The Nation Newspaper

Tag: AfCFTA

  • Charting the course for competitive manufacturing under AfCFTA

    Charting the course for competitive manufacturing under AfCFTA

    The manufacturing sector’s 10 per cent contribution to Gross Domestic Product (GDP) is considered to be abysmal, considering that the same sector accounted for as high as 35 per cent of Ireland’s GDP growth in 2021, for instance. The figure is even higher in the U.S.A., where manufacturing accounts for more than 60 per cent of total exports and about 35 per cent of total productivity growth. Now, with the sector’s unimpressive performance, industry operators and experts fear that the promising growth trajectory and development opportunities embedded in the African Continental Free Trade Agreement (AfCFTA) may slip through Nigeria’s fingers. They have, therefore, proffered a number of measures to boost the sector’s competitiveness. Assistant Editor CHIKODI OKEREOCHA reports.

    It is not for nothing that members of the Organised Private Sector (OPS), particularly those in the Manufacturers’ Association of Nigeria (MAN) intensified their advocacy for an environment conducive to business and even broadened the scope of their engagements with the Federal Government and other relevant stakeholders to include implementing policies and reforms to deepen domestic production, boost the manufacturing sector’s competitiveness and hopefully, reverse its depressing successive low performance over the years.

     As the demand for manufacturing grows, it, in turn, spurs the creation of jobs, investments, and innovations in virtually all sectors. This is why manufacturing is regarded as the economy’s growth engine, with industrialisation seen as central to developing economies such as Nigeria catching up with the advanced economies.

    Therefore, the sector, in the context of the African Continental Free Trade Agreement (AfCFTA), which came into effect on January 1, 2021, creating the largest free trade area in the world, covering 54 African countries, presents a unique chance for Nigeria, as Africa’s largest economy, to bolster its manufacturing sector and become a manufacturing hub for Africa.

    Founded in 2018, the AfCFTA seeks to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3.5 trillion. Its main objective was to create a single continental market for goods and services, with free movement of business persons and investments.

     With Nigeria’s large market and population estimated at over 200 million, the country was tipped by experts in international trade and diplomacy as the potential biggest beneficiary of this trade liberalisation deal. Sadly, however, it is doubtful if the country will be able to latch onto a robust manufacturing sector to seize the opportunity of a promising growth trajectory and other development benefits embedded in the AfCFTA to fix her struggling economy.

     MAN President Otunba Francis Meshioye put the reality of the local manufacturing sector’s lack of competitive edge in perspective. He lamented, for instance, that despite being a key industrialisation driver, the manufacturing sector’s contribution to Nigeria’s total output is about 10 per cent, with an average growth rate of approximately 2.3 per cent over the last five quarters of this year.

     The occasion was the 3rd Adeola Odutola Lecture and Presidential Luncheon which was held in Lagos, last week, with the theme “Setting the Agenda for Competitive Manufacturing under the AFCFTA: What Nigeria Needs to do.”

     It was the last part of activities marking the 51st Annual General Meeting (AGM) of MAN, where Meshioye, lamented that the growth of industrialisation in Nigeria remained at a very low ebb.

     “In 2021, average manufacturing output accounted for as high as 35 per cent of Ireland’s GDP growth; 27.44 per cent in the case of China, and 48 per cent of Puerto Rico’s economy,” he said, for instance.

     According to him, the figure is even higher in the U.S.A., where manufacturing accounts for more than 60 per cent of total exports and about 35 per cent of total productivity growth.

     Meshioye added that the United Nations Industrial Development Organisation’s (UNIDO’s) industrial competitive performance index has equally shown that Nigeria’s industrial sector has a low competitive capacity.

    Read Also: Trade negotiator, stakeholders to implement final agreement on AFCFTA report

     The MAN President said: “There is no better time than now to confront the challenge of low competitiveness and abysmal performance of this important sector.

     “It has become a matter of necessity and urgency to deepen our awareness of the imperative of the AfCFTA. We need to develop the right strategies and concerted effort to position our economy as the number one manufacturing hub of the African economy.”

    Meshioye said the AfCFTA window should be maximised in such a way that products manufactured in Nigeria would be preferred in terms of quality and pricing.

     He lamented that currently, the cost of manufacturing is daily rising because of scarce and unavailable manufacturing inputs that continue to shrink profitability and threaten the existence of the critical sector of the economy.

     “More worrisome is the fact that the sector that should propel job creation, productivity, and economic growth is enmeshed in a series of challenges that constantly limits its contribution to the GDP,” the MAN President stated.

     He said: “If Nigerian manufacturers will compete effectively, then a comprehensive and concerted effort needed to be deployed by the government to overtake the binding constraints that limit local production.”

     Some of the constraints include multiple taxations, high cost of borrowing, inadequate infrastructure, shortage of Foreign Exchange (forex), naira depreciation, insecurity, high cost of borrowing, and low patronage of made-in-Nigeria products, among others.

     Otunba Meshioye added that the government also needed to attract foreign investment that would bring about a reduction in the forex crisis and ensure sufficient forex inflow that the country clearly requires.

     “We seek an atmosphere that supports favourable competition with our counterparts in other countries, particularly within the continent,” he said, pointing out that it was in view of the foregoing that the theme for the Association’s 51st AGM was couched with a deep reflection over the growth trajectory of the manufacturing sector in Nigeria and Africa.

     “Our goal is to brainstorm at the AGM, dwelling on the theme for the purpose of suggesting a policy direction for the new government,” he emphasized.

    Operators, experts chart the way forward

    For Meshioye, the starting point to resolving the industrial sector’s low competitive capacity and hopefully, positioning Nigeria as Africa’s number one manufacturing hub is to address the plethora of challenges militating against the sector’s performance.

    The MAN boss lamented that the prevailing regime of multiple taxation has been limiting the manufacturing sector’s competitiveness. According to him, an average member of MAN is subjected to no less than 30 different forms of taxes, fees, and levies, resulting in rising costs of doing business and rapid divestment in the manufacturing sector.

