Trading under the African Continental Free Trade Area’s (AfCFTA), which commenced on January 1, 2021 is a laudable development as it builds on existing initiatives for regional integration and laying the groundwork for more, even as immense support from countries and leaders across the continent is merited.
The AfCFTA was established in 2018 with the sole aim of creating a single market for goods and services in Africa. The agreement was ratified by 32 AU countries and Nigeria signed the agreement in Niamey, Niger on July 7, 2019 to promote intra-African trade with other African countries.
On November 11, 2020, the Federal Executive Council (FEC) approved the ratification of the agreement demonstrating Nigeria is on course to participate in trading under the AfCFTA.
The agreement has a huge potential as it would create the world’s largest single market of about 1.2 billion consumers and workers thereby increasing opportunities for African manufacturers and businesses especially those constrained by the size of their domestic markets. The AfCFTA, if properly implemented and executed across the continent, could boost Africa’s economy to $29 trillion by 2050 from the current size of $2.6 trillion.
The agreement will also be facilitated by movement of persons to expand economic integration of the continent, under the Pan African Vision of ‘An integrated, prosperous and peaceful Africa’. Integrating Africa into one trade area provides significant opportunities for entrepreneurs, businesses and consumers across the continent. It could also rapidly support sustainable development in the world’s least developed region.
Government Efforts In Boosting Export
According to National Bureau of Statistics (NBS), the value of total exports in third quarter (Q3), 2021 increased marginally by 1.0 per cent against the level recorded in Q2, 2021 and 71.4 per cent compared to Q3, 2020. Petroleum products accounted for most of Nigeria’s exports, making up 89.8 per cent of total exports in Q3, 2021.
Despite Nigeria’s vast export potential for agricultural commodities, non-oil exports still account for a small percentage of total export value.
Over the years, the federal government has implemented several initiatives targeted at increasing non-oil exports, including the export expansion grant, which reimburses exporters between five per cent and 15 per cent of their export value.
The grant, which is made through an export credit certificate, can be used by exporters to defray taxes, such as company income tax and VAT, and the purchase of FGN bonds amongst others.
The vice president, Yemi Osinbajo said the federal government will continue to support Nigerian exporters through its various agencies bringing about necessary reforms to boost the growth of the country’s non-oil exports.
Osinbajo urged exporters to take advantage of opportunities for growth in the African market through the AfCFTA.
The vice president stated this recently when receiving delegation of major agro-exporters in the country. The delegation came with the CEO/executive director of the Nigeria Export Promotion Council, Mr. Segun Awolowo who formally developed a Zero-Oil Plan designed to move Nigeria away from being an oil-dependent economy.
Highlighting the approval of the National Development Plan by the Federal Executive Council, the vice president stated that, “one of the major components of that Plan is that we are trying to move away as much as possible from our dependence on oil and gas proceeds as our major sources of foreign exchange. You have seen a trend towards that in revenue figures.”
He further said: “we believe attention needs to be paid to exports generally. Of all the various plans of government that we have, one of the critical things for us now is that we all know that we are moving away very quickly from oil.”
Noting that Nigeria is a principal player in the AfCFTA agreements, the VP stated that Nigerian exporters and businesses can be major beneficiaries of the agreements, saying, “for us economically, beginning now, we cannot afford to have a situation where for any reason at all, an area of competitive advantage for us which is agro-export suffers in any way on account of something we can help. Anything we can do, there shouldn’t be a cause for any kind of hindrance to agro-export.”
On support for agro-exports, Osinbajo stated that government agencies will continue to explore measures to boost exports saying that agro exporters are the end-users of the services of government.
Chairman of BUA Group, Abdul Samad Rabiu said the company food businesses were merged into BUA Foods became necessary to maintain its market leadership in the agribusiness and food processing sector as well as take advantage of the growth opportunities in the economy and the export prospect presented by the AfCFTA.
An entrepreneur and business management expert, Dr Timi Olubiyi, noted that, “to generate considerable revenue from non-oil exports, Nigeria and other African countries must shift away from exporting raw products and commodities toward exporting high-value finished goods.”
He said Nigerian manufacturers should aim to take advantage of the opportunities provided by AfCFTA to drive trade with other African countries.
He added that the federal government still has a lot of work to do in terms of providing basic infrastructure, a favourable investment climate, and elimination of multiple taxes for manufacturers and investors to thrive.