The Manufacturers Association of Nigeria (MAN) has outlined ways in which local manufacturers can outshine African peers when the implementation of the African Continental Free Trade Area (AfCFTA) begins in July.
According to MAN, the Federal Government must show readiness in addressing issues of infrastructure deficit, policy flip-flops and regulatory pressure on businesses, if the country must take something from the trade deal.
Speaking at an annual media luncheon held in Lagos last Thursday, Mansur Ahmed, president of MAN, said supply-side constraints in the economy must be fixed immediately to make Nigerian manufacturers competitive and robust in the AfCFTA regime.
“For the gains of AfCFTA to be realised, government must show readiness in addressing the supply side constraints in terms of lack of infrastructure,” he said.
“Policies and regulations should not be too harsh for businesses to operate. Regulations should be seen as a way of assisting businesses to grow which ultimately enhances competitiveness and boosts the economies,” he further said.
The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent.
It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.
Ahmed said in view of this, the Nigerian government must lead by example by ensuring that policies were industry-friendly to guarantee a competitive intra-African trade.
“We cannot achieve competitiveness without the provision of infrastructure such as good road networks and electricity, not only within African countries but also across the borders,” he warned.
“There is also the aspect of provision of soft infrastructure – like visa, tariffs, and foreign exchange – that will help ease up the process of carrying out business transactions between countries,” he noted.
He explained that the issues must be addressed since the AfCFTA was not just about trade in goods but also trade in services.
“As you may be aware, modern industry competitiveness depends, to a great extent, on provision of adequate and efficient infrastructure. From the availability of power and energy to transport and logistics, the role of infrastructure cannot be overemphasised in trade and economic development on the continent,” he further said.
He pointed out that transportation alone was vital to enhancing competitiveness in trade, stressing the need to address gridlock challenges faced at the nation’s seaports in Apapa and Tin Can, Lagos.
“For instance, due to poor infrastructure, it will cost a business owner in Nigeria more to transport goods from Lagos to Kano than it will cost a Chinese business owner to transport the same goods from China to Lagos,” he disclosed.
“Speaking of infrastructure, electricity is a vital input for manufacturing process to the extent that it constitutes up to 40 percent of the cost of production. Increasing the tariff of this core input will have drastic negative effect on the Gross National Product (GNP); Gross Domestic Product (GDP), disposable income, consumption, consumer price index, employment, and government revenue from corporate taxation,” he warned.
“Similar to this is the uneven pricing of this commodity across DisCos, which if not corrected, will lead to uneven development in certain parts of Nigeria as the percentage increase in tariff differs,” he said.
He appealed to the Federal Government, as a major stakeholder in the electricity industry, to concentrate on developing processes and polices to attract significant investment to encourage large-scale generation and significant improvement in transmission and distribution of power.