     The aforementioned issues, Meshioye said, have combined to depress demand, worsen job losses and increase the incidence of poverty and low revenue generation from the sector. He, however, expressed confidence that the Presidential Committee on Fiscal Policy and Tax Reforms will adequately address the matter.

     Indeed, in a bid to help resolve the issue of multiple taxation agitating the minds of manufacturers and other businesses, President Bola Tinubu established the Presidential Committee on Fiscal Policy and Tax Reforms to remove all barriers impeding business growth.

     The Committee, chaired by a tax expert at Price WaterhouseCoopers (PwC), Mr. Taiwo Oyedele comprises experts from both the private and public sectors. It will have responsibility for the various aspects of tax law reform, fiscal policy design and coordination, harmonisation of taxes, and revenue administration.

     Meshioye said the OPS is being represented on the Committee by the Director-General of MAN, Segun Ajayi-Kadir.

    “We look forward to working jointly with the representatives of the Ministry of Industry, Trade and Investment on the Committee to make the case for fair taxation of the manufacturing sector,” he stated.

    The MAN President also identified high interest as another constraining factor, pointing out that the average bank lending rate for manufacturers is 26 per cent annum. He, however, acknowledged the nine (9%) interest rate on the N75 billion loan facility for a minimum of 75 companies that was recently promised by President Tinubu.

    While commending the President for the initiative, Meshioye, however, expressed hope that “it could even come at a lower rate and MAN would be given the opportunity to work with government to determine deserving sectors, agree on the disbursement modalities and join in the evaluation and monitoring of its effectiveness.”

     Meshioye also said while manufacturers appreciate the administration’s policy on exchange rate unification as part of measures to address the forex crisis, the problem, however, is only half solved as forex shortages and high rates persist in the market.

     He urged the government to ensure effective enforcement of local content and patronage regulations. This, according to him, can be achieved by strict enforcement of local content laws, incentivising local sourcing of raw materials, and innovation in the manufacturing sector.

     He also said the public sector at all levels should step up their compliance with existing government directives on patronage of made-in-Nigeria products, including Executive Orders 003 and 005.

    Furthermore, Meshioye lamented that despite being one of the sectors of the economy with wide sectoral inter-linkages, the low level of development of auxiliary sectors was disentangling the manufacturing sector from the rest of the sectors.

     “This is more so in agriculture, iron and steel and mining sectors. This has resulted in a limited supply of raw materials and other inputs for the manufacturing sector. Therefore, it is essential to encourage backward integration and sectoral linkages to promote a more sustainable manufacturing sector in Nigeria,” he said.

    A sector weighed down by a $1.5tr infrastructure deficit

    The MAN chief lamented that poor infrastructure, including inadequate power supply, poor road networks, and inefficient port facilities are serious impediments to the growth of the manufacturing sector.

     Indeed, the absence of economic infrastructure, especially electricity supply contributes significantly to the high-cost operating environment which obstructs the development of manufacturing in Nigeria.

    For instance, electricity distribution in Nigeria has continued to hover around 4,000 Megawatts (MW).

     While electricity takes only about 10 per cent of production cost in some other countries, it gulps between 40 and 50 per cent of Nigerian manufacturers’ cost of production. This has forced many factories to curtail output or even shut down.

    Manufacturers brought this reality nearer home when they lamented that as of the second half of 2022, their expenditure on alternative energy sources stood at N76.7 billion.

    According to them, the N76.7 billion spent on alternative energy sources increased from the N45.04 billion recorded in the corresponding half of 2021, indicating a N31.66 billion or 70 per cent increase over the period.

     It also increased by N8.9 billion or 13 per cent when compared with N67.8 billion recorded in the preceding half.

     As if this is not enough to strangulate manufacturers, their operations have continued to suffer due to the persisting scarcity of forex and unfavourable Naira exchange rate parity. The lingering forex scarcity and continuous depreciation of the Naira have left manufacturers bleeding and limited their capacity utilisation.

     The former Minister of Industry, Trade and Investment, Mr Olusegun Aganga, agreed with manufacturers and other businesses in Nigeria that the burden placed on them by decrepit infrastructure has not only become too heavy to bear but also has been one of the major factors responsible for their lack of competitive edge.

     Aganga specifically said Nigeria required about $1.5 trillion over the next 10 years to close its current infrastructure deficit.

    He said Nigeria must review the legal framework for alternative financing sources such as private equity and venture capital funds, and development funds for infrastructure development.

     He was emphatic that Nigeria’s Development Financial Institutions (DFIs), such as the Development Bank of Nigeria (DBN), Bank of Industry (BoI), Bank of Agriculture (BoA) and Nigeria Export-Import Bank (NEXIM) are unable to meet the needs of Nigerians because they are grossly undercapitalised.

     He, however, noted that Nigeria commenced the repositioning of BoI in 2013 which included getting it credit-rated so that it can access cheap funds from the international capital markets and institutions.

     He also said the Central Bank of Nigeria (CBN) has to develop a financing model, working with local banks to unlock new sources of cheap long-term capital for strategic industries.

     “It is important to bear in mind that almost all the competitors of Nigeria provide financial incentives and support to manufacturers, especially in strategic industries,” he said.

     He recalled that the Development Bank of Nigeria was set up in 2014 as a wholesale bank to source cheap finance from external sources for DFIs, such as BoI. But, as he stated, “I am not sure it is working that way now and I would encourage the government to review the performance of the bank and reposition it.”

    The former boss of Goldman Sachs also stated that it would be useful to now undertake a comprehensive and in-depth review of the domestic capital market to determine how it can optimise its contribution to capital formation and financing, going forward.

    Aganga reiterated that access to affordable finance in Nigeria was an issue. “Finance is insufficient and the cost of funds in Nigeria is high, typically between 15 per cent and 20 per cent.

     He said relative to its competitors, Nigeria has a remarkably low domestic credit to GDP ratio and the credit, too expensive due to a combination of factors including high treasury rates, high inflation, infrastructure deficit and inefficiencies, among others.

