• Monday, April 22, 2024
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BusinessDay

Nigeria’s budding trade opportunities with Indonesia amid an uncertain global economy

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Indeed, the world is a global village. Travel and cross-border commerce and investment levels have never been greater in the history of our planet. However, moments of crises and threats to the sovereignty of nations have a way of recalibrating national, business and human relations.

Governments (national and subnational), businesses and individuals in Nigeria must therefore decipher the challenges of this moment in history and take proactive steps to weather the current economic storms by exploring prospects outside our borders. In the process, there is an opportunity to turn the current trials into a springboard for recovery and sustainable prosperity.

Over the last two and a half years, the outbreak of the coronavirus pandemic and, more recently, the Russia-Ukraine conflict have underpinned economic turmoil in many countries and regions across the world. Global supply chains have been disrupted, inspiring many countries to recalibrate their economic relations with long-standing trade partners.

The European nations’ conflict has also sparked an energy crisis which is prompting some countries to take pro-active steps to secure resources to power economic activity. In addition, the United Nations and other international organisations are sounding the alarm around food shortages in some regions, including Africa.

Like other nations, Nigeria, Africa’s largest economy and most populous nation, must take steps to secure its future. An example of the changing tide in global trade and investment is the move by Germany, amid the uncertainty around gas supplies from Russia, to secure additional/alternative gas supplies from Senegal. Meanwhile, as the alarm bells ring louder about a food crisis in Africa, some countries are partnering with other nations to guarantee improved supply.

Nigeria’s recent partnership with Morocco to set up a $1.3 billion fertilizer plant is a step in the right direction to address the needs of our agroeconomy. Such actions will reflect a prioritization of the structural transformation that will ensure that Nigeria is not left behind and is better prepared for future crises.

Furthermore, the deal models how countries can harness their economic strengths or natural endowments to build long lasting and mutually beneficial trade relations. Morocco needs ammonia for converting its phosphate reserves into fertilizer, but in order to produce ammonia, it needs access to natural gas, which Nigeria has in abundance. Indeed, Nigeria should invest resources in building and scaling similar arrangements with countries that can derive offer mutual benefits from increasing trade and investment.

One such country is Indonesia, south-east Asia’s largest economy and most populated country. Since President Joko Widodo took office in 2014, Indonesia’s Africa policy has prioritised economic engagement and cooperation with the continent. This has led to a steady rise in trade between Indonesia and the African continent. However, over the last few years, despite the disruption created by Covid19, trade between Nigeria and Indonesia has grown significantly. As a result, Nigeria, has now overtaken South Africa as the top trading partner on the African continent with a trade balance of $2.6 billion in 2021.

This is indeed a major milestone that indicates what is possible between both nations. The Nigerian Indonesian Chamber of Commerce and Industry (NICCI) has noted the growing number of Nigerian companies that are forging partnerships with Indonesian entities. Likewise, there is an increasing flow of investment from Indonesian entities into manufacturing, mining, agriculture, renewable energy, oil and gas.

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These trade and investment transactions include a joint venture between PT Timah of Indonesia and Topwide Ventures of Nigeria for the mining of tin in Jos, Plateau State. Others include direct investment in a modular refinery by PT Intim Perkasa in Akwa Ibom State, and the consumer goods company Wings expanding its local production capacity in Lagos. The Dufil Group, manufacturer of the famous Indomie noodles, has invested in the largest noodle manufacturing plant in Africa. Through its subsidiaries, it has also invested in a palm oil refinery in the Lekki Free Zone. The Kellogg Tolaram multi-billion naira cereal making factory in the same free zone is another example of a fairly recent investment that can be scaled.

Keeping with its mandate to promote bilateral trade, investment and tourism between Nigeria and Indonesia, the NICCI is joining other stakeholders to sustain the momentum of economic ties between the continental economic heavyweights.

The chamber has been deliberate in creating and participating in several investment and trade missions in Nigeria and Indonesia and is encouraged by the level of interest that past engagements have generated

The 2017 Nigerian-Indonesian Business Forum held in Lagos, the 2018 Indonesian-African Dialogue, the 2019 Indonesian-African Infrastructure Dialogue and the annual Tradexpo Indonesia held in Jakarta are notable events that continue to grow in influence each year.

Several more transactions are expected to be consummated as Nigerian investors join their counterparts in Indonesia to attend the Inaugural edition of the Nigerian-Indonesian Investment and Trade forum scheduled to hold in Jakarta, Indonesia from the 24th to 26th of October. This year’s event is being championed by the Nigerian Chamber of Commerce and Industry in collaboration with the Nigerian Investment Promotion Commission, the Nigerian Export Promotion Council, the Federal Ministry of Foreign Affairs and the broader Nigerian and Indonesian governments. With the disruptions linked to Covid19 now in the rearview mirror, and given the momentum built from prior interactions between Nigerian and Indonesian investors, the NICCI projects that the trade balance between the nations could rise to $4 billion by 2023.

Balogun is the president Nigeria Indonesia Chamber of Commerce and Industry