On this piece, ANOZIE EGOLE seems to be at how poor infrastructure, together with logistics, could hinder Nigeria from totally benefitting from the African Continental Free Commerce Settlement
The African Continental Free Commerce Settlement, which Nigeria is a signatory to, guarantees to be a transformative step for intra-African commerce, aiming to create a single marketplace for items and companies throughout 54 African international locations.
Because the continent’s largest financial system, Nigeria’s participation in AfCFTA is important not just for its development but additionally for the initiative’s general success. Nevertheless, regardless of its potential advantages, Nigeria faces vital challenges in totally capitalising on AfCFTA. From infrastructural deficits to regulatory bottlenecks and insufficient commerce facilitation mechanisms, the nation’s means to maximise the alternatives of the free commerce settlement is threatened until pressing reforms are made.
One of many main boundaries to Nigeria’s efficient participation in AfCFTA is its poor infrastructure, notably in key sectors reminiscent of transportation, logistics, and power. Based on the World Financial institution, Nigeria ranks 168th out of 190 international locations in ease of buying and selling throughout borders, a obvious indication of the hurdles companies face in shifting items and companies effectively throughout the nation.
In Nigeria, transportation networks are fragmented, and insufficient street, rail, and port amenities contribute to delays and better enterprise prices.
Based on a 2020 report by the Nigerian Ports Authority, greater than 50 per cent of containers within the nation expertise vital delays as a result of logistical inefficiencies.
The shortage of contemporary, well-maintained transport infrastructure not solely raises the price of commerce throughout the nation but additionally limits its connectivity to different African markets.
Intra-regional commerce beneath AfCFTA requires clean and environment friendly cross-border transportation routes, however Nigeria’s rail and street networks are largely inadequate. These deficiencies are compounded by the excessive prices of power, one other important element for commerce facilitation. With out pressing reforms in these areas, Nigeria dangers dropping out on the potential advantages of AfCFTA as different African international locations enhance their infrastructure.
At a current occasion in Lagos, the President of the Nigerian Indigenous Shipowners Affiliation, Mr Sola Adewunmi, disclosed that the international locations should not have the wanted amenities to profit from the settlement.
“As a result of when you’ve gotten these items and there aren’t any technique of transporting them, then what’s the essence of getting them? And we shipowners carry on asking ourselves how ready we’re for this process are, as a result of we realise that we didn’t have the amenities to harness AfCFTA advantages.
“I hope that we use the chance of this interplay to talk to the authority, to allow them to know that Nigeria as a nation if we needs to profit from AfCFTA. We should get ready by way of acquisition of recent vessels to swimsuit these functions,” he concluded.
Stakeholders have opined that one other key problem for Nigeria’s participation in AfCFTA was the complicated and inefficient regulatory atmosphere that companies should navigate.
Challenges
The World Financial institution’s Doing Enterprise Report for 2020 ranked Nigeria 171st globally for the convenience of beginning a enterprise, reflecting the regulatory hurdles confronted by entrepreneurs and merchants. Regardless of the introduction of the Nationwide Single Window, stories point out that companies typically expertise vital delays as a result of inefficient information processing and human errors. These bottlenecks improve the price of commerce and cut back the nation’s competitiveness on the continent.
Furthermore, the dearth of a unified regime throughout the Financial Group of West African States, to which Nigeria belongs, complicates the method of aligning with AfCFTA’s goals. AfCFTA goals to harmonise commerce tariffs and cut back non-tariff boundaries. For Nigeria to align with these goals, it should overhaul a few of its processes and enhance transparency.
Adewunmi complained that many buyers in Nigeria have been dropping cash every day as a result of poor authorities insurance policies.
“On daily basis our fortunes carry on dwindling, dwindling within the sense that persons are dropping cash as a result of unhealthy insurance policies, as a result of insufficient funding,” he mentioned.
Based on Adewunmi, delivery is a specialised commerce and for indigenous shipowners to compete with the massive delivery nations, there’s a want to present some form of incentives.
“I can’t think about a Nigerian shipowner saying he wished to compete with any individual that’s getting a mortgage at a greater fee,” he famous.
A former Vice President of the Affiliation of Nigerian Licensed Customs Brokers, Dr Kayode Farinto, said that for AfCFTA to succeed, authorities companies ought to prioritise commerce facilitation even when there’s stress on income era.
He added that in logistics administration, the nation’s maritime business had not fared nicely.
“It’s because logistics entails the involvement of a multimodal transport system however our reliance on the street alone is a stumbling block and a barrier to the free movement of commerce. The Ministry of Marine and Blue Financial system must liaise with the Ministry of Commerce both on non-public social gathering settlement or take it as a core duty to make sure that our over-reliance on the street is stopped,” Farinto mentioned.
Whereas AfCFTA is designed to spice up the commerce of products, the fact is that Nigeria’s industrial sector isn’t sufficiently developed to satisfy the calls for of an open continental market.
A report by the Nationwide Bureau of Statistics confirmed that the contribution of the manufacturing sector declined by 20.95 per cent in Q2 2024 when in comparison with the identical interval in 2023. The NBS report additionally confirmed that the sector’s contribution declined from 16.04 per cent in December 2023 to 12.68 per cent in June 2024.
The nation stays closely depending on oil exports, with petroleum accounting for over 80 per cent of complete export income. Non-oil exports, reminiscent of agricultural merchandise, textiles, and manufactured items, will not be aggressive sufficient by way of high quality or quantity to satisfy the calls for of different African international locations.