    Harnessing MSME’s potential is also key

     Aganga said the world over; MSMEs are the primary drivers of employment and economic growth, employing 75 per cent and 70 per cent of the workforce in China and Brazil, respectively.

     He said that based on the last survey conducted by the National Bureau of Statistics (NBS) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in 2020, there were 40 million MSMEs, employing 76.5 per cent of Nigeria’s workforce and accounting for 49.78 per cent of the GDP and 7.64 per cent of exports.

     Aganga expressed worries that enough attention has not been given to the MSME sector, particularly since 2017. He said according to the surveys by the NBS and SMEDAN, the number of enterprises in the sector grew by 20 million from 17 million in 2010 to 37 million in 2013.

     Between 2013 and 2017, it grew by only four million, and in 2020 it fell by about two million to 40 million, partly due to the effects of the COVID-19 pandemic.

     Giving more breakdowns, Aganga said: “Nigeria’s 40 million MSMEs comprise 96.7 per cent of all businesses in Nigeria. 98.8 per cent of them are in the micro cadre. One positive factor is that 67 per cent of businesses are owned by the youth.”

     The expert said Nigeria already has a comprehensive plan, the National Enterprise Development Programme (NEDEP), which was launched in 2014 along with the Nigeria Industrial Revolution Plan (NIRP). “This can be updated and implemented as part of the long-term plan,” he said.

    According to him, it covers the entire ecosystem of the MSME sector nationwide, working closely with the SMEDAN, Industrial Training Fund (ITF), BoI, the state and local governments and the private sector, under the supervision of the National MSME Council, which was set up in 2014 in accordance with SMEDAN’s Act.

     Interestingly, the current administration is not unaware of the issues agitating the minds of manufacturers and businesses and hurting their competitiveness, especially in the context of the AfCFTA.

     The Minister of Industry, Trade and Investment, Dr. Doris Uzoka-Anite, indicated this much when she said the Federal Government envisioned a revitalised industrial sector and is therefore, committed to addressing all aspects of industrialisation from consumer credit, fiscal and monetary policy alignment and continuous engagement with MAN.

     The minister, who was represented by the Director-General, Financial Reporting Council of Nigeria (FRCN), Dr. Rabiu Olowo expressed the ministry’s readiness to collaborate with MAN to resuscitate Nigeria’s industrialisation.

     While emphasising the pivotal role of manufacturing in enhancing Nigeria’s economic competitiveness, Uzoka-Anite stressed the need to deploy strategic interventions in the manufacturing sector to enhance the country’s competitive edge and harness the full benefits of AfCFTA.

     She identified four imperatives to maximise the opportunities presented by the AfCFTA. They include the combined responsibility of the government and manufacturing sector; robust public-private partnership particularly in the area of research and development to enhance the strength of manufacturing.

     Others are supporting Micro, Small and Medium Enterprises (MSMEs) with capacity and potential for exports, and investment in infrastructure and technology.

     The minister maintained that the government was willing to support the establishment of research and development centres across the country to enhance innovation. She encouraged manufacturers to create these centres and also promote regional value chains and industrial clusters.

     Lagos State Governor, Babajide Sanwo-Olu agreed that there was an urgent need to address the challenges that have beset the manufacturing sector in order to enable Nigeria to take full advantage of the opportunity presented by the AfCFTA.

     Sanwo-Olu said the challenges, ranging from inadequate infrastructure, inadequate power to policy environment, and security among others, are very fundamental to determining the manufacturing sector’s survival, growth and competitiveness.

     The governor, who was represented by the Commissioner for Commerce, Cooperatives, Trade and Investment, Mrs Folashade Ambrose-Medebem, said the administration in Lagos State recognises the strategic position the state occupies and the role it must play for Nigeria to leverage the opportunities presented by AFCTA.

     Sanwo-Olu said this was why his administration continued to prioritise investment in critical infrastructure and the implementation of policies and strategies aimed at improving the ease of doing business and strengthening the productive capacity of MSMEs across all sectors.

     However, a common thread that ran through the presentations and recommendations by operators and experts at the just-concluded MAN AGM was that diligent implementation of identified pro-industrialisation and business-friendly policies and reforms are crucial to the success of the administration’s renewed push to leverage a revitalised and competitive manufacturing sector to remake the economy.

  • How modern agricultural technology would contribute to AFCFTA’s success

    How modern agricultural technology would contribute to AFCFTA’s success

    In recent years, adoption of technology, improved regulation and increased macroeconomic stability in many African nations have opened new frontiers, offering a crucial balancing role required for food security and improved livelihoods.

    At the centre of efforts to maximise farm productivity, the role of technology cannot be gainsaid. While more advocacy and policy initiatives continue to be pursued, there’s one pressing need — delivering technology solutions to farmers, including biotechnology.

    The advances in the field of biotechnology over the past decades has allowed the precise development of new products in the agricultural sector.

    While there are still delays on the African continent in the development and implementation of biosafety policies and regulations, this has hindered the development of improved crop varieties to close the deficit in food production in most parts of the continent.

    However, stakeholders in the agricultural sector have examined the role modern agricultural technology will play, not just in making the African continent self-sufficient in food production, but in contributing to the success of the African African Continental Free Trade Area (AfCFTA).

    The Nation learnt that the African Continental Free Trade Area (AfCFTA) is a free trade area founded in 2018, with trade commencing as of 1 January 2021. It was created by the African Continental Free Trade Agreement among 54 of the 55 African Union nations.

    According to the World Bank, The AfCFTA agreement aims to provide broader and deeper economic integration across the continent as well as attract investment, boost trade, provide better jobs, reduce poverty and increase shared prosperity in Africa.

    Also, in a document released by the African Union Development Agency (AUDA-NEPAD), in May, 2023, the intra-African trade currently accounts for only 15 per cent of the continent’s total trade, compared to 58 per cent in Asia and 67 per cent in Europe.

