Nigeria's leading finance and market intelligence news report.

Takeaways from Okonjo-Iweala’s visit: How Nigeria can unlock growth

A clear call for reforms and competitiveness came from Ngozi Okonjo-Iweala, Director General, World Trade Organisation, who was recently on an official visit to Nigeria.

The visit – her first since assuming office on March 1, came with a lot of hope and assurances on the gains her WTO leadership presents. However, Nigeria must sort out a myriad of obstacles and take huge opportunities in the Africa Continental Free Trade Area (AfCFTA) to expand the weak economy and create needed jobs. Meeting with President Buhari, who she thanked for the huge support for her candidacy, Okonjo-Iweala listed conditions that could enable Nigeria benefit from the WTO, play big on the regional and global fronts.

“WTO will do more to help Nigeria, but we need to add value to our products in order to trade more. We should exploit all the opportunities in front of us, including the AfCFTA,” she told Buhari. Okonjo-Iweala was visiting Nigeria at a time of widening trade deficit and a slow take-off of AfCFTA, three months after it opened for business. Her visit, basically was to explore how WTO can support Nigeria and improve dwindling trade.

For the first time in four years, Nigeria posted negative trade figures in 2020 as the COVID-19 pandemic crushed oil demand, and tumbled revenues of oil-exporting countries. With a N7trillion trade deficit in 2020, exports fell as much as 35 percent, according to latest data by the National Bureau of Statistics (NBS). Total trade was reported at N32.42trn for the entire 2020, exports came at N12.52trn while imports settled at N19.89trn.

Okonjo-Iweala said at an abysmal 0.33 per cent, Nigeria shares a small fraction of world trade and 19 percent of Africa’s total. She raised optimism that AfCFTA could help Nigeria boost trade and investment, however, the regional bloc’s most populous country and biggest economy has faced teething problems keying in. While some top African economies have reportedly freighted their first cargoes under the AfCFTA, Nigeria continues to foot-drag.

However, Okonjo-Iweala believes that “We can do more, we can turn things around.” According to her, “To do that we have to improve our investments and add value to some of our products, because the AfCFTA is a unique opportunity for us to be able to engage commercially with other African nations to boost export and create more jobs. “And that is the message I want to convey to the country,” she said.

For her, the enormous support from Aso Rock and Nigerians is a motivation to take up current challenges in global trading system, including supply chain disruptions precipitated by the coronavirus pandemic, rising protectionism and unilateralism, growing economic nationalism, and trade restrictions covering substantial amount of international trade.

During the meetings which held in Abuja, the Director-General also discussed her ongoing efforts in Geneva to help Nigeria and other WTO members deliver concrete results on issues including fisheries subsidies and accelerating COVID-19 vaccine production, in the months leading up to the 12th Ministerial Conference later this year. She listened to government officials, entrepreneurs and other stakeholders about their experiences, needs and concerns with the trading environment within Africa and around the world and also explained what trade and the WTO can do to help the Nigerian economy grow quicker and diversify.

At a separate engagement with Adeniyi Adebayo, Minister of Industry, Trade and Investment, Okonjo-Iweala expressed concerns over Nigeria’s over reliance on oil earnings, especially as the world fast transits to renewable energy. In 2020, Nigeria’s predominant export remained crude oil, valued at N2.424 trillion, and represents 81.02% of total exports while non-crude oil export was just N568.2billion, or 18.98% of total export. “We are an oil and gas-based economy, and that has sustained us and still will. But the world is moving away from fossil fuel.

“We have to advocate and migrate to other types of activities. Nigeria must think fast on how to join the movement, we must advocate and be willing to migrate,” she told the minister, while advocating “appropriate investments in goods, agriculture and services.” Adebayo had intimated Okonjo-Iweala of some of Nigeria’s expectations regarding ongoing negotiations ahead of the upcoming WTO Ministerial Conference in Geneva in December 2021. On the agriculture negotiations, Adebayo said Nigeria was expecting balanced and equitable outcomes that would address the structural causes of insecurity in Net Food Importing Developing Countries (NFIDCs) and Least Developed Countries (LDCs).

