Nigeria: OPS - AfCFTA Will Attract Multinationals to Manufacture in Nigeria

29 December 2020

Members of the organised private sector of the Nigerian economy have expressed hope that strict enforcement of the Rules of Origin (RoO) under the African Continental Free Trade Area (AfCFTA) will present opportunities to multinational manufacturing companies to set up plants in Nigeria.

The Director General of the Nigeria Employers Consultative Association (NECA), Mr. Timothy Olawale, told THISDAY yesterday that Nigerian businesses, as well as the country in general, should make adequate preparations in order to be able to tap the huge market potential offered by AfCFTA.

Olawale said strict enforcement of RoO requirements would limit the possibilities of extra-regional products to enter the African market, adding that "multinationals desiring to profit from the continental agreement will need to set up their plants/factories in Nigeria in order to take full advantage."

He stated that the policy will influence the influx of more foreign investment into the country.

He, however, warned that some businesses would not be in a position to appropriate the opportunities presented by the expanded continental market.

"While there is general optimism surrounding the promise of the AfCFTA to aid economic development, there must also be recognition that, like all free trade agreements, the AfCFTA will inevitably create winners and losers. Whether for their own inefficiencies or the sub-optimal business environments they may find themselves in, some businesses or even entire sectors in national economies will not be in a position to make the most from the expanded market opportunities and, in fact, may even be unable to compete with competitors from other continental economies," Olawale added.

He also expressed concerns about the future of Nigeria's MSMEs in AfCFTA and warned that no trade deal would be good enough without benefitting at least a majority of the country's MSMEs.

"There is little knowledge or no knowledge on the part of the MSMEs about the AfCFTA," he noted.

Also, the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf, said that AfCFTA would serve as an avenue for Nigerian industries to penetrate new markets and establish strong cross-border supply chains with other African countries.

Muda said: "The benefits and costs of the trade agreement will not be evenly distributed among participating countries. Only countries with open, friendly, and enabling business environment will stand to benefit from the agreement and this underscores the need for Nigeria to strategically position itself for significant trade gain. The AfCFTA poses new competitiveness risk for Nigeria firms, especially for those in the real sector of the economy."

However, the Lagos State Chairman of the National Association of Small and Medium Enterprises (NASMEs), Dr. Adams Adebayo, told THISDAY yesterday that the government should protect the micro and small businesses to save them from being wiped out by AfCFTA.

Adebayo, who spoke for the Micro, Small and Medium Enterprises (MSMEs), said COVID-19 had affected every sector of the economy and made nonsense of their preparations for AfCFTA.

He urged the government to look at the AfCFTA holistically and carry out proper restructuring so that it might not expose the micro and small enterprises to undue advantages by the country's neighbours.

"See how trailers load of rice and other items are being smuggled into the country just few days after the borders were re-opened. Nigeria has one of the most porous borders in the world in spite of them being manned by highest number of security agencies.

"Government should make sure that the local industrialists and the MSMEs are protected. If not, what is the essence of opening your borders to the people that will kill you? That is exactly what we are trying to avoid. The government should carry along the MSMEs and not focus only on the large enterprises and manufacturers that already have the shocks absorbers to withstand the impacts of AfCFTA.

"The NASMEs are going to die if they are not protected. As we are even talking now, not everybody will come back. Some of my members are shouting that they might not come back because of this COVID-19 and the recession. The government should move closer to the MSMEs," Adebayo said.

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