    Read Also: Truncated education, lost livelihoods: NEDC renews efforts to rebuild insurgency-ravaged Northeast

    It noted that the The AfCFTA is expected to boost intra-African trade by 52.3 per cent by 2025, increase Africa’s income by up to $450 billion by 2035, according to the IMF, and lift 30 million Africans out of extreme poverty.

    The Project Manager of the African Agricultural Technology Foundation (AATF), Nairobi, Kenya, Prof Sylvester Oikeh, said with the implementation of biosafety policies and regulations in most African countries, and with farmers adopting the technology, the AfCFTA will experience a lot of success especially via the food sector.

    Speaking further, Oikeh noted that technologies and business models do exist to address many of the gaps within the African agricultural sector.

    He said; “the adoption of new technologies is often hindered by a combination of economic, social and political factors.

    These gaps, he said, must be overcome if African agriculture is to be transformed to become the driver of development that it can be.”

    ”At the African Agricultural Technology Foundation (AATF), we lay great emphasis on building a balance in the portfolio for products accessed and developed through conventional and biotech approaches to provide more options for farmers.

    ”We believe in leveraging technology to help farmers defy bottlenecks that stifle productivity at the farm leading to hunger, poverty, diseases and deaths. Increased uptake and change of attitudes on various agricultural technologies is key.

    ”This comes with empowering farmers to adjust the ways they protect crops and manage the fields for better output. Available studies show that farmers cannot engage in the same age-old practices and expect different results. Change is of essence now and going forward, which technology plays a great role in achieving AFCTFA’s success”, Oikeh noted.

    Speaking on how modern technology would contribute to AFCFTA’s success, The President of All Farmers Association of Nigeria (AFAN), Arc. Kabir Ibrahim said, farmers would exit subsistence farming with the aid of modern technology which would in turn boost food production.

    This, he said, would not only make the country self-sufficient, but make Nigeria a net exporter in the market. Ibrahim said the AFCFTA offers Nigeria the opportunity to become Africa’s giant through optimal food production.

    He said that the optimal food production would be achievable using biotech crops as they are very safe and nutritious to consume.

    He said the cowpea (beans) which had been genetically modified to resist the insect pest of maruca vitrata, commonly called Pod Borer Resistant Cowpea (PBR Cowpea), had the potential of helping Nigeria economically.

    Ibrahim said it would help Nigeria close the deficit of nearly 500,000 metric tonnes now being experienced and enable it to be a net exporter of the commodity to Africa nations through AfCFTA.

    ”My background in pure science and architecture imbues in me the ability to decipher the efficacy and potential of any scientific innovation empirically.

    The biggest impact of biotechnology has been in the field of agriculture mainly because of the need for more sustainable food production to feed the ever-increasing world population.

    “I am convinced that there is no nexus between cancer and GM crops, for instance,’’ he said.

    Furthermore, the AFAN president stressed the need for collaboration among government, policy makers, and other relevant players in the agricultural sector in African nations to implement and push for the adoption of the modern agricultural technology to enhance faster market development and growth of the African Continental Free Trade Area (AfCFTA).

  • Trade negotiator, stakeholders to implement final agreement on AFCFTA report

    Trade negotiator, stakeholders to implement final agreement on AFCFTA report

    The Chief Trade Negotiator and Director General Nigerian Office for Trade Negotiation

    Indications are that all the paper work are being perfected to get ratify the mplementation of Nigerians membership into the African Continent Free Trade Agreement (AFCFTA), The Nation can authoritatively report.

    This was disclosed by the Chief Trade Negotiator and Director General of the Nigerian Office for Trade Negotiation Amb. Yonov Agah in Abuja, the federal capital territory at the weekend.

    While presenting t the Nigeria Regulatory Audit Report for priority sectors under  the AFCFTA, Agah stated that this became inevitable as the federal government needed to begin validation for proirity sectors under AFCFTA. 

    Read Also: FG denies news of expulsion of envoy from Niger Republic

    Agah noted that the Federal Executive Council in November 2020 ratified the membership of Nigeria in the AfCFTA and subsequently adopted the template for implementation which is what stakeholders are working on now. “This again points to the arrangement for Nigerian’s final implementation of the agreement.”

    Pressed further, Agah said, “This Minisiterial assignment is critical owing to the fact that the federal government and Nigeria as a whole stands hugely to benefit from the agreement once it is fully implemented. We are expected to revisit key sectors and find the ones we should impose restrictions and the ones we should maintain status quo with.

    “Nigeria is fully committed to the implementation of the agreement but will however ensure that grey areas are addressed especially in terms of cross border trade and taking into account its commercial implications.”

    The meeting had stakeholders in the business, legal and other priority sectors is crucial for all to sit and ratify the audit report on this priority areas.

  • ‘AfCFTA will aid Nigerian food products ‘penetration into Africa’

    BY DANIEL ESSIET

    The Chief Executive, Agricultural and Rural Management Training Institute (ARMTI), Dr Olufemi Oladunni, sees export at the forefront of the nation’s improved foreign exchange. He supports discussions focused on maintaining Nigeria’s competitiveness within the global trade and export finance market. He shares his thoughts with DANIEL ESSIET

    How can the nation’s agriculture sector take advantage of the US-China tensions?

    United States in particular, is a market of great interest and opportunity for many Nigerian exporters. From the strong historical ties to the current and future opportunities, there definitely is lots of focus on that part of the world from Africa. If the current trade conflict continues, both countries will eventually look out for new trade partners.  That therefore, offers a great market opportunity to the agricultural sector of the rest of the world (including Nigeria) in both countries. To compete at that level however, the nation’s agricultural sector needs to be more productive and meet set international standards.

    In which export markets do you see the strongest demand for Nigeria’s agro products?