The government, he said, looks forward to outcomes that would reduce overfishing and unsustainable development of the fishing sector of developing countries. While acknowledging WTO efforts in training on international trade governance, Adebayo also drew her attention to the country’s capacity difficulties, which continue to undermine effective participation in the multilateral trading system.

On E-commerce, Okonjo-Iweala advised that Nigeria’s 103rd position out of 167 countries in logistics was not just good enough, but a potential area for investments. She recognized Nigeria as a leading light and its youth involvement in fintech and technology and assured that the WTO is developing rules to underpin e-commerce in a fair and balanced way to also build capacity. The WTO, working with other financial institutions would deliver technical assistance, training and quality upgrade to unlock some bottlenecks confronting Nigeria.

Okonjo-Iweala also spoke on the WTO concerns about Nigeria’s foreign exchange management and how it had been used to support manufacturing, exports and imports. The Central Bank of Nigeria (CBN) in 2015 launched a foreign exchange restriction policy, which has till date barred over 41 items from access to foreign exchange for import.

However, European Union (EU) countries had filed complaints about some of these trade restriction policies before the WTO, particularly on the use of devaluation of the balance of payments agreement to protect the dairy industry. “We have a complaint against us by the EU about the use of devaluation of the balance of payments’ agreement with respect to trying to protect the dairy industry,” Okonjo-Iweala noted during talks with Godwin Emefiele, CBN Governor. “And they feel that this is not the right instrument, and as DG WTO, I have to make this known.”

She was of the opinion that the CBN’s argument about protecting local industries against dumping and cheap imports was reasonable, but could be addressed through the WTO trade remedies, rather than a ban on imports. Governor Emefiele, at the meeting defended the apex bank’s restrictive trade policy, stressing that it was meant to protect local industries from unfavourable competition, conserve foreign reserves and boost jobs.

Emefiele argued that with the country’s high unemployment rate at 33 percent, one of government’s top priorities is to create job opportunities and provide an enabling environment for the teeming unemployed youths.

“Nigeria remains open to business from any part of the world,” he however assured.

Okonjo-Iweala also told the Minister of Foreign Affairs, Geoffrey Onyeama of WTO’s readiness to support Nigeria with capacity building and technical assistance, to improve the quality of products for export.

The WTO would also work with entrepreneurs and producers to ensure that the country’s products can access global markets, and particularly, support women entrepreneurs to access the international market working with the Nigerian Export Promotion Council (NEPC). She also reassured that the WTO would work with other international organizations to help Nigeria sort out some of its infrastructure deficits.

Meeting with Zainab Ahmed, minister of finance, budget and National planning, she re-emphasized the opportunity in the AfCFTA and that one of the objectives is to see how the WTO could help add value to primary products especially within Africa. Nigeria is one of the biggest producers of Sesame seeds and Shea butter in the world but has been barred from the US and European markets due to quality issues.

“We also have the joint statement initiative at the WTO to see what rules can underpin trade for MSMEs and women in trade because we believe reaching them will make a difference in regional and global value chain since most of the population are in informal sector,” she said.

At the meeting, the finance minister requested WTO’s assistance in gas emission and bio-economic resources, as well as support for the country’s push for gas to be classified as a transition energy. “Our gas emission in Nigeria is very minimal compared to global emissions. We have these assets and we have not tapped into it to aid our development. We want you to support us and we have it in our agenda in COP 26 to campaign for gas to be classified as transition energy even if it’s for a limited period of 20yrs.

“We also want the WTO to support us on how Nigeria can leverage on bio-economic resources. We have been too dependent on fossil fuel and crude contributes significantly to the extent that whichever way the market swings to, we are affected. This is unhealthy,” she said.

Meeting with the Presidential Task Force on COVID-19, Okonjo-Iweala pledged to ease restrictions on Covid-19 vaccine supplies to ensure inclusiveness in production and acquisition. She acknowledged how export restrictions on the movement of medical supplies, equipment, and supplies to make vaccines, has become a huge impediment to tackling the pandemic.

The Pfizer BioTech vaccine manufacturers had disclosed that it takes 280 components to manufacture the vaccine, with a supply chain involving 19 countries. “This means that when a country puts export restrictions on one, it slows production everywhere, and that’s where the WTO comes in,” she said.

Whatsapp mobile

Get real time updates directly on you device, subscribe now.