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Improving trade relations to boost the economy and transport sector

A reliable and efficient transportation system plays a fundamental role in any nation’s economic growth and prosperity. A well-structured transportation system can provide adequate access across the nation, which in turn facilitates the timely movement of goods and services across the entire value chain.

Transportation is the critical success factor in economic growth and development, as well as a wealth creating industry on its own merit. Historically inefficient transportation systems limit a nation’s ability to maximize its natural resources, distribute and integrate the manufacturing and agriculture sectors, ensure the supply of education, medical care and the other infrastructural facilities that keeps life going.

The importance of effective infrastructure for a nation like Nigeria cannot be overemphasized, especially from a national wealth creation perspective. We are strategically located on Africa’s west-central coast, and the Federal Republic of Nigeria is undoubtedly the biggest economy in Africa.

Nigeria is the largest nation in Africa (from a perspective of both economy and population) with a gross domestic product (GDP) of $397.3 billion and a population of over 200 million people (in 2018). As well as being the world’s sixth largest oil producer (and largest in Africa) with proven oil and gas reserves of 37 billion barrels, Nigeria is 192 trillion cubic feet, with over 300 square kilometres of arable land, and significant deposits of largely untapped minerals.

GDP from transport in Nigeria increased to $720.241 million in the third quarter of 2019 from $642.927 million in the second quarter of 2019. Transportation contributed 2.49 percent to nominal GDP in Q1 2019, an increase from 1.85 percent recorded in the corresponding period of 2018 and higher than 2.05 percent recorded in the fourth quarter of 2018.In real terms the transportation and storage sector grew by 19.50 percent in Q1 2019.

Nigeria shipped $52.9 billion worth of products around the globe in 2018. That dollar figure reflects a -46.7 percent decline since 2014 but a 29.9 percent gain from 2017 to 2018. Applying a continental lens, nearly a half (43.9 percent) of Nigerian exports were shipped to European countries while 27.7 percent worth was destined for Asia. Another 13.2 percent was delivered to North America while 9.2 percent went to Africa, 4.9 percent arrived in Latin America excluding Mexico but including the Caribbean, and 0.4 percent was sold to importers in Oceania (0.4 percent) led by Australia.

From those figures we can see the huge economic potential that exist in Nigeria, combined with vast abundant resources, Nigeria is still a destination for global investment. Although its main challenges range from poor public transportation systems, high corruption, mismanagement of security challenges by past leaders, all resulting in the lack of diversification of our economy. Lack of modern transport infrastructure, especially in the transportation sector (which is still in the low level) has given rise to a great opportunity for global investors to look at.

The importance of improving trade relations and Foreign Direct Investment (FDI) are some of the ways of boosting the economy, U.S.A, Australia, China and Vietnam are some examples of nations that grew their economies with such strategy. Although barriers may exist within the host country in the attraction of trade opportunities and FDI, it is very important to establish a transparent, broad and effective enabling policy environment to attract investments and also the ability to build the human and institutional capacities to implement and maintain the growth is very important.

The transport sector promotes and supports job creation, makes products cheaper for our internal markets, as well as opening the global market for our products and services, which encourages innovation and greater productivity in Nigeria.

The current high level of unemployment and folding up of a large number of Small and Medium Enterprises (SME) within the Nigerian economic sector has negatively impacted on the economy because SME’S plays an extremely important part in modern day economies (especially in the transport sector) proving to be the most attractive and tremendous innovative catalysts for the growth of a better economic system and so we must find ways of reviving and bring them back to life for the growth of our economy .

In addition, the vital contribution of SME’s to economic development is a reality that has been unanimously recognised globally by experts as it shows the economic and social benefits impacts led to the attention of the SME sector as a field of strategic interest for economies.

Transportation and logistics are two key areas which plays an important role and can facilitate the attractiveness of investments of Multi-National Companies (MNC’S) to the economy. There is also need for increased level of economic and social security’s such as building modern transport infrastructures capable of offering better connectivity between different locations across the entire nation.

Nigeria and Australia’s are trading partners, it accounts for less than one percent of Australia’s bilateral trading relationship. Both nations relationship has great potentials for improvement. Nigeria is Australia’s 42nd largest trading partner, accounting for less than 0.2 percent of Australia’s two-way trade. Total goods and services trade with Nigeria amounted to $945 million in 2018.

Its major exports included wheat, edible products and paper, but the potential of the market is far greater especially in the area of transportation and Logistics, because Australia in particular is one of the World leading nations that owes a lot of credit to its transport and logistics industry as a result of constantly evolving its freight networks, this has made the nation one of the most prosperous nations in the world, facilitating exports from the core industries that fuels Its economy and bringing high quality ,low cost import goods to retailers and keeps the living costs down to Australia’s consumers.

Recently the Australian Logistics Council reported that logistics accounts for 8.6 percent of Australia’s GDP, 1.2 million jobs for Australians and a $130 billion USD annual injection to the national economy and strongly believe it is very important for Nigeria to explore all avenues of improving the trade and investments relationships between both nations, especially in the transport and logistics sector. I would suggest that Nigeria transportation sector adopt the Australian model to drive greater efficiency in its transportation sector to drive greater efficiency and growth of its economy at large.

The solution to the economic challenges in the transport sector is the necessity of having well-articulated and flexible government transport policies to attract foreign investors to the sector. Some key elements of such policies should include good tax measures, economic liberalization, an enabling business environment, political stability, modern technological system, and a good security network.

 

FESTUS OKOTIE

 

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