Nigerian economy: Recovery, growth and sustainability – Part 2
The Federal Executive Council further approved Nigeria’s membership of AfCFTA on the 11th of November 2020, which took effect from 1st of January 2021.
Although, full implementation of the Agreement may take some time as countries still have to negotiate aspects of the Agreement such as dispute settlement processes, trade, tariffs and intellectual property rights. The investment and trade opportunities from AfCFTA will expose Nigeria to the following opportunities:
1. It will eliminate barriers against Nigeria’s products thereby expanding market access for Nigeria’s exporters of goods and services which would serve as a catalyst for growth and boost job creation in the Nigerian economy;
2. It will provide a Dispute Settlement Mechanism for stopping the hostile and discriminatory treatment directed against Nigerian businesses in other African countries;
3. It will support the industrial policy of Nigeria through the negotiated and agreed “Exclusion and Sensitive category lists” to provide space for Nigeria’s infant industries; and
4. Provide a platform for Small and Medium Enterprises (SMEs) integration into the regional economy accelerate women’s empowerment and thereby providing a connection to regional and continental value chains.
Our efforts, beyond bilateral trade agreements, are also focused on implementing consistent and predictable policies in order to diversify the economy and mitigate investor uncertainty. Investors can rest assured that policies and reforms that are being implemented will align with our long-term goal of expanding local production capacity and market access, while protecting our industries through anti-dumping measures.
Measuring the Expected Impact from Key Economic Initiatives and Policy Implementations
We believe the ongoing implementation of these policies will lead to improvements across several key performance indicators used by our Ministry to measure the rate of success of key mandates. We have mentioned a few of these KPIs already but to summarise again, our key performance indicators include the following metrics:
1. In Industry, the manufacturing sector’s contribution to GDP, production levels across key industrial sectors, rate of adoption of locally produced goods by the Federal Government, and the number of jobs created per annum within the manufacturing sector;
2. In trade, the value of non-oil exports; and
3. In investments, the annual value of foreign direct investments and our ranking in the ease of doing business
As of 2019, the manufacturing sector’s contribution to GDP was at 9%. Our target is to reach 20% by 2023. For jobs created in the manufacturing sector, approximately 5 million jobs were created as at 2019. Our target is to grow this by 1 million in 2023. On foreign direct investments, we delivered $663 million in 2019 and are targeting $6.5 billion in 2023.
The challenges faced by both investors and our Ministry are significant but surmountable. For investors, the perception of regulatory inconsistencies and uncertainty pertaining to fiscal and monetary policies remain a major challenge. Our vision is to lead the discourse of industrial development policies and to improve the Ministry’s response to investor concerns from one of minimum response to one of active and result-oriented approach to advocacy and dispute management.
We’re leveraging our platform and presence on inter-agency committees to work alongside relevant agencies with overlapping mandates to the
Ministry. Our role in these committees will be to advocate on behalf of investors and provide support and oversight to agencies largely responsible for implementation plans and prescribed targets.
For our Ministry, we’ll continue to address our challenges head-on. A few of these notable roadblocks, all of which are addressable include:
1. Limitations in the industrialisation program and development of MSMEs which warrants heavy capital investment from both the private and public sectors and requires a strategic approach to financing them. Any budgetary pressure faced by the public sector might reduce our overall capacity to finance MSMEs and our ability to meet our targets;
2. Limitations in the industrialisation programmes targeting the agriculture sector which requires large expanses of land which as we all know is difficult to acquire; and
3. Competitive disadvantage due to the infrastructure deficit and the presence of cheaper smuggled goods in the Nigerian market. We are of course developing and driving strategic, whole-of-government approaches to addressing these challenges.
A lot of our work in 2020 was on establishing baselines, reviewing performance of earlier plans and fine tuning our strategies to cope with the effect of COVID-19. We expect to make significant progress in 2021 on laying a strong foundation for backward integration, digitisation, and kicking off large-scale industrialisation projects. In 2021 we should see some KPIs coming on stream, largely in the realm of foreign direct investment, greater production volumes by targeted industrial sectors, value of non-oil exports, and employment.
Our Ministry will remain steadfast in addressing challenges and implementing these key initiatives. We welcome and will continue to welcome the support of the private sector and all other strategic partners aligned with our vision of a more diversified economy.
I thank you all for your time and for giving me the opportunity to share the initiatives governing our efforts in developing a greater and more productive Nigeria.
Otunba Adeniyi Adebayo CON, is the Minister of Industry, Trade and Investment.