EU sees Nigeria’s trade cost reduce by 10% on new agreement

Nigeria could reduce its trade costs by more than‎ 10 percent, as well as retool its degenerated economy on the back of the Trade Facilitation Agreement (TFA) recently ratified by the Federal Government, according to the European Union (EU).

‎”For developing countries like Nigeria, the entry into force of the TFA could reduce trade costs by 10 percent. The TFA will therefore offer opportunities to support Nigeria’s efforts in relaunching its economy.”Filipo Amato‎,Trade Counsellor, and Head of Trade and ECOWAS section, EU Delegation to Nigeria and ECOWAS, told BusinessDay.

The Federal Government recently, signed the Trade Ratification Agreement in Davos Switzerland, with the aim to ease trade through efficient border procedures, encourage more local production, improve control of fraud, and expand its low revenues.

According to Amato, the signing of the TFA by Nigeria confirms government’s intention to play a more active role in the area of trade relations in Africa and globally.

“The agreement should make it easier for Nigerian companies to export to the rest of the world. The EU and its member states are already providing and would continue to provide within the framework of their development cooperation, project assistance to Nigeria and West Africa to ensure the effective implementation of the TFA,” Amato further said.
The ratified trade facilitation agreement contains the rules of trade, eliminates barriers, and further reduces customs clearance time.
It also sets out measures for effective cooperation between customs and other appropriate authorities on trade‎ facilitation and customs compliance issues.

Analysts believe that even modest reductions in trade transaction cost, such as lengthy border procedures, translate into significantly increased trade.

The benefits include making it easier for trade deals to occur between nations and eliminating all forms of barriers to trade inflows into the country, in addition to increasing volumes of goods and services for export.

Research shows that developing countries stand to gain two-thirds of total World Welfare from Trade Facilitations‎, taking into considerations, transactions delays and constraints in clearing of imported goods.

Okechukwu Enelemah, minister of Industry Trade and Investment, earlier informed that the Federal Government had already commenced the procedural steps in implementing the just ratified trade agreement.

“‎The TFA would increase the volume and value of trade in goods. The greater the volume, the greater the revenue generated, the more jobs created and the more the economy expands.

“Recently, Anabel Gonzalez, senior director for Trade and Competitiveness at the World Bank, visited us with her team to engage in concrete decisions, where discussions were held on the single window and one stop shop, raising the quality of Nigerian products for export, in addition to setting up trade infrastructure at the ministry; assistance in staff training with the World Bank study and analysis that will help us in the negotiations for the continental Free Trade Agreement,” Enelemah said.

He however noted that the focus of all this is to create an enabling business environment for trade and business transactions to happen with relative ease, in line with global competitive demands.

Onyeka Mbamalu, a clearing agent, said delays that often characterised clearing of goods and services are expected to be addressed with the ratified Trade Agreements, since the WTO and other relevant bodies are expected to provide technical assistance to clearing of goods in the country.

BusinessDay found that businesses suffer direct border -related costs, such as expenses related to supplying information and documents to the relevant authority and indirect costs such as those arising from procedural delays, lost business opportunities and lack of ‎predictability.

However, trade experts say everyone stands to gain from making the process of trade easier. Government gains because efficient border procedures‎ make them able to process more goods and improve control of fraud, thus increasing government revenue.

“In Trade Facilitation Agreement, businesses gain because if they could deliver goods more quickly to their customers, then they are more competitive. Consumers gain because they are not paying the cost of lengthy border delays. If a truck waits at the border for a week, ultimately the customer is paying for its being off the road and unproductive in that time” Celestine Okeke, a business cosultant told BusinessDay.

Analysts believe that changing business practices has also put ‎the spotlight on the speed of delivery. They insist that in an ever globally competitive trade environment, businesses cannot afford to have imported or exported goods tied up for long periods at the border because of unnecessary or over-complicated procedures and requirements.