    Nigeria’s agricultural products will do well in almost every export destination in as much as set standards are adhered to and the products are competitive in terms of price. Meanwhile, countries that host large population of Africans and Nigerians are most likely to have the highest demand for Nigeria’s agro products. Most agro companies remain solely focused on their domestic market, despite expanding global opportunities and a national campaign to promote exporting. As a result of this unrealised potential, these businesses forgo greater profitability, diversification, and other competitive advantages derived from engaging internationally. We lose a primary source of sustainable, high-wage job creation and economic growth. Our exporters have to undertake international market assessments to identify needs and opportunities. They then applied that intelligence to take actions that would generate the greatest return in helping their businesses increase exporting. Export is key to boosting foreign earning, so we need to focus on agro exports. Whether big or small businesses, the leadership should seek to increase revenues and employment and promote overall economic competitiveness, they must adapt to rapidly changing global realities that are shifting the focus of demand for Nigerian produced goods and services. Our biggest exports to the world, in volume terms, are products such as agri-foods.

    Do you see Africa Continental Trade Agreement providing an opportunity for Nigerian food products to expand into the continental economy?

    Yes, it does provide market opportunity for the Nigerian food products. Beyond that however, the perceived ‘chronic oversupply’ of food in Nigeria is only a periodic thing. This happens only at the harvest season of each commodity. The huge supply at the harvest of each commodity is not an all-year run thing because of poor/ low efficiency in the post-harvest handling of food commodities in Nigeria. To take advantage of the opportunities that the Africa Continental Trade Agreement presents, Nigerian agricultural sector needs to improve in value addition to food commodities and ensure strict adherence to global and regional food safety standards. I believe there are a lot of local firms with proven capacity for success in exporting a range of goods and services, but they underachieve as a whole. The continental trade agreement will provide an opportunity for Nigerian food products to expand into Africa.

    Do Nigerian products have satisfactory access to international markets, particularly in Europe?

    No. This is due to a number of factors including: low productivity, non-competitive pricing, and non-adherence to food safety regulations often leading to rejections. There should be increased investment further along the value chain to enable the development of value-added products that are more internationally competitive and respond to consumer demand. For exporters to Europe, the presence of pathogenic micro-organisms remains the single most notified food safety issue. We need to address issues such as chemical contaminants, mycotoxins and pesticide residues. We need to strengthening the capacities to meet international food safety requirements and in infrastructure to provide an enabling environment for value chain development. Ultimately, increased public expenditure in agriculture and agricultural research is needed to improve productivity and build the resilience of the agricultural sector so that producers are better prepared to meet international trade requirements.

    What measures should be put in place to boost the market competitiveness of Nigerian agricultural exports?

    The government and the private sector have made concerted efforts to keep trade volumes on a consistent upwards trajectory over the past decade. However, the country remains in trade deficit in some fronts with exports faltering in recent years as a result of external challenges such as low global commodity prices. The Government is explicitly targeting increased foreign direct investment (FDI) inflows, deploying a multi-pronged strategy to attract new investment. Measures include a wide-reaching tax reform programme, easing restrictions on FDI across several sectors. But we need to do more to boost agro exports.

    Government should work with the private sector to help stimulate innovation for sustainable agri-food systems and produce better and safer food while preserving natural resources and biodiversity. Our  growth will be propelled by prioritisation of agriculture as a key contributor to development and the fast-paced adoption of new technologies to boost the sector. But we have not seen growth in irrigation. We have to harness technology to expand irrigation to farmers who traditionally relied on rainfall to water their crops. This will boost productivity and income for farmers by helping them extend the growing season and become more consistent in their production.

     

    One of the drivers of growth in the agricultural sector will be the expansion of irrigation. The area under irrigation has not increased significantly for a long time. Farmers need access to quality input, irrigation facilities, farm and processing machineries, functional infrastructure, including power, dam, roads and strict adherence to set global food export standards. It is time for Nigeria to become a strong exporter of food products.

    How do you account for the lack of processing of agricultural raw materials on the spot in Nigeria?

    Food processing has a huge potential to unlock economic growth. We have capacities to process meats, confectionary, canned fruits, vegetables, dairy products, noodles, bread, and other baked goods. While we domestically produce poultry, pork, and eggs we need for food manufacturing industry, we still smuggle poultry. The vast majority of dairy products are also imported. There is need to use the sub sector to help the industry accelerate progress towards food security and improved nutrition. We   can be competitive and businesses flourish in the current ecosystem if investments are focused on acquiring processing machineries. The machines are costly. The processing industry face infrastructure challenges, such as power, water supply and roads. There is the issue of  epileptic power supply, high cost of raw materials due to low productivity at the production level, inadequate technical know-how/ skills, short supply of low cost simple technology processing machineries,  non-competitive product pricing compared with commodities traded internationally.

    What challenges does the limited availability of water present to agricultural producers?

    Enormous. It has largely limited agriculture in Nigeria to a rain-fed activity. Farmers therefore, have more idle time during the dry season. This brings about negative impacts/ outcomes on the productivity, competitiveness and overall profitability of the sector. Water resource management is a challenge for the sector. Nigeria relies on rain-fed land for 80 percent of its agricultural needs.

    In what way is agricultural development crucial to the achievement of the SDGs?

    The Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. The SDGs are part of Resolution 70/1 of the United Nations General Assembly, the 2030 Agenda. SDGs goals are: No Poverty. Zero Hunger. Agricultural development is a critical nexus to the achievement of a good number of the SDGs. Agricultural development is a sound strategy to combat poverty (Goal 1), eradicate hunger (Goal 2), ensure good health and well-being (Goal 3), promote industrial growth (Goal 9), reduce inequality (Goal 10), etc. The challenges to feed Nigerians sustainably are huge. With the Sustainable Development Goals, Nigeria and the rest of the global community has adopted a compelling vision with ambitious goals. I believe we need to reshape agriculture and food system to better feed Nigerians and deliver sustainable development.

    In your opinion, what are the main obstacles for rural development policy?

