Africa’s most populous nation is failing to tap opportunities in the various trade agreements the country has entered despite a worsening foreign exchange crisis.
Nigeria’s weak non-oil exports under its various free trade agreements dampen its capacity to earn foreign exchange amid acute dollar scarcity and strengthen its naira currency.
Experts attributed the country’s inability to tap various trade agreements to the lack of competitiveness.
They say Nigerian manufacturers are hard hit by a harsh operating environment and this makes their production costs high and competitiveness low.
According to them, the country has failed to tap opportunities in various trade agreements owing to the inability of its products to compete favourably in those markets.
“We didn’t benefit from AGOA because we are not competitive. It is not just to export at zero-duty but to compete favourably,” said Segun Kadir-Ajayi, director general of the Manufacturers Association of Nigeria (MAN), said Wednesday during the Presidential Luncheon for Media.
“We need to do a lot domestically to make our products competitive so we can compete favourably in those markets,” Ajayi added.
The African Growth And Opportunity Act (AGOA) which allows over 6,000 products to be exported to the US duty-free will end later this year with the expectation of it not being renewed by the President Trump administration, Nigeria is yet to raise its export substantially to the world’s biggest economy.
South Africa, Kenya, Madagascar, Lesotho, and Ghana dominated the non-oil AGOA exports, with Nigeria’s exports mainly dominated by crude oil. non-oil exports of Africa’s most populous nation under AGOA remained stagnant, primarily comprising a few agricultural products and handicrafts.
Muda Yusuf, chief executive officer at the Centre for the Promotion of Private Enterprise (CPPE), said the major challenge hindering the country from maximising free trade agreements is a lack of competitiveness.
“Lack of competitiveness is why most manufacturers are inward-looking and more dependent on domestic than international markets,” Yusuf said.
“Nigeria’s low non-oil export reflects the challenges of our manufacturing sector. How can you compete when your cost of production keeps increasing daily,” he asked.
Read also: Why Nigerian manufacturers are uncompetitive
“Our cost of production is too high for us to be able to make any significant impact as far as export is concerned and this is why primary products export has continued to dominate.”
Also, after six years of the African Continental Free Trade Area (AfCFTA) – a borderless Africa with a single market for 1.5 billion people which has been projected to expose each country to a $3.4 trillion market opportunity on the continent, Nigeria’s manufacturers are yet to harness this potential owing to lack of competitiveness.
Obiora Madu, an export consultant and the director-general of the African Centre for Supply in response to questions said Nigeria’s failure to maximise free trade benefits is based on its non-export culture and capacity.
“We have failed to utilize our free trade agreements to grow our non-oil exports because we have never been intentional and have no export culture,” he said.
Madu stressed the need for the government to build an export culture and capacity needed to boost non-oil exports and harness opportunities in its free trade agreements.
“Nigerians are very enterprising but there is no strategic intent from the government to boost non-oil,” he noted.
He urged the government to move beyond the talking stage of diversifying the economy into an actionable strategy that brings results.
Sada Ladan Baki, chairman of the export group, Lagos Chamber of Commerce and Industry (LCCI), said the country’s several trade agreements have failed to boost its non-oil exports owing to lack of competitiveness and the government’s unwillingness to look beyond crude oil.
“We are not maximising our free trade exports because we have failed to look beyond oil revenue and we do not have a coherent policy on the export drive,” he said.
“We do not have a robust and ambitious export policy and this is responsible for our inability to harness opportunities in AfCFTA and AGOA,” he noted.
Nigeria earned N6.24 trillion ($4.2 billion using N1,500/$ as exchange rate) in nine months from non-oil exports, accounting for almost half of what Brazil earned from sugar exports of $9.8 billion alone.
Odiri Erewa-Meggison, chairman of the export group, Manufacturers Association of Nigeria, said the country needs to finalise the date to launch its participation in the Guided Trade Initiative for Nigeria to benefit from AfCTA.
Meggison added that the current high cost of production for manufacturers remains a huge threat to Nigeria-based companies’ competitiveness under AfCTA.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
