Benin hit by neighboring Nigeria’s car import ban

Surveying his sprawling car dealership on the fringes of Benin’s commercial hub Cotonou, Kassem Hijazi alternates between chainsmoking Marlboro cigarettes and puffing on a hookah.
He and his colleagues do not have much else to do. There has not been a single customer since December, when neighboring Nigeria banned car imports by land as part of a wave of protectionist policies that are strangling Benin’s economy.
“We spend our days smoking, it is our life now,” Hijazi sighs, sitting in a gazebo beside his stock of thousands of cars steadily accumulating the dry winter dust.
This afternoon, Hijazi — who, like the vast majority of car dealers in Benin, is Lebanese — called in his Beninese accountant to help close up shop.
Debts are accumulating and the stress is becoming too much. “I lost in one year what I have earned in 16,” Ali Assi, another car dealer, said.
Of the 2,500 Lebanese dealers in Cotonou, 1,600 have packed up and left in the last six months, shutting down businesses that employed dozens of drivers, cleaners and security staff.
“Unemployed people used to come here to find work,” said Vincent Gouton, who represents a group of car dealership managers in Cotonou.
The Benin car market began its free fall last year when neighboring Nigeria entered its first recession since 1994.
Nigeria, an economic behemoth of 190 million people, gobbles up “99 percent of car exports” in Benin, according to Gouton.
Benin, a tiny country with scarce natural resources, relies on its port business to survive.
From the port city of Cotonou, imported cars, fabrics, and food from all over the world get distributed across west Africa.
But since the Nigerian economy crashed following the collapse in global oil prices, Benin has been suffering knock-on effects.
Nigerian President Muhammadu Buhari’s protectionist policies — his government has banned a slew of items including cars imported by land — has only aggravated the situation.
“This decision will encourage smuggling, it is back to square one,” Gouton said.
Several agreements were signed in the past between Benin and Nigeria to facilitate legal trade.
But Nigeria accuses Beninese customs of failing to monitor the exported goods and collect taxes.
Buhari hopes that closing land borders will revitalize Nigerian industries and attract business to the port at Lagos, Nigeria’s economic capital and largest city.
Today over 20 products — the list has never been officially published — are banned from being imported overland.
“For the past 18 months, we have seen a lot of policies that are not market friendly,” said Nigerian economist Nonso Obikili.
“The self-sufficiency policy has led the government to create all sorts of hostile environments around import,” Obikili said.
“The government wants to ban palm oil (imports) but our plantations are not ready to meet local demand, and it takes two years to get oil from trees. It is a mess,” said Obikili.
“And this will encourage illegal trade.”
It is not just Benin which is hurting.
Nigerian car dealer Olabanji Akinola said he had to fire half of his employees last week as a result of the ban.
Business used to be brisk at Akinola’s car dealership, located on the outskirts of Lagos.
Yet now he cannot pay any wages. “In Cotonou, they tax 35 percent of the value of an imported car. In Lagos, it is 70 percent,” Akinola said. “It is killing the business.”
“The price of cars will go up, and the smuggling will increase. There are 200 roads through the bush to come to Nigeria, the borders are porous,” Akinola said.
“This morning, customers begged me on my knees to lower my prices, but I cannot,” Akinola said.
Ultimately, it may only be the Nigerian government who benefits from the import ban.
In 2016, customs seized 307 contraband vehicles, worth nearly 5 billion naira (about 15 million euros). 
The figure is expected to rise in 2017.

Source: Arab News