0.5% tariff by Sahel States set back for small businesses, gain for smugglers – Stakeholders
By Idris Z Kankia, Katsina
Some traders in Mai’adua local government of Katsina State have expressed concern over the 0.5 per cent tariff imposed by the Alliance of Sahel States on goods from Nigeria and other ECOWAS countries.
The traders in separate interviews with The Syndicate said the new tax will affect small businesses and lead to revenue losses due to smuggling across the borders of the two countries.
The traders’ concern aligned with views of the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf.
It would be recalled that Mali, Niger and Burkina Faso, recently withdrew from the ECOWAS bloc and formed the Alliance of Sahel States.
They also announced imposition of additional 0.5% teriff on goods imported from outside the three countries.
However, traders in Kongolom, a border town with Niger Republic, said the tariff would disrupt businesses of the largely small scale traders in Nigeria and Niger.
One of the traders, Alhaji Muhammad Mamman said that the tariff would disrupt the long-standing trade relationship between countries in the region as many traders along the border rely on daily transactions to sustain their businesses and families.
“Small and medium scale businesses might not afford the expenses forced by this new tax. If fewer goods move across the border, markets in Mai’adua and other areas will suffer, leading to economic stagnation,” he said.
Mamman forecast that smuggling would increase as traders might look for ways to bypass the official channels, which may lead to revenue losses.
Malam Abubakar Sagir, another trader said instead of imposing more taxes, both countries should work on improving trade policies that encourage economic cooperation.
He said business in the border communities has already been affected by the past border closures and diplomatic issues, especially between Nigeria and Niger Republic.
Traders, he said, might reduce their imports or look for alternative routes to avoid the levy, which comes with its own risks.
On his part, Alhaji Kabir Sani, an expert and a businessman, revealed that majority of the traders in Nigeria and Niger depend on small profit margin.
“Any extra cost will affects our ability to compete; adding a 0.5% duty will only make things worse.
“Instead, both governments need to find a better way to support trade, not make it harder.
“If this continues, business will slow down, and both Nigerians and Nigeriens will suffer,” he added.
Some experts viewed the new tariff as a blow to the African Continental Free Trade Agreement (AfCFTA), which has witnesed sluggish implementation.
The experts opined that even if the tariff does not affect intra-West African trade volume in absolute terms, the region may lose traction in efforts at trade formalisation.
None of the Sahel countries in question is among top 10 African countries Nigeria imports from in Africa.
Last year, South Africa, Ivory Coast, Senegal, Cameroon and Togo, accounted for 90.95 per cent of exports to Africa.
Nigeria’s trade with the neighbouring countries has also grown recently, even though the Nigeria’s trade with other ECOWAS countries remains negligible.
In 2024, Nigeria’s import rose from N164 billion to N600 billion, representing just one per cent of the country’s total import, while export was N5.28 trillion as against N2.24 trillion recorded in 2023. The value of export to ECOWAS countries, including the Sahel region, was 6.8 per cent.
Niger is ninth of Nigeria’s 10 top export partners, which stands at N25.91 billion in 2024, which is insignificant when compared with Nigeria’s export to South Africa.
The emerging tariff war in the sub-region, experts fear, could reverse the resurging trend and changing pattern of trade in the zone.
Dr Muda Yusuf, Chief Executive Officer, Centre for the Promotion of Private Enterprise, however said the levy would have limited impact because trade within the sub-region, especially between Nigeria and its immediate neighbours, is mostly informal.
“The levy, I strongly believe, would not have a significant impact on informal trade which, in this case, is higher than formal trade. The borders are porous, and most of the trade that takes place there is informal and undocumented.
“The formal trade will be affected by this new levy imposition, but it is not so much when you look at trade within the subregion and our major trading partners within the sub-region.
“Look at our trading numbers with Niger; it is not that significant to affect us,” he said.
He added that Nigeria’s total trade imports and exports within the sub-region is less than 10 per cent of Nigeria’s total trade, therefore, not very significant enough to have any adverse effect.
“Look at the cattle and animals brought in for festive periods. Are those trade numbers recorded? Does anyone pay taxes on them? Niger is landlocked and most of their goods come in from Nigeria and the Republic of Benin, most of which is undocumented. The levy would affect those countries more than us,” he said.
On the impact it will likely have on AfCFTA, he said non-tariff barriers present even more problems and burdens to ECOWAS states than levies and tariffs.
“To move a cargo of export across Benin Republic and Togo, exporters pay what is called ‘transit levy’ which runs into millions of naira. I believe the transit levy is even more than the newly-imposed 0.5 per cent levy that the Sahel countries introduced. Benin already banned some of our goods, ignoring the ECOWAS protocol and treaty. The respect for the protocol within the sub-region is extremely weak and almost non-existent now, and this levy is the final nail in the coffin for the ECOWAS treaty and protocol,” he said.
Also, Director-General of the African Centre for Supply Chain, Dr Madu Obiora, said the move was expected.
“Since they do not belong to ECOWAS anymore, treaties like the ECOWAS Trade Liberalisation Scheme (ETLS) do not apply to them again, and this is expected.
“What this means is that imports from ECOWAS countries would be affected and I think the 0.5 levy is not so heavy.
“I do not know what is being done to bring them back to the regional bloc, but any more serious trade tariffs will significantly disrupt trade flow in West Africa.
“For traders that used to ship to the affected countries, this levy might affect their trade facilitation mechanisms.”
He said that the best option is to dismantle trade barriers instead of coming up with new taxes.
“The three countries are landlocked nations and in retaliation, other countries might go on to impose counter-tariffs on them, increasing the cost of movement of goods across countries, which is already very expensive.
“The trio might also be forced to look for alternative trade routes if countries like Togo, a major trading route between West Africa and the rest of Africa, impose tariffs as well,” he said.
