Maigatari: Inside Nigeria’s Booming Border Market

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The desire to hasten the pace of regional economic integration in Africa led the federal and some state governments to establish free trade zones across the nation’s borders to provide easy market access to neigbouring countries in the West African sub-region.

One of such to markets is the Maigatari Border Free Zone situated at Maigatari, Jigawa State bordering Zinder in the Republic of Niger. Maigatari has a long standing reputation as one of the largest border markets trading in livestock, hides and skin, food stuff, and a variety of manufactured goods and commodities in Sub-Saharan Africa.

The Maigatari border market has been a transshipment point and as such a major hub in the old Trans-Saharan Trade Route which linked the West African sub region with other parts of Africa.

It was established by the Jigawa State Government in the year 2000 under the then Jigawa Corridor Concept to provide easy access to and also serve as a distribution centre between the southern parts of Nigeria and the landlocked Niger Republic and other landlocked countries of West Africa.

Maigatari has a population of 179,715 people as at 2006 census and a land mass of 870 sq km, of which 65sq km is allocated for the Maigatari Border Free Zone.

CROSS BORDER TRADE 

When our reporter visited the border town a few weeks ago, he saw a booming market with Nigerians, their Nigerien neighbours and traders from other foreign countries sealing deals and monies changing hands, a throw back from the traditional way of life before national boundaries were drawn. The modus operandi of the market is quite detached from the formal trade relations.

It is instructive that a substantial proportion of cross border trade transactions that occur at the Maigatari economic corridor flows through informal channel.

A trader, Malam Isah Usman Who spoke to our reporter said most importers and exporters preferred the Maigatari border market because of the absence of complex and expensive clearing procedures at ports and borders manned by Customs.

He said the procedures for border crossings are complex, hence the preference for the Free Trade Zones.

Usman said the fact that the border market operates “ with highly efficient infrastructural facilities, less bureaucracy and streamlined one-stop-shop operational procedures makes it a choice destination for traders from Niger Republic and other landlocked countries of West Africa”.

He said business owners were increasingly identifying the Maigatari free border market as a veritable tool to fast track economic development of the West African sub region.

He called on the Nigerian Export Processing Zones Authority (NEPZA) to sustain its special regulatory and fiscal incentive regime to enhance the competitiveness of the Maigatari Free Border Market.

TRADE INCENTIVES

The Nigerian Export Processing Zones Authority (NEPZA), the statutory body vested with the authority to license, regulate and facilitate investments at the free trade zones has a huge presence at the Maigatari Free Border Market.

Moving round the border market, our reporter observed generous physical and fiscal incentives provide by NEPZA, to make the booming border market what it is today.

At the Maigatari Free Trade Zone there is provision of facilities as water, electricity, security and telecommunication as the physical incentives put in place by his organization. The physical incentives provided by NEPZA could account for about 25% of an enterprise’s initial capital outlay.

A set of  fiscal incentives which include complete holiday from all forms of taxes and levies duty free importation of capital goods and machinery have served to promote activities at the free trade zone.

One-stop approvals for all permits, operating licenses and incorporation papers are also available ; 100% foreign ownership of investments; 100% reparation of capital projects and dividends and duty free, tax free import of raw materials provide huge opportunity for cross-border trading activities.

Enterprises in the zone can sell up to 100% of their manufactured item with up to 35% value addition in the domestic economy regardless of whether the item is banned or prohibited.

OPPORTUNITIES

The excellent location of Maigatari Free Trade Zone puts it at an advantageous position for investors to export finished goods to the rest of Africa and the world. Located in the Northern part of Nigeria known for huge presence of Textile Industries, investors can take advantage to locate Textile industries in Maigatari.

Nigeria with a population of over 180 million people is the largest consumer market in Africa. The Free Zone Incentive to sell 100% of manufactured products into the domestic market offers investors excellent opportunity to make bumper profits while working towards developing the export market.

Already, the Jigawa State Government in collaboration with the Nigerian Export Processing Zones Authority (NEPZA) has granted approval to West African Cotton (WACOT) proposal to set up a Sesame Seed Processing Plant at the Maigatari Free Trade Zone.

This is intended to create wealth, generate employment, provide sustainable means of livelihood and reduce poverty among the people of the state and the country at large.

Reduced earnings from crude oil revenues, Nigeria’s main export and source of over 80% of government’s foreign exchange earnings have put the country under pressure to free itself from the perennial cycles of oil boom and bust to hasten the nation’s economic recovery efforts.

A redirection of attention to non oil external trade, particularly the Free Trade Zones is key and offers the Nigerian government an opportunity to come out of recession and, going forward, pursue a path of economic growth that is less volatile and more sustainable.

CHALLENGES

In spite of the enormous opportunities that abound at the Maigatari Free Trade Zone, the free border market also faces a number of challenges like other free border markets in the country.

One of the key challenges in the operation of the Maigatari Free Trade Zone as observed by our reporter is inadequate power supply. This no doubt remains the single major threat to the survival of investments in the free trade zone.

The cost of alternative power supply eats deep into investors’ profit. Most businesses pack up few years after takeoff because of the unbearable cost of alternative power supply.

Many Nigerians however however believe that the problem of power supply will soon be a thing of the past with the current effort being made by the Ministry of Power, Works and Housing to tackle the problems of the power sector head on.

Lack of clarity in government’s policies has also been identified as one major challenge confronting the Free Trade Zones. For instance, a few years ago, federal government banned importation of some goods into the country but the laws guiding the operations of the free zones permit such goods to into the free Trade zones. Most of the free trade zones were consequently seized by the Customs. Before the matter was resolved most of the goods had either gone bad or accrued so much demurrage. This lack of clarity in the framework of the Free Trade Zones led to the closure of some Enterprises.

Also, inadequate knowledge of the Free Zones Scheme has led to insufficient collaboration by relevant government agencies that should see to the smooth running of the Free Trade Zones.

Security challenges in parts of Nigeria is also a major challenge which the Maigatari Free Trade Zone as foreign investors are quick to make reference to the Boko Haram insurgency in the Northern part of the country as a discouraging factor for investment in the country.

WAY FORWARD

To reap maximum benefits from the Maigatari Free Border Market and indeed other free trade zones, the federal government must take bold steps to transform the economy through its policy of industrialization by fixing power, developing more infrastructures at the free trade zones and tackling security challenges.

The government should continue to enforce a simple system between commercial banks for cross-border payments. Before April 2016 when the Central Bank of Nigeria approved that the naira be used as a single currency for all transactions at the free trade zones, the previous arrangement under which all manner of currencies changed hands was a massive disincentive to cross-border trade.

In total compliance to CBN’s directive, our reporter moved round the market with special focus on currency used for transactions, and we observed that naira was the only currency used in the market.

The member states of the West Africa Economic and Monetary Union (UEMOA) should conclude all reviews to allow banks to operate simple services for small and medium sized businesses to make trade payments directly from Naira to CFA francs and vice versa.

The Jigawa State Governor, Alhaji Badaru Abubakar should also leverage his private sector background and his connections with critical stakeholders to ensure huge revenues from the free trade zone to his state and the country at large.

With the facilities available in the free trade zone which include ten completed prototype factory buildings with associated road networks, drainages, electricity, water supply ready for outright lease to potential investors, and the presence of all security agencies at the border, the Maigatari Free Trade Zone is no doubt ready to play a leading role in the nation’s economic recovery efforts.

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