    There are many obstacles at different levels. The challenges of addressing rural poverty, whilst also feeding a growing population are profound. These include poor social amenities and infrastructure, inadequate access to market, rural-urban migration, non-participatory approach to development, insecurity, lack of provision of public goods and disabling business environments. Access to finance is a main bottleneck for rural development. We need to provide incentives for people to live and prosper in rural areas. We not only need to ensure that food production is a stable and profitable occupation, but also that other income generating activities exist in rural areas. The rural people should have access to basic services, such as schools, education and health care among others.

    How can Nigeria’s agriculture sector be made more attractive to foreign investment?

    The Nigeria’s agriculture sector has been growing at a steady pace. For us to facilitate a strong agricultural sector means investing in the infrastructure and creating predictable regulations. If this is fully utilised, farmers could meet the food needs of the country. We need to embrace pro-private sector policies such as offering tax incentives to new agri­businesses. Such measures will go some way to making agribusiness an attractive investment prospect, for foreign investors. What investors need is a guaranteed market by controlling importation of food commodities; easy access to land (including acquisition of certificate of occupancy); functional infrastructure (power, roads, water, etc.)

    How’s infrastructure and logistics affecting the ability of growers to compete in terms of exports?

    Whether, small or big farmers-those using two acres and more, they all need infrastructure to pack and grade their produce in line with market requirements. That is why the government and the stakeholders like us are calling for investment in logistics. Increasing efficiency in logistics   will make it easier for farmers and producers to access both local and international markets. It is costly right now because of wasted time and cost markups at each step along the way .This makes our produce uncompetitive by the time it reaches its destination. Poor infrastructure and logistics have largely limited the productivity of producers. These have increased percentage of post-harvest loss and impeded producers’ access to more profitable markets. Hence, they cannot compete favorably in the international market.

    What recommendations would you make to policymakers in order to fully exploit agricultural resources?

    The government and the private sector must work together to create stronger value chains in agribusiness. Stakeholders need funding to increase the scale of the entire value chain.

     

    To achieve this will require funding the development of infrastructure, power, roads, and irrigation facilities among others. The other thing is to ensure the local market is protected from being used as a dumping ground for agricultural products from more developed economies. Our population is on the up. More people will need feeding. The agricultural industry is looking for researchers to drive growth in productivity. This will require increased funding for research to make the industry ready for the future. We must do everything to assist local producers to meet up with the requirements/standard of the export market.

    Could you summarise the main work of the Institute?

    ARMTI provides management training, consultancy and advisory services. The Institute also conducts applied management research, special and diagnostic studies; and disseminates management information. Overall, the Institute contributes to policy development which will enhance better management of the nation’s agricultural and rural sector.

  • Afreximbank chief seeks specialised agency for AfCFTA

    The President, African Export-Import Bank (Afreximbank), Prof. Benedict Oramah, on Thursday in Abuja, urged the Federal Governmentto set up a specialised agency to enable it take advantage of the opportunities offered by the implementation of the African Continental Free Trade Area (AfCFTA).

    Delivering the keynote address at the 2019 Independence Day Dinner and Gala Night to mark the 59th anniversary of the country’s independence, Prof. Oramah said such an agency should be the arrow-head for achieving Nigeria’s strategic objectives for its membership of the AfCFTA.

    According to him, Nigeria’s goal should be set out in a carefully developed strategy and entrusted to an accountable set of people to implement

    He described AfCFTA as a platform for Africa’s collective self-reliance and said the country had a great opportunity to benefit immensely from it if certain actions were taken at the federal, state and corporate levels in a coordinated manner.

    He said while the promise of the AfCFTA in terms of development outcomes was not in question, the road ahead was likely to be rough and turbulent, saying the country should consider triggering an adjustment process for operators in sectors likely to be negatively impacted and putting in place arrangements to support those that could become competitive by simple re-tooling and transforming from import substitution to export orientation.

    He also urged the government to make credible trade information available to local businesses interested in international trade, especially intra-African trade, arguing that while the AfCFTA creates the legal basis for a potential pan-African market in goods and services, the creation of that market was the job of economic agents whose operations were usually driven by information.

    “Unless businesses and traders know where the markets for their goods are or where they can source inputs, they cannot participate fully in the market the AfCFTA is hoping to create,” he stated.

    Prof. Oramah said the strongest economic argument in favour of the AfCFTA was that it would help African economies to industrialise and improve the continent’s share of global manufacturing output, and advised that the medium- to long-term goal for Nigeria and other African economies should be to achieve clearly defined levels of industrialisation.

    He said: “Available evidence shows that labour intensive light manufactures offer the greatest market opportunity for Nigeria.”

     

  • AfCFTA to increase African trade by $35b

    THE African Continen
    tal Free Trade
    (AfCFTA), if successfully implemented, would increase intra-African trade by as much as $35 billion or 52 per cent yearly above the baseline by 2022, the Nigerian Shippers’ Council (NSC) said at the weekend.

    The Council’s Executive Secretary/Chief Executive Officer, Hassan Bello, stated this at the maritime stakeholders’ summit organised by Journalngonline.com at the weekend.

    The theme of the conference was “Maximising benefits of intra-African trade under AfCFTA regime”.

    Bello was represented at the event by James Chabulatuda, Operations Officers, Consumer Affairs, of the Council.

    Bello added that the Agreement would have the consequence of imports from outside the continent decrease by $10 billion yearly, whereas agricultural and industrial exports would increase by $4 billion and $21 billion above the baseline.

    He added that the AfCFTA would boost small and medium scale enterprises by 80 percent in Africa’s growth by using regional markets as stepping stones for expanding into overseas markets outside Africa.

    The Council boss stated that Nigeria with population of 200 million, seventh largest in the world, third largest youth population in the World, 20th world largest economy and strong services, will create job opportunities for the people as well as opportunities for investment.

    He noted the main objectives of the Agreement to include expansion of intra-African trade through better harmonisation and coordination of trade within continent; enhancement of competitiveness at the enterprise level to support economic transformation, exploitation of economic of scale to take advantage of continental market access.

    Others are adding value to Africa’s natural resource; developing regional value chains and attracting investments into Africa.

