have always responded to the issue of self-sustainability in local production by closing the borders, but the policy has only produced a few winners and many losers.
Economists describe this distinction through the lens of Pareto and Kaldor–Hicks efficiency. In the former, no one is made worse off; in the latter, some may lose but the overall gains are large enough that, in theory, winners could compensate for the losers.
Nigeria’s border closure fails both tests; it enriches a handful of manufacturers while leaving consumers poorer and the wider economy weaker.
Nigeria’s border closure and its aftermath
Muhammadu Buhari, former Nigerian President, closed the nation’s land border between August 2019 and December 2020, but failed to address structural challenges in the economy. During this period, data from the Nigeria Bureau of Statistics (NBS) showed that inflation spiked from 11.02 percent to 15.75 percent when the border was reopened.
The Financial Derivatives Company (FDC) in its report noted, “Import restriction is a cure worse than the disease.” Historically, previous land border closures in Nigeria only made things worse for consumers, the very group the government claimed to protect.
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The illusion of protection
Historical data show that every major round of import restrictions, from the 1982 Economic Stabilisation Act to Obasanjo’s 2002 measures and Buhari’s 2019 border closure, was followed by sharp inflationary pressures. Instead of insulating the economy, these policies consistently eroded purchasing power, distorted markets, and entrenched inefficiency.
Abdulrauf Bello, a fund manager at Cowrywise, illustrated the point with Nigeria’s cement industry. Installed capacity in the country is about 63 million tonnes, nearly double the current demand of 33 million tonnes.
“On paper, such excess capacity should drive prices down. Yet, cement remains stubbornly expensive at N7,000–N10,000 per 50kg bag in 2025. The reason is market concentration: cement makers control over 95 percent of supply. In this oligopoly, players have little incentive to compete aggressively on price. Barriers to entry, capital requirements, access to limestone deposits, energy costs, and regulatory approvals, lock out new entrants, insulating incumbents.”
Bello argued that if imports are not restricted, foreign competition can force prices lower, expanding consumer surplus and reducing the housing deficit of more than 20 million units.
“What matters most is consumers getting the best deals,” he noted. “And one of such ways to make that happen is allowing competition to thrive.”
CardinalStone analysts added weight to this argument, observing that despite Nigeria’s huge installed capacity, the industry’s capacity utilisation hovers at just about 51 percent. In other words, half of the plants sit idle while prices remain among the highest in Africa, a paradox sustained not by demand but by market power.
A similar paradox plays out in agriculture. Even though Nigeria is one of Africa’s largest producers of staple crops, farmers still struggle to meet local demand. Simple economics dictates that when production falls short, prices climb rapidly as demand outpaces supply.
Structural bottlenecks such as low yields, insecurity, inadequate storage, poor rural roads, and limited access to technology keep output low and wastage high. The Buhari administration’s Anchor Borrowers Programme pumped cash into the sector. However, without tackling these fundamental issues, the policy failed to raise productivity or stabilise prices.
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How border closures stifle competitiveness
Manufacturers often think that they gain when borders are shut. But that is only one side of the story. When borders are shut (like we had during Muhammadu Buhari’s government), a few manufacturers control the local market but the sector stagnates due to lack of international competition.
Mojisola Adeyeye, director general of National Agency for Food and Drug Administration and Control (NAFDAC), said in 2023 that more than 70 percent of Nigerian agricultural exports are rejected in Europe and America due to quality concerns, often linked to delays and compromised standards.
BusinessDay findings show it can take as long as one month for containers to move from warehouses to the port, during which products, especially perishables, lose value. Truckers also complain of being extorted at checkpoints, a practice that further raises costs and discourages participation in export trade.
This combination of weak competitiveness at home and logistical bottlenecks abroad explains why Nigeria struggles to convert its production into FX earnings. In contrast, neighbouring West African countries with more efficient ports and better trade facilitation often find their exports accepted in markets where Nigerians are rejected.
The real fix: cut production costs
Segun Ajayi-Kadir, director-general of the Manufacturers Association of Nigeria (MAN), captured the problem bluntly on Arise TV. He noted that manufacturers are “still borrowing at above 30 percent.” He noted that “there is nothing you can produce and be profitable and be able to scale if you borrow at that rate.” He added that firms also face crippling energy costs, poor power supply, insecurity in key production zones, and multiple regulatory obstacles that raise costs at every turn. The consequences are stark: manufacturers are now saddled with over N2 trillion worth of unsold inventory, a direct result of high production costs pricing goods out of consumers’ reach.
These unsold goods tell two stories at once: producers cannot sell because prices are too high, and consumers cannot buy because purchasing power has been eroded. It is a vivid illustration of how inefficiency and weak demand feed off each other, trapping both industry and households in a cycle of stagnation.
These structural inefficiencies explain why Nigerian products struggle to compete globally. Unlike their peers elsewhere, Nigerian manufacturers provide their own electricity, water, roads, and even security. Until such systemic issues are fixed, border closures will only shield inefficiency rather than solve it, experts say.
Equally important is fixing Nigeria’s export infrastructure. As long as containers spend weeks stuck on the road to the ports, and as long as extortion at checkpoints remains rampant, Nigerian goods will continue to be rejected abroad or arrive at foreign markets too late to be competitive.
As Abdulrauf Bello of Cowrywise noted, what maximises consumer surplus is not fewer sellers but more competition. Instead of shutting out imports to favour a few big firms, government policy should focus on creating a level playing field, lowering entry barriers, and encouraging both domestic and foreign players to invest, experts add.