Fluctuating CFA exchange rate blamed for 90% drop in Seme Border activity

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Licensed customs agents at the Seme Border in Nigeria have attributed a 90% decline in border activity to the fluctuating exchange rate between the Central African CFA (CFA) franc and the Nigerian naira.

According to Mr. Godon Ogonnanya, Special Adviser to the President of the National Association of Government Approved Freight Forwarders, Seme Chapter, border trade flourished when the CFA was weaker than the naira.

Ogonnanya further explained that land border imports are inherently more expensive due to double duty payments – once at the origin port and again at the Seme border crossing. The current exchange rate fluctuations are believed to be exacerbating this cost disadvantage.

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He emphasizes the inherent costliness of land-based imports compared to sea freight. Importers utilizing land routes are subject to double duty payments – once at the port of origin in the exporting country and again at the Seme border crossing upon entering Nigeria. This double taxation, coupled with a strengthened CFA relative to the naira, is believed to be significantly discouraging import activity.

“Trade activities have dropped by about 90 percent but things are changing gradually. It is not something that can change overnight. The major challenge is the fluctuating rate of CFA. For example, today it would be N2,000 to one CFA, and tomorrow it will change to N,3000 against the CFA.

“The CFA rate is the reason activities are low here. In those days when the CFA was a little bit down, activities were much there but now that the rate has gone up, it is affecting the business. Because, after clearing at the border in Cotonuo, by the time you get to the Nigerian border the rate of CFA would now come up again,” he stated.

Ogonnanya expressed hope that things would gradually recover at the borders.

“The challenging thing is that what you would spend to clear the goods at Cotonuo Port for the Benin Republic government including the transport before you get to Seme to clear with the Nigerian government before the goods would be allowed into the country, all these add to the cost including the high rate of CFA and dollar,” he explained.