Growing the economy through trade is a critical imperative to repositioning Nigeria for the next phase of economic progress with the focus being on the core necessities of improving local production and enhancing the inter-regional movement of goods within the African continent by taking full advantage of the African Continental Free Trade Agreement (AfCFTA), the pan African trade agreement that is set as a framework to bolster trade relationships among the 55 countries of Africa, and essentially providing access for easy movement of goods and services within the continent.
The AfCFTA was conceived to expand trade within the African continent, ensuring that the over 1.2billion market with a combined GDP of over 3.1 trillion US Dollars according to 2023 estimates is a tremendous rise from the 2010 figures, which put the total GDP number for the continent at around 2.1 trillion USD, is able to increase trade amongst its member countries.
The AfCFTA provides a critical basis to understand the potential and size of the African market which has assets and resources to compete based on the continent’s core comparative advantages to the rest of the world, and a GDP estimated to reach 4.2 trillion USD by the year 2027. In fact, by its share size of untapped wealth, Africa does not need to depend on financial or material (especially food) aid from the rest of the world if Africa’s resources can be better deployed and managed.
For Nigeria, with a population size of over 220 million and representing around 12 per cent of Africa’s population size, there is an urgent need to galvanize the various aspects of the economy into a fulcrum of productive engagements and local outputs of goods that are exportable within the continent and internationally through deliberate government trade policies and improvement of the ease of manufacturing within the country. If the productive sector is encouraged to come into full capacity, Nigeria has the best chance to, as the country with the largest population and with the high population size of young productive people in Africa, Nigeria can lead the African market and determine the direction of the flow of trade in terms of volume and value.
Nigeria’s trade policy has often emphasized the need to diversify the country’s export beyond crude oil with strategic interest being to expand non-oil exports such as cocoa, rubber, palm produce and others with limited emphasis on finished goods export, especially in the food sector. On the other hand, Nigeria has pursued an import liberalization policy much to the detriment of critical sectors of the economy resulting in a steady fall in the value of the naira. It is my hope that there will be serious attention paid to our over-dependence on imported commodities which has destroyed many important sectors and has made Nigeria vulnerable in international trade with the rest of the world. Just like China, Nigeria has all it takes to become the production epicentre and manufacturing hub for the rest of Africa given our resources and human capital advantages
With over 133 million multidimensional poor Nigerians and an unemployment rate above 33%, mostly among the active young population, Nigeria needs emergency action in trade development and ensuring that Nigerians are pulled out of poverty. This will demand reducing dependency on crude oil and moving away from the mono-economy structure we currently have to expand the space in agriculture production and other sectors such as textiles, garments and clothing which have enormous potential to galvanise trade.
Read also: Why Nigeria should leverage the AfCFTA for improved manufacturing
Nigeria needs to move from a consumption-driven and import-dependent economy to a production-based economy with improved exports to enable the country to earn enough foreign exchange to withstand the fall in the value of the naira, a steady fall which has been as a result of our over-dependency on the receipts from crude oil sales with the many attendant volatilities in the international oil market
Given our current economic situation, it is imperative to reverse our import dependency and ensure that the government consistently provides support and increase the pool of support to the Small and Medium scale business to help them increase productivity and to ensure more exports from Nigeria year on year. Part of the solution to improving trade receipts for Nigeria will be to take steps to ensure improved customs regulations and operations to enhance the free flow of goods. Nigeria needs improved port operations, demanding the revaluation of the operational frameworks of the Nigerian Ports Authority (NPA) to ease the process of export.
The Nigerian Investment Promotion Commission (NIPC) which was established through Decree 16 of 1995 to promote trade and investment must be reenergized to attract critical investments into all sectors and to ensure support for local production. To enhance export, existing export incentive schemes which includes duty draw-back scheme, export expansion grant and manufacture in-bond schemes should be engaged to deliver real value to the economy.
The newly sworn-in minister of Trade and Investment, Mrs. Doris Uzoka-Anite already has her work cut out with regard to ensuring that Nigeria’s participation in global trade is greatly improved. What she has is a very strategic portfolio which she no doubt has the capacity to administer effectively. It is imperative that the new minister attacks the issues from two key perspectives by firstly, addressing internal trade opportunities as it has to do with trade within Nigeria and among the various states and regions and ensuring that each state or region expands its production activities based on comparative production advantage.
On the other hand, it is the issue with the demands of external or international trade with respect to the ease of ensuring that Nigerian-produced goods have access to key international markets and destinations. Interestingly, Dr. Ngozi Okonjo Iweala who is a Nigerian and has a very deep understanding of Nigeria’s economy is in charge at the World Trade Organization. It will be expected that with her presence in that very position, many interactions that will be helpful to Nigeria will be encouraged and the minister of trade and investment will be at the top of leading that engagement from the get-go.
.Ikem, PhD, is a public policy consultant and media executive based in Lagos