  • ‘AfCFTA threatens N50b local market’

    Paint manufacturers in the country seem unsettled by the recent signing of the African Continental Free Trade Area (AfCFTA) agreement by the federal government, arguing that the development is capable of jeopardizing the development of the over N50billion local investment in the sector.

    This is happening as the sector is still fighting to curtail the effects of increasing activities of unqualified producers and other grey market operators to their business and the attendant dangers their operations pose to the health of Nigerians and the environment.

    Investment in the local paint sub-sector is currently estimated at over N50b and installed capacity of 200ML of assorted paints annually, ranging from heavy coatings, car finishes and refinishes. Also in the mix are wood lacquers, industrial coatings and decorative finishes (to mention a few) and not forgetting millions of job offerings from the sector.

    Addressing journalists in Lagos to herald the 2019 Coatings Show holding next week, Abimbolu Sunday Babatunde, Chairman of Paint Manufacturers Association of Nigeria (PMAN) stressed that their parent body, Manufacturers Association of Nigeria (MAN) has since voiced local manufacturers distaste for AfCFTA because of its injurious nature to growth of manufacturing in Nigeria and the economy in general.

    “I can tell you that it was MAN that delayed the signing of AfCFTA in the first instance and was not informed before the president assented on behalf of the country,” Babatunde lamented, saying that the development will sure make Nigeria a dumping ground as everybody is targeting it because of the market size.

    According PMAN, what will simply play out is that with the trade agreement, their products will find easy entry into the Nigerian market. This they said will not only give fair competition to local products, but also take away the much needed employment opportunities in the country and erode tax revenue for future development.

     

  • IoD seeks deeper engagement on AfCFTA

    The Institute of Directors (IoD) said there was need for the Federal Government to further engage relevant stakeholders  on the prospects and challenges of the African Continental Free Trade Area (AfCFTA) agreement.

    Its new President/Chairman, Governing Council, Chief Chris Okunowo, who spoke in Lagos during his inauguration, said the trade liberalisation deal that promises to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3.3 trillion.

    With this huge financial promise, Okunowo said there was need to further engage with stakeholders in both the private and public sectors whose diverse inputs will further help strengthen relevant institutions to allow the country to take advantage of the agreement to boost trade and investment.

    Read Also: ‘Oil service firms to benefit from AfCFTA‘

    Okunowo said such engagement was with a view to enhancing the country’s chances of benefiting optimally from the treaty  signed by President Muhammadu Buhari.

    Buhari had signed the free trade deal on July 7, this year, at the 12th Extra-ordinary Summit of African Union (AU) Heads of State and Government in Niamey, Niger Republic.

    This came about 16 months after foot-dragging on the signing of the hotly-debated AfCFTA, with Buhari citing the need to consult widely with stakeholders on the benefits or otherwise of joining the continental trade bloc.

  • ‘Oil service firms to benefit from AfCFTA‘

    OIL and gas service and manufacturing companies that have built their capacities will benefit from the Africa Continental Free Trade Area Agreement (AfCFTA), Nigerian Content Development and Monitoring Board (NCDMB) Executive Secretary (ES), Mr. Simbi Kesiye Wabote and  Manufacturers Association of Nigeria (MAN) President, Mr. Mansur Ahmed have said.

    They spoke in Port Harcourt, the Rivers State capital, during the inauguration of Alcon’s ultra-modern factory for electrical power distribution panels and switchgears, which the firm set up in partnership with ABB, a world- leading electrical and power original equipment manufacturer (OEM).

    The facility has the capacity to produce 750 main distribution panels, 1,200 sub-main-DBs to over 5000 consumer units and engage 150 workers.

    In his keynote address, the ES stated that investments, such as Alcon’s, open opportunities from the national to continental levels. According to him “the establishment of such manufacturing outfits will enhance the delivery of the target benefits under the AfCFTA agreement.

    “If you take the population of Africa and the potential market and given the general level of development of countries, the sky is the limit for any manufacturer that makes the right investment, has the right quality and partnerships.”

    He commended Alcon for being the first company to obtain NCDMB’s ‘Nigerian Content Equipment Certificate (NCEC) Category A’ for electrical switchgear and panel building. It announced that the Board would no longer grant approvals to import the products manufactured by Alcon.

    He charged the company to continue to deliver top-notch low voltage panels as well as introduce new products that could match those that are manufactured in any part of the world.

    He promised that NCDMB would continue to educate industry stakeholders about the company’s capabilities through the NOGIC JQS platform.

    Wabote commended Alcon for its ability to nurture a formidable partnership with ABB, stating that it “attests to the fact that if local companies have the right processes and procedures in place, international OEMs will be willing to form alliances and partnerships that endure’’.

    Manufacturers Association of Nigeria (MAN) President Mansur Ahmed urged Alcon and other manufacturers to take advantage of the opportunities presented by President Muhammadu Buhari’s recent signing of the continental free trade agreement, which will bring the 55 African countries into one common market.

    He explained that AfCFTA will generate a market of 1.2 billion people and an active economy of trillions. He added: “Every manufacturer or investor should look at that and begin to thrive. I am glad that Alcon is seeing this vision and there is a plan for expansion. As we go into the AfCTA, we are going to create a bigger market, four to five times bigger than what exists.”

    Alcon Managing Director Mr. Gerardo Della Santa stated that the factory was the largest and that it had trained its workers locally as well as in Egypt and Italy to keep pace with new technologies and new products.

    He described the facility as landmark because it will transfer technology, create new jobs and expertise. “We perform the full cycle of the panel production, design, customisation, assembly, testing, packaging and delivery,” he said.

    Santa confirmed that the company had received all required certifications from ABB and Standards Organisation of Nigeria (SON) to operate. He thanked NCDMB for believing in the company’s vision and the Bank of Industry (BoI) for providing the financial support for the investment.

    ABB Country Managing Director Mr. Hany Abd-Elazim underscored the company’s long partnership with Alcon and its support for the new production facility, noting that it had huge value addition in line with the local content initiative.

