With coming into full force of the African Continental Free Trade Area (AfCFTA) Agreement, the Nigerian government says it already has plans to tap into opportunities in ‘trade in services’ as a major position of strength, as infrastructure challenges threaten its competitiveness to ‘trade in goods.’
The African continent took a bold step into an integrated market in January 1 2021, which could see huge economic benefits in a single market economy for 1.3 billion people improving the Gross Domestic Product of over $3.5 trillion market, while lifting as much as over 30 million Africans out of poverty.
The Nigerian government on its part says it would depend strongly on its harnessed strength in services, particularly in areas like banking, Nollywood, and other services sector to trade with other African nations. But analysts, who spoke with BusinessDay, insist that trade in goods, not just services would be the real deal and guarantees the most populous country on the continent better gains.
“What we are currently looking at in Nigeria is where we have comparative advantages. Currently, we have comparative advantages in our trade in services. In the last few years, Nigeria’s services sectors comprising mainly of the banks, the Nollywood, musicians, lawyers have been engaging us on a legal framework to expand their services to other African nations and have a better playing ground. This signing of AfCFTA and ratification will help our service industries expand opportunities in Africa,” Niyi Adebayo, minister of industry, trade and investment, and chairman of the National Action Committee on AfCFTA, said in a virtual conference on the trade pact monitored by BusinessDay.
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He said, “The whole idea for us here is that the AfCFTA is creating a big marketing bloc and trade within ourselves first,” noting that government was also strengthening MSMEs to grow the manufacturing, improve quality, have a better enabling environment whereby their goods by way of price would also be competitive such that our goods could move around.
“We want to take advantage of the 1 billion market share in addition to our own 200 million, and dissuade any form of dumping, so that Nigerian goods can dominate the market,” Adeniyi said.
But, as the Federal Government advances efforts at revitalising the infrastructure as seen in the rail system, linking the ports infrastructure, decongesting Apapa and working on key legacy projects such as the second Niger Bridge, and advancing efforts on World Bank ease of doing business ranking, industry stakeholders say efforts need to be quickened to advance Nigeria’s trade in goods advantages in the pact.
“We are strong in trade in services, but key to trade is in goods. The AfCFTA Agreement must seek to industrialise the continent. We must find out how the trade pact will revive the industries,” Issa Aremu, vice president of Global Industrial Union and president of Textile Association of Nigeria, told BusinessDay.
The vision of the founding fathers of the Organisation of African Unity is having a common market, as seen in the vision of Kwame Nkrumah of Ghana of agenda 2063, Aremu said.
“It is good that Africa must trade within itself. We must not live on handouts of aid when we could take advantage of trade. We must exercise cautious optimism. Recall, we have been trading, but we must ask key question of how the trade will develop Nigeria and Africa.
“Trade is a means to development, but we must ask how many jobs are we expecting for a country and even a continent facing massive unemployment concerns. There must be link between the political leaders and the technical people running the policy,” Aremu said.
“Will this revive production,” he queried. “Take Nigeria for instance, how can Nigeria accepting that we’re strong on goods, and for me the key to trading is goods. I’ve seen our banks in Senegal, Ghana and other countries, but modern banking is going digital. So, what is the job content of the banks, because they could be financing imports?
“Our concern as labour union is that this pact must revive trade in goods and the goods must be what we produce and enforcement of rules of Origin comes in here. This must begin to address trade in goods and create wealth. We led the regional ECOWAS Trade. Our textile was at some point producing for other African countries.
“We must lead this to industrialisation, development, wealth creation, job creation to make the best out these special trade pacts. The uncritical manner we went into WTO since 1995 has crashed some our markets, even the textile industry. This must tell a different story for us,” the labour leader said.
“We must find out how these pacts would stimulate our industrialisation. We have huge potential as seen in the Dangote’s 650,000 barrels per day, which should point us towards trade in goods and key commodities,” he said further.
Ken Ukaoha, president, National Association of Traders Association, said Nigeria must identify industrial clusters in the country and support them to compete favourably.
“You must look at the enterprise capacity and production of our people ensuring that the agreement generates enterprise for our people. Can we have people in the manufacturing sector that could add value and export, as given us the opportunity on the ‘rules of origin’”, he said.
