As the world warms in Nigeria, others call for improved trade | The Guardian Nigeria News
The African Continental Free Trade Area (AfCFTA) would have the capacity to significantly boost intra-regional trade and break Africa’s long-standing dependence on foreign countries as export destinations and sources of imports and investments. With the official launch on January 1 of this year, many trading blocs are starting to realign their preferences in an effort to improve market access. FEMI ADEKOYA writes about how major trading partners like the United States and Europe are revising their trade agendas to align with the AfCFTA.
AfCFTA holds the ace for African countries to improve intra-African trade and replace activities that were until now dominated by countries outside Africans. Despite this potential, there are challenges to the ability of African countries to remove red tape and encourage trade.
Indeed, Afreximbank’s recent African trade report showed that despite ranking third among contributors to intra-African trade, Nigeria’s trade share remains low given its status as the continent’s largest economy. It is even then that raw materials dominate the articles exported from the continent.
The report showed that although the outlook for 2021 is positive and Africa’s trade is expected to rebound strongly as global economic activity picks up and demand for African exports increases, informal cross-border trade (ICBT) remains dominant.
The Afreximbank report notes that the ICBT, which is a key component of intra-African trade, is very widespread in its composition and estimates that in East Africa the ICBT is very high and could be as high as to 80 percent of the value of formal trade in some countries.
South Africa was the biggest contributor to intra-African trade, accounting for 23% of total trade, in 2019. The biggest leap came from DR Congo, which became the second-largest intra-African trading nation, representing 10.4% of total intra-African trade. -African trade and Nigeria were third with seven percent. Despite a 4.7 percent decline, Nigeria’s share of intra-African trade has remained constant at around seven percent and Nigeria has become the third largest intra-African trading country.
While the AfCFTA provides a means to systematically dismantle tariffs that distort trade across the continent, non-tariff barriers (such as inefficient, dilapidated or non-existent road, rail or port infrastructure and automated border systems and procedures, as well as as phytosanitary measures and other administrative requirements) are often seen as more damaging than tariffs and as the main contributor to the high cost of intra-regional trade.
This has reinforced the need for trading partners like the United States and Europe to provide opportunities that facilitate trade. Experts note that how the European Union reacts and interacts with the new trade zone to the south will be critical in determining the success of the AfCFTA.
So far, the European Union’s Economic Partnership Agreement (EPA) remains a stumbling block for trade with Africa as a bloc. With integration, the EU is exploring new ways to appeal to key stakeholders like Nigeria.
Recently, French President Emmanuel Macron inaugurated the France-Nigeria Business Council.
The Council is a private sector initiative aimed at strengthening trade relations between the two countries with Abdul Samad Rabiu, founder / chairman of the BUA group of Nigeria, as the first chairman.
The newly inaugurated board also includes Gilbert Chagoury of Chagoury Group, Mike Adenuga of Globacom and Conoil, Aliko Dangote of Dangote Industries, Tony Elumelu, chairman of UBA & Heirs Holdings, and Herbert Wigwe, CEO of Access Bank as Nigerian members of the advice. .
The largest French companies, including Dassault and Total Energies, are also members of the board.
Speaking at the inaugural board meeting in Paris on the sidelines of the Business France summit in Versailles, France, Abdul Samad Rabiu thanked President Macron for his vision in creating the French Nigeria Business Council.
He said the move resulted in a reset of trade relations between Nigeria and France and created a viable platform for businesses from both countries to partner and improve trade relations.
According to Abdul Samad Rabiu, “Nigeria has many potentials for French companies to do business in different fields, including solid minerals, and mining, manufacturing, agriculture, associated equipment, energy. , food processing and even in the field of associated equipment or infrastructure for the value chains of these sectors.
“Where French companies were once risk-averse or unable to do business with Africa’s largest economy, they can now be assured of a platform through which they can enter and mutually develop the market.
“Where Nigerian companies had not seen French companies or the French market as a viable destination due to a lack of information, they can now be sure of a platform to facilitate this.”
For its part, the United States of America unveiled an initiative called “Prosper Africa” through which it aims to significantly increase trade and investment with Nigeria and other African countries.
Prosper Africa aims to reverse the United States’ trend of eroding African markets by providing technical assistance to American and African companies to double trade and investment in both directions. It places particular emphasis on transparent markets and private enterprise as the foundations for economic growth and job creation.
So far, the African Growth and Opportunity Act (AGOA), a United States trade law extended until 2025, improves access to the United States market for countries in sub-Saharan Africa (ASS ) eligible.
The President and CEO of the Business Council for Africa, Florie Liser, previously told the Guardian that the initiative aims to strengthen bilateral relations between the United States and many African countries, adding that it aims to promote prosperity, security and stability in the United States. Africa relations.
Considering how China’s success in doing business on the continent has been driven by its high and diverse financial flows, U.S. officials see Prosper Africa as an innovative method to engage with African leaders and entrepreneurs through a coordinated effort. between American agencies – with less reference to China. .
“With things developing here in Africa; a regional market with over 1.2 billion people, free trade area, labor market growth through young people, basically you cannot ignore the African market and opportunities. Nigeria has the largest economy in Africa. You can’t talk about growing your business globally without Africa and you can’t talk about business in Africa without Nigeria.
“American companies come to Africa to invest and have been looking for partners like GE for a long time. What they are looking for is the right environment that will facilitate and promote their investments in the country and provide them with certainty, the rule of law, and they will be able to get their resources at some point, ”she said. added.
Regarding the performance of many African countries vis-à-vis AGOA, Liser said, “A number of African countries have not really taken full advantage of the AGOA opportunity and Nigeria is one. of them. You are exporting oil and more value-added agricultural products to the United States. Nigeria could do more with leather products like shoes and clothing as the country has had a textile industry here for a long time. You did not take advantage of AGOA to ship these products.
“There are a lot of opportunities, there are five and a half years left. So, with the zero oil policy that has been put in place and the government’s efforts to improve the ease of doing business up to 16 points on the World Bank’s score for doing business, now is the right time to attract investment to Nigeria in the non-oil sectors, ”she said.
Executive Vice President for Programs, Creative Associates International, Earl Gast, noted that the private sector is exploring how to make the initiative work in Nigeria, being a major player on the continent.
With the arrival of the African Continental Free Trade Area (AfCFTA), Gast noted that creating a larger market under the trade deal will be of interest to US investors looking to expand their borders into African markets. .