One of many main causes for this low industrial capability is the nation’s reliance on outdated manufacturing strategies, which makes its merchandise costlier than these from different African international locations.
Based on the Producers Affiliation of Nigeria, the nation’s industries are burdened with excessive manufacturing prices, pushed by costly power, lack of infrastructure, and restricted entry to finance. Till these points are addressed, Nigerian producers will battle to make the most of AfCFTA’s alternatives for elevated intra-African commerce.
Nigeria’s commerce coverage has historically been protectionist, with excessive tariffs and import restrictions aimed toward defending native industries. Nevertheless, such insurance policies conflict with the ideas of AfCFTA, which seeks to scale back tariff and non-tariff boundaries throughout the continent. The implementation of AfCFTA requires Nigeria to progressively dismantle a few of its protectionist insurance policies, which can face resistance from home industries that aren’t but aggressive sufficient to resist free market competitors.
The President of the Maritime Reporters Affiliation of Nigeria, Mr Godfrey Bivbere, said that AfCFTA represents a ground-breaking initiative by the African Union, designed to create a single marketplace for items and companies, promote free motion throughout borders, and unlock the immense financial potential of our continent.
He, nonetheless, lamented that boundaries, reminiscent of insufficient infrastructure, regulatory bottlenecks, and operational inefficiencies continued to hinder the seamless movement of products throughout the continent.
The Chief Government Officer of Le Look Home of Baggage and Sneakers, Mrs Chinwe Ezenwa, opined that in Nigeria, there have been core maritime/ logistics points that needs to be addressed to make AfCFTA successful.
“Freight forwarding in Nigeria additionally should be rejigged and tailor-made in the direction of trendy improvements and clear operations. The superior port infrastructure helps intermodal transportation. This implies cargo can seamlessly transition between ships, vehicles, trains, and plane, enhancing provide chain effectivity,” Ezenwa suggested.
In the meantime, Nigeria’s overreliance on the import of completed items, notably from Europe and China, additional undermines the advantages of the settlement. Whereas AfCFTA guarantees to boost Nigeria’s entry to African markets, the nation’s present commerce stability closely favours imports, particularly for shopper items, electronics, and equipment. With out vital modifications in native manufacturing and agricultural productiveness, this imbalance will persist.
The Nigerian authorities’s dedication to AfCFTA is one other essential consider figuring out the success of the settlement. Whereas Nigeria signed the AfCFTA protocol, the gradual tempo of implementation and lack of clear coverage path have raised issues concerning the authorities’s dedication to the settlement.
Based on a survey carried out by the Nigerian Financial Summit Group in 2021, 45 per cent of enterprise leaders in Nigeria expressed doubts concerning the authorities’s means to implement AfCFTA successfully as a result of political and institutional inefficiencies. The gradual rollout of vital reforms, reminiscent of the event of a Nationwide Commerce Facilitation Committee and the updating of the Nationwide Commerce Coverage, additional exacerbates these issues.
Moreover, the dearth of alignment between Federal and State Governments concerning the implementation of AfCFTA is a serious concern. Whereas the Federal Authorities is accountable for negotiating and implementing worldwide agreements, states are the first actors in infrastructure improvement, together with roads, ports, and industrial zones. This disconnect complicates the nation’s means to determine a cohesive nationwide technique to maximise AfCFTA’s potential.
Conclusion
For Nigeria to beat these challenges and totally profit from AfCFTA, substantial reforms are wanted throughout a number of sectors. The federal government should prioritise infrastructural improvement, notably in transportation and power, to facilitate the graceful motion of products.
Public-private partnerships may play an important position in unlocking the mandatory investments in these areas.
Regulatory reforms are equally important. Streamlining border processes, decreasing corruption, and implementing digital programs throughout your entire provide chain would considerably enhance the nation’s competitiveness.
Nigeria should additionally put money into industrialisation and export diversification. Offering assist for small and medium-sized enterprises which make up over 90 per cent of Nigerian companies may improve the nation’s manufacturing output.
Moreover, investing in human capital, innovation, and expertise would assist native industries turn into extra aggressive within the African market.
Lastly, the federal government should present higher political will to implement AfCFTA successfully. Strengthening establishments, making certain cross-governmental collaboration, and constructing belief with the non-public sector will probably be key to overcoming the challenges Nigeria faces in implementing the settlement.
The MARAN president suggested that because the nation embarks on the journey, it was pertinent to recollect the influence that the AfCFTA holds for our nation, and certainly, the continent at giant.
“By breaking down boundaries and fostering nearer financial ties, we pave the way in which for unprecedented alternatives, development, and prosperity,” he suggested.
For Ezenwa, if Nigeria should totally profit from AfCFTA, some key points need to be addressed to allow the continent to successfully optimize this commerce treaty.
“Logistics is a giant concern which should be addressed to allow AfCFTA to ship on the immense potentials, which we already know. New deep seaports in Nigeria should be able to compete by way of infrastructure, effectivity in operations, service-driven prices, trendy expertise, transparency, and ease of doing enterprise. Freight forwarding in Nigeria additionally should be rejigged and tailor-made in the direction of trendy improvements and clear operations,” she concluded.
Whereas the AfCFTA presents vital alternatives for Nigeria, the nation’s means to harness these advantages will depend upon overcoming its infrastructural, regulatory, and industrial challenges. By addressing these points head-on by complete coverage reforms and funding in key sectors, the may may place itself as a serious participant within the African commerce panorama. The time to behave is now, as AfCFTA has the potential to remodel not simply Nigeria’s financial system, however your entire continent.
