How Nigeria’s economic woes hobble continental integration
• AfCFTA’s $80 billion deals in three years at stake
• Afreximbank to raise trade integration projects to $25b
Nigeria’s economic structure, dominated by commodities and primary products offerings, with a slow-paced, but painful infrastructure development strategy, is now running against its plans to participate in the continent’s market integration agenda.The integration plan, under the African Continental Free Trade Agreement (AfCFTA), which Nigeria played a major role from initiation to development of framework, is now scaring the country, due to assessed lack of capacity to stand ensuing competition, after long years of neglect of the domestic market’s environment.
The development is putting at stake Nigeria’s share of the $80 billion targeted intra-Africa trade deals, which would be facilitated by the take off of the agreement in the next three years.
According to Afreximbank, intra-African trade encompasses trade in goods and services between or among African countries and between Africa and Africans in the Diaspora.Worrisome for Nigeria, is the fact that hopes to get the major infrastructure inputs in development fixed, especially the power and road networks, have remained illusive, with statements credited to government’s officials creating more doubts over a possible solution soon.
For example, the Minister of Power, Works and Housing, Babtunde Fashola, was recently quoted as saying that power problems in the country is not a quick fix, contrary to his earlier statement. Besides, the country’s near lone seaport terminal- Apapa Port, is currently overwhelmed with traffic gridlock and near inactivity, courtesy of poor infrastructure.
Similarly, last weekend was full of expectations of reaching unanimity in the prolonged signing of AfCFTA, as the technical committee appointed by government was mooted to be finalizing recommendations in favourable of the scheme.
Already, 44 countries out of the 54-nation continent have been boarded into the initiative that is expected to increase trade efficiency among the African economies, with goals of increasing volume, value, productive activity and employment, as well as individual and collective Gross Domestic Product growth.
The Executive Vice President, Business Development and Corporate Banking, Afreximbank, Amr Kamel, during the Structure Trade Finance seminar and workshop in Casablanca, Morocco, noted that the signing of AfCFTA presents a unique opportunity for improving trade among African countries, with strong expectations of substantial economic growth.
“It breaks down the many barriers that have made it difficult for Africans to trade with each other.“However, it also presents a huge challenge, in that the missing link in African trade is the absence of trade and business information across borders. Because of our past colonial experiences, most African countries are still strongly linked to their former colonial countries in terms of trade.
“Consequently, when a business man in a country thinks about export or import trade, his first thoughts go towards the former colonial country. This is true, even when the item to be purchased can be bought less expensively from a nearby African country,” he said.Dr. Luke Anorue, a university lecturer, alleged that there are unseen hands, with self interest, working against the success of the scheme, that would increase flow of trade in value and volume, leading to growth, adding that there can never be a situation where Nigeria will be the only country offering products to others.
“Granted that capacity challenge is a disadvantage, even though it has not been officially stated as the cause of not signing, but it is a shame for Africa’s largest economy to advance that as excuse.“This is an opportunity to raise the capacity, as Nigeria cannot box itself in a corner. Raising the capacity is possible, even within a short term with sincerity of purpose. By the way, how many of the 54 countries is endowed more than Nigeria? How many can boast of more enterprising individuals?
“I think this whole saga about AfCFTA is just about postponing the evil day, which would surely come. We must grow, but cannot be possible by avoiding opportunities. We are already into exports, it’s just expanding the value chains and value additions and taking up challenge is the way forward,” he said.
But the Director and Global Head of Communications and Events Management, Obi Emekekwue, said AfCFTA has come to stay and for the collective good of the continent’s economies.
Speaking on Nigeria’s delayed signing of the AfCFTA, he said the bank is optimistic that the country will, admitting that government’s decisions, all over the world, generally tends to take time, with processes involving the lawmakers, technocrats and respective committees that would do studies, before returning back to the general assembly.
He said that the scheme would offer a win-win opportunities, as all the economies have unique offerings to each, through comparative advantage that would lead to growth and development of the continent, rather than the existing barriers that have deprived Africa of the intra-trade potential.
Meanwhile, Afreximbank is implementing its fifth Strategic Plan tagged: “IMPACT 2021: Africa Transformed”, aimed at facilitating a 50 per cent growth in intra-African trade, worth $250 billion by 2021, from the current estimated $170 billion and bringing the intra-African trade share of total African trade to 22 per cent.
The Plan will also see Afreximbank disburse no less than $90 billion on aggregate, on a revolving basis, in support of African trade between 2017 and 2021, pushing up disbursements in support of intra-African trade to $25 billion during the period. Emekekwue said the bank is acting as a catalyst for industrialisation and export development by addressing the constraints to industrialisation in the continent, facilitating the production of value-added exports and services and ensuring that the produced goods and services are traded.
It’s interventions across Africa have included the development of the agro-processing, light manufacturing and tradable service sectors, supporting the construction of industrial parks and Special Economic Zones across to make export manufacturing more competitive by reducing the infrastructure constraints.
To address the challenge of improving access to trade finance and trade services across Africa in the face of cuts in credit lines to Africa by international banks, Afreximbank approved trade finance lines for more than 34 banks across the continent, worth $12.5 billion between 2015 and May 2017, with $8.5 billion disbursed in 2017 alone.
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