    He expressed delight that the new facility will create jobs and improve productivity. He added that the factory provided an opportunity to export products within the ECOWAS region and expand to the continent when the African Free Trade Area takes effect from mid 2020.

    “This will support the cooperation to have local value added products from Nigeria to be exported,” Abd-Elazim said.

  • AfCFTA: Now the hard part

    Your excellency, our reports show that, on balance, Nigeria should consider joining the AfCFTA”, and using the opportunity of the on-going AfCFTA negotiations to secure the necessary safeguards required to ensure that our domestic policies and programmes are not compromised…

    “Our study has shown that the AfCFTA is not without major risks and undesirable impacts. The most significant of which is the potential rise in smuggling and abuse of the rules of origin. The risk is that it will provide incentive for traders to disguise goods imported from outside the continent as made in Africa goods to qualify for duty-free treatment…The risk is further complicated by the lack of capacity, resources and will on the part of some African countries to enforce their borders. Tackling this threat will require collective efforts at the highest level of ECOWAS and the African Union”.

    The above was the summary of findings/recommendations of the Presidential Committee on African Continental Free Trade Agreement last month. Barely a week after, the federal government in a terse statement would announce that “Nigeria is signing the AfCFTA Agreement after extensive domestic consultations”. With Republic of Benin also boarding the AfCFTA train, Eritrea remains the only African Union member yet to agree to the trade policy.

    The horizon, as it would appear, couldn’t be better. We are here talking about continent whose members would rather do business with former colonial masters than their kith and kin now deciding finally not only to change course but to redress through concrete measures the historic imbalance with major trading partners. Currently, the United Nations Conference on Trade and Development (UNCTAD) puts the percentage of total trade conducted between African countries at less than 20%– as against 80% with the rest of the world. One can only imagine the impact of a redirection of the current trend from, say the current 20 percent to 50 percent on the various economies in the continent. Or better still, the impact of the removal of the costly customs duties which the agreement guarantees and which the UN Economic Commission for Africa (UNECA) projects could increase intra-African trade by 52% within five years.

    The problem is that AfCFTA idea is increasingly outmoded. In fact, I’ll put the chance of its making a difference – or even survival – at less than 20 percent – and that I will consider rather generous.

    I start with the African giant, Nigeria whose 2018 Gross Domestic Product (GDP) of $397.30 billion readily presents a study in the mismatch between infrastructure and the GDP. With the value of Nigeria’s infrastructure put at about 35 per cent of GDP, compared with 70 per cent for larger economies, we are simply not there yet!

    Some estimates suggest that Nigeria will require an annual investment of N9.47tn ($30 billion) over a decade to make the bend – a problem very much at the heart of its diminished economic growth and lack of competitiveness. So, it’s a long road ahead.

    Here, at once is the great irony: Everyone from the high official to the lowest operative pretends to know the problem(s). Of course, it has to be the case with the country having been on roller-coaster train of de-industrialisation as far back as anyone could remember. Little wonder an average high school kid, even without any serious contemplation, can roll out the problem on the tip of his/her fingers: lack of basic infrastructures such as roads, railways and power.

    For an oil producing country, a petrochemical industry which would have provided the raw material base for the nation’s industrial take-off, has become a tall dream. Absent the critical linkages between agriculture and agro-processing, post-harvest losses are not only among the highest in the world, farming has remained at a most ridiculous pre-industrial level. Today, with perhaps the exception of the indigenous conglomerate – Dangote Group, and few other international brands that have managed to survive the Nigerian scourge, the environment – no thanks to the harsh and myopic policies of government – is now renowned as a giant cemetery for manufacturing entities.

    But then, just as the problems are well known, so also are the solutions seemingly very straightforward. Yet, the matter, like a party manifesto that gets recycled from one electoral season to another, are such that the Nigerian government has done practically little else than recycle them, and when it suits the government in power, kick them down the road! And so the scourge endures in its manifold variants.

    Let somebody tell me how the government intends to dissolve the heavy baggages that have hobbled our industrialisation quest short of a miracle.

    Of course, I am amused when I hear otherwise knowledgeable Nigerians relish the AfCFTA promise of “immense opportunities for Nigeria’s manufacturing and service companies to expand to Africa”. They forget that the African Growth and Opportunity Act (AGOA) initiated by the United States government to give African countries a berth in the United States market existed before it. Exactly 19 years after, Nigerians should be interested in knowing why the initiative floundered here even when other smaller, relatively less endowed countries on the continent were able to take advantage of it. It is a lesson in our penchant for sloppiness, our lack of abiding standards and our predisposition to cut corners.

    I can list other dozen reasons why AfCFTA is fated to die on arrival. I will cite two. Thanks to Donald Trump and his Make America Great Again and his Brexiteers and resurgent Far Right allies in Europe, not only the old sanctimonious rules of globalisation being rewritten, global trade relations are being altered to an extent that would have been unimaginable barely a decade ago. In a real world where the issues of economy intermingle with those of national security, the rule has since become one of country first! While Nigeria continues to luxuriate in the most expensive farce called ECOWAS – and now AfCFTA, other countries more discerning know better than throw their borders open without cast iron guarantees on what it considers its national interest more so at a time the entire humanity is experiencing unprecedented turmoil. A country where a foreigner – a Nigerien could easily saunter into an airport, going as far as mounting the wings of an aircraft readied for take-off obviously belongs to a different age!

    Finally, ever wondered why the mention of Nigeria evokes fear, hate, anger, mistrust and envy? Talk of Nigeria’s brand of exceptionalism. Didn’t they say in these parts that Naija no dey carry last? Talk about our signature reputation of fierce but sometimes crooked competitiveness that has become too loud to be ignored!

    I close this way: there is nothing mysterious in the so-called free trade. The talk about AfCFTA being nothing without the African giant although seductive is cheap. A Nigeria already burdened with its own internal problems can do without a club whose rationale is utterly questionable at this time. Let’s get cracking with the business of fixing our economy and, if I may add, the security challenge and everything will fall in place.