Need To Boost Trade Among African Countries

Trade between African countries has the greatest potential for building sustainable economic development and integration.

The debate on the benefits of trade has dominated this decade and Africa has cast its vote for more and better trade within itself. In March 2018, African countries signed a landmark trade agreement, the African Continental Free Trade Area Agreement (AfCFTA), which commits countries to remove tariffs on 90 per cent of goods, progressively liberalise trade in services and address a host of other non-tariff barriers.

AfCFTA, which aim to enable a free flow of goods and services across borders in Africa and boost the trading positions of the continent in the global market, is projected to boost trade within the region by 52.3 per cent by 2025, according to the International Monetary Fund (IMF).

However, more than three years after the AfCFTA kick-off, Nigeria’s trade value with other African countries in relation to its total foreign trade, remains low. The National Bureau of Statistics (NBS) report on the Foreign Trade in Goods Statistics for Q1, 2023, showed that, at N842.6 billion, Nigeria intra-African trade represented just 6.99 per cent of its total foreign trade (N12.047 trillion) in Q1, 2023.  On a quarter-on-quarter basis, Nigeria’s trade value with other African countries also declined by 24.87 per cent to N842.6 billion in Q1, 2023 from N1.122 trillion in Q4, 2022.

RELATED

Hello Spinster! Here’s Why You’re Not Attracting High-value Men

23 hours ago

TETFund: Solving Brain Drain In Nigeria’s Healthcare, Academic Systems

5 days ago

Reaction For Low Trade

Senior analyst, Parthian Partners, Okiki Oladipo said, despite the potential of the AfCFTA agreement, implementation still remained an eyesore given the state of infrastructure among African countries and the issues of economic ties.

“When agreements like this that cuts across both Anglophone and Francophone countries become a thing, there are usually many barriers to be pulled down. Thus, African nations have struggled with optimizing the agreement.

“For Nigeria to be better positioned to milk the benefit, there is a need to promote Industrialisation in the country vis-a-vis fixing infrastructures that would aid optimal production cost.

“When this is done, Nigeria will become an export hub into other African countries, meeting the local content requirement while also exporting at a competitive price,” he said.

Effort Of Stakeholders

At the just concluded 30th Annual General Meetings of the African Export-Import Bank (Afreximbank) in Ghana, minister of Finance of Egypt and chairman of the Afreximbank Annual Meetings, Mohamed Maait, said, Africans must work collaboratively towards finding integrated solutions to the new challenges confronting the continent.

Secretary general of the AfCFTA Secretariat, Wamkele Mene said, with the inclusion of a vision for an integrated African market in the founding treaty of the OAU, the founding fathers of the AU had foreseen the need for Afreximbank, saying, the vision had been grounded in the objective of the integration of African trade finance.

Mene noted that, if trade barriers were eliminated but there was no trade finance, all the efforts would come to nothing, adding that if trade finance was available but trade barriers persisted and prevented trade, then all the efforts would still have been wasted.

Mene commended the support and collaboration which Afreximbank had provided for the implementation of the AfCFTA, including the introduction of the AfCFTA Adjustment Fund and the establishment of the Pan-African Payment and settlement System (PAPPS), saying that support was critical as Africa sought to rely on itself to create a better future.

Former president of Niger, Mahamadou Issoufou said, with Africa accounting for a significant proportion of the world’s arable land, it was time for the continent to be able to feed itself, noting that, a focus on agriculture and agro-industrialisation would also lead to creation of employment.

Issoufou commended Afreximbank for its support towards the AfCFTA project, which had included supplying indispensable personnel, in addition to making investments, such as the AfCFTA Adjustment Fund to help countries adapt to the AfCFTA and improve their ability to compete in the new trade regime for which the bank had already provided $1 billion.

The group executive chairman of Lancelot Group, Adebayo Adeleke explained that, to boost intra-African trade, the region must improve physical integration, such as cross-border energy and transport infrastructure and connective infrastructure; strengthen political cooperation, such as harmonising customs rules and procedures; and facilitate business integration, such as regional electronic settlement system, electronic cargo tracking system and easing restrictions on services trade.