Seven weeks from now, Africa will begin a continental free trade that promises to turn the tables for Nigeria and launch the continent into a mega-trading hub.
The African Continental Free Trade Area (AfCFTA), the largest trade agreement after the World Trade Organisation (WTO), is touted to open up a $3.4 trillion opportunity for a continent barely trading at 16 percent with each other.
For Nigeria, the continent’s most populous nation, it is an opportunity for firms to grow revenue, profits and a lagging gross domestic product, while creating jobs for a country with 27 percent unemployment rate and misery index of 43 points.
The key question, however, is, how prepared is Nigeria to benefit from the trade treaty?
“We are ready for the AfCFTA. Our Group’s presence in the export free trade zone is an indication that we are ready. We have resumed export to neighbouring West African countries, commencing with Ghana,” Osaro Omogiade, managing director of Nosak Distilleries Limited, told BusinessDay recently, when asked whether his firm was ready for the trade deal.
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Many Nigerian manufacturers, exporters and farmers interviewed by BusinessDay have re-echoed Omogiade’s view, with Guinness Nigeria sounding optimistic during a recent interview.
However, the general feeling among economists and analysts is that many things must change for Nigeria to lead the chase on the continental trade from January 2021. First is the model of farming in Nigeria, which analysts say does not put local farmers in the driver’s seat.
In terms of mechanisation, Nigeria has a capacity of 0.067 per square kilometre of arable land, whereas South Africa’s is 43 per square kilometre. Egypt has 400.09, while Rwanda’s and Ivory Coast are 1.3 and 0.32, respectively, according to the Food and Agricultural Organisation (FOA), World Bank and Index Mundi.
Many African countries are more mechanised or have more tractors than Nigeria with 200 million people, which means that their costs of production will likely be lower than Nigerian farmers’.
Similarly, yield per hectare in Nigeria is the lowest among emerging African peers. In tomato, average yield per hectare is 7 metric tons (MT), whereas it is 20MT in Kenya, 8.6MT in Ghana, and 86.8MT in South Africa.
Despite being the largest maize producer in Africa, Nigeria has an average of 2MT per hectare as against 3.8MT in Ethiopia and 6MT in South Africa. For potatoes, Nigeria’s yield per hectare is merely 3.7MT whereas Ethiopia and Kenya have 15.1MT and 15.1MT, respectively, with South Africa ahead with 38.8MT.
“We must invest more in research to increase farmers yield per hectare,” Abiodun Olorundenro, managing director of an agro-based firm, Aquashoots, said.
“What crops are we going to sell to other African countries under AfCFTA, when we are currently not growing enough to feed ourselves,” he asked, saying farmers must make mechanisation and innovation the centre of farming methods to boost productivity and maximise cost.
Moreover, most of Nigeria’s agriculture practice is done on a subsistence level and are seasonal, unlike South Africa with large extensive farms with markets in Europe and the Americas. According to Olorundenro, the game-changer is to adopt all-year farming to minimise the impact of changing climate patterns on Nigerian crops.
Research is still a problem among farmers and manufacturers, making production cost very expensive. Nigeria’s products are still rejected due to an inability to meet set standards, including poor packaging and use of obnoxious chemicals during storage.
Christanah Adeyeye, director-general, National Agency for Food and Drug Administration and Control (NAFDAC), said over 70 percent of Nigerians products were being rejected abroad.
Victor Iyama, president, Federation of Agricultural Commodity Association, said this must end for Nigeria to be competitive under the AfCFTA, noting, “Farmers need to adhere to standards and good practices. The issue of standards is key in any trade, be it inter-regional or global trade.
“We must avoid monetary policies that make it difficult for manufacturers and exporters to access foreign exchange.”
Analysts say the state of Nigerian ports, especially Apapa and Tin Can, must change for Nigeria to make headway in AfCFTA era. In Apapa, the cost of moving goods in and out of the ports has doubled in the last 12 months with officials asking for bribes. About 5,000 trucks seek access to Apapa and Tin Can ports in Lagos every day, whereas an earlier plan was for only 1,500 to access the ports, according to the Lagos Chamber of Commerce and Industry (LCCI). Scanners are not working and delays are common, putting perishable export products at risk. However, logistic is still a major problem across Africa, as roads are still bad.
“Logistic is still a big problem. It takes 14 days to ship goods from Brazil to Nigeria and takes a month to ship goods from South Africa to Nigeria,” Ibrahim Kabiru, national president, All Farmers Association (AFAN), said, adding, however, that Nigeria is currently at advantage of AfCTA because it feeds the whole of West-African region.
The Nigeria-Benin Republic border must be open for the trade to happen between Nigeria and the rest of Africa. Most Nigerian exporters cannot move their goods to West Africa due to the closure, as they move their goods to Europe by sea first before waiting for return vessels.
Tony Ejinkonye, former president, Abuja Chamber of Commerce and Industry and Director of Business Development (Africa), Eskilroad Network Limited, said infrastructure needs to be improved to lower cost of production and put Nigerian businesses on the competitive edge.
“The primary change that must be done is for all relevant infrastructures that will support and enhance competitiveness to be undertaken by the government. Without being repetitive, our roads, power, and transportation that will bring down the cost of goods and services and make us more efficient are the keys to our socioeconomic survival in the new African landscape,” he said.
Celestine Okeke, an associate consultant of the Department for International Development (DFID), noted that Nigeria must implement reforms.
“Low yield and good agricultural practice are big concerns. We must have sectoral policies that address specific needs to give us a competitive edge. NAFDAC needs to up its game in regulatory functions. The competition is getting continental and global now,” Okeke said.
Luqman Mamudu, a former director of Policy and Strategy at the National Automotive Design and Development Agency, believes Nigeria can compete in automotive space. But, he said, there is a need for local automotive players to strengthen local content by installing local body shops.
“For instance, for a product like automotive to be regarded as made in Nigeria, its local content must be independently determined to be above 30 percent. This mechanism is usually put in place to avoid good routed into the bloc through rogue nations,” he said.
Odinaka Anudu, Harrison Edeh & Josephine Okojie
