Nigeria’s major AfCFTA benefits to come from manufacturing, non-oil export sectors
Though operators continue to raise concerns about the need for safeguard measures under the African Continental Free Trade Area (AfCFTA) regime that is expected to commence next year, the services, non-oil export and manufacturing sectors of the economy have been identified as key sectors that will benefit the most from the trade deal.
According to insights shared with The Guardian by a research and advisory firm, the creation of a continental market could provide suppliers of services the scale of operations and the long-term finance they need to boost competitiveness in services provision and, in turn contribute to improving trade facilitation on the continent and strengthening the gains from the Agreement stemming from increased trade in goods.
The firm added that if there has been an upward trend in the non-oil export of Nigeria to ECOWAS and other African countries with major export of Nigerians to Africa being manufactured goods, then the post-AfCFTA implementation presents an interesting era for industrial players in Nigeria.
The Manufacturers Association of Nigeria (MAN) had noted that if liberalisation under the AfCFTA is not checked through safeguard measures, 4301 of 4779 total manufacturing tariff lines of 5%, 10% and 20% will be moved to 0% in the first five years, thus leading to closure of virtually all manufacturing companies within the period.
The first impact of liberalization through tariff cuts, according to MAN, is the surge in imports of manufactured goods into the country, while other impacts are on the outputs, incomes, employment and investment of the manufacturing firms.
In principle the import surge is expected to reduce sales/output; the magnitude would be higher for competing manufactured goods. This implies that full liberalization from the onset moving 90% of tariff lines to zero percent would have catastrophic implications for Nigeria.
However, the Managing Consultant, RTC Advisory Services Ltd, Dr. Vincent Nwani stated that the services sector has been identified as the segment of the economy with the highest propensity to generate resources that ensure stability of the macro economy, particularly employment generation, domestic investment and foreign investment inflows and overall growth in domestic economic activities.
“The services sector is an enabler of other components of domestic economic activities, the gross domestic product (GDP). The sector drives manufacturing, agriculture and agri-business, oil production and trade, mining and quarrying, retail and wholesale distributions, housing and real estate, among others.
“We believe that Nigeria has a minimum of 65% upside potential to succeed in the new AfCFTA dispensation depending on the actions or inactions relating to infrastructure provision and sectoral reforms moving forward. It is recommended that the details of AfCFTA should be well communicated to the business community including capacity building to empower businesses with skill to benefit from the agreement by the committee put in place to drive AfCFTA implementation.
“Commitment of the government to support manufacturers with necessary incentive that will reduce their cost of production and make them more competitive is germane.
“Finally, the committee should work in collaboration with the private sector in order to understand what they need from the government especially with respect to monitoring shipments into the country to prevent free entrance of goods from third countries and marketing their goods at exhibitions in various African countries”, he added.