• Thursday, February 29, 2024
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Beyond ECOWAS, 18 months of AfCFTA yet to show in Nigeria’s exports

Beyond ECOWAS, 18 months of AfCFTA yet to show in Nigeria’s exports

Last year, Emmanuel Ijewere, CEO of Best Foods, an agribusiness company in Nigeria, was excited about the prospects of a $3.5 million deal that entailed doing more business across Africa. He had told this reporter that the deal involving businesses in some East African countries had been finalized for the last quarter of 2021.

Recently, when he was asked about that deal and how it went, he reported it had not gone ahead, eventually, even though with optimism that “things would still work out”. The multimillion dollar deal with prospects of getting bigger, was to include livestock coming from those countries to Nigeria, and certain crops (he would prefer are not mentioned) to be exported back to those countries.

“They too have problems in their own countries,” he said. “It is not only Nigeria that is having a slow start on AfCFTA.” The major problem, as he would later explain was caused by logistics.

Though the AfFCTA has had more launches than NASA, no trade has actually happened under the terms of the deal

“We have no rail line, we don’t have direct flights in many cases, and the cost of transporting goods by flight is very expensive. We’re just developing the shipping routes,” said Ijewere.

It has been 18 months since the Africa Continental Free Trade Area (AfCFTA) started, but there is little evidence to show it is improving trade across the continent, and at least not Nigeria and its exports. If trade across the continent has improved since the much awaited trade agreement took off, anyone seeking to determine this would as at today, be unable to find that information from AfCFTA, or at least not from of its websites.

However, analysis of data by the National Bureau of Statistics shows that in the first quarter of 2022, Nigeria’s exports to ECOWAS was N329.6 billion while exports to other parts of Africa amounted to N113.1 billion. Comparing with the same time last year (2021), Nigeria’s exports to ECOWAS countries was N260 billion while to the rest of Africa was N159.6 billion.

As data shows, Nigeria’s exports to ECOWAS increased year-on-year when comparing the first quarter of 2021 (N260 billion) and 2022 (N329.6 billion), but exports to other African countries declined from N159.6 billion to N113.1 billion within the same period. Beyond the decades-old regional trade in West Africa, through ECOWAS, there is no proof of the trade agreement currently working for Nigeria. At the very least, available data does not support it.

Though the AfFCTA has had more launches than NASA, no trade has actually happened under the terms of the deal, said a March 2022 article by The Economist. “There is a lack of urgency,” said David Luke of the London School of Economics (LSE) quoted in the report.

Focusing on Nigeria’s exports and the possibility of being impacted by AfCFTA, NBS data shows that in 2019, the last ‘healthy year’ before the trade agreement took off, Nigeria’s exports to ECOWAS was N2.2 trillion, while to the rest of Africa was N1.6 trillion. In 2020, the pandemic year as it has been called, exports to ECOWAS declined, recording N841 billion, and likely also worsened by a border closure by the Nigerian government.

For the rest of Africa, the decline was not as much, recording N1.5 trillion. However, by full year 2021, Nigeria’s exports to ECOWAS increased to N1.2 trillion while exports to the rest of Africa declined to N1.1 trillion.

“What has happened in the past one year (of AfCFTA) is not likely to change much in the next six months,” said Ijewere. “I put it at 6 months because I can see a number of small actions that are taking place, and more and more confidence building up in the sub region, and I believe that it will start bearing fruits, but also remember the biggest danger Nigeria faces is the fact that Nigeria could end up as a dumping ground for exports from other African countries.”

However, Nigeria as a nation has opportunities of increasing the quality and quantity of its own products. Agriculture is one of the biggest areas where we can get this done, he said.

For Kabir Ibrahim, national president, All Farmers Association of Nigeria, “the fact is that whether we like it or not, productivity on the part of our farmers has reduced, largely because of insecurity”. According to him, a lot of efforts being made to boost agricultural output are being hindered by the very low purchasing power of the Nigerian currency, worsening the situation from “insecurity that is permeating the nooks and crannies of Nigeria”. Yet, exporting more would have meant earning more foreign exchange.

Ijewere and Ibrahim remain optimistic that things will get better, at least as far as agricultural exports (and trade with the rest of Africa is concerned), but data, is yet to indicate things are about to get better.

“We have opportunities that haven’t been exploited because the private sector and the public sector in Nigeria are not really working together the way they should,” said Ijewere. “Countries like Ghana who have created an optimal, seamless relationship between private and public sector are taking full advantage of this. Their process of taking decisions is faster.”

Read also: Motor insurance seen to boom with ECOWAS Brown Card automation

As the Economist wrote, this year, AfCFTA helped start a scheme to allow traders in one country to pay for goods in another using their domestic currency, rather than dollars, thus cutting foreign-exchange costs. But in general progress has been slow.

Ijewere, who says he has not given up on his multimillion dollar deal (and other prospects), said he is working on achieving that goal and “hopefully, we’ll be able to achieve it before the end of this year”. The other danger he foresees, however, are the Nigerian ports.

“Last year, the Nigerian Ports were in a totally hopeless situation, and if we are to bring in livestock and keep them in the ship for about a month, they will all die. Those are the realities that one was facing,” he said, hoping the situation at the ports would have improved this year. After all, for him, it is a two-way trade of importing livestock to grow a local dairy/beef business, while also exporting crops produced in Nigeria, which are in high demand in those other countries.