Nigeria: AfCFTA - Experts Task Nigerian Manufacturers On Value Addition

3 March 2021

Nigeria has been advised to transit from resource-based economy to one driven by value-addition and processing in other to benefit from the recently signed African Continental Free Trade Agreement (AfCFTA).

This was emphasised by stakeholders at an interactive session of the Nigeria Association of Agricultural Journalists (NAAJ).

Speaking in Lagos, the Managing Director and Chief Executive Officer of JR Farms Ltd, Mr. Olawale Opeyemi, warned that the nation could become a dumping ground if it continues on the trajectory of not adding value to its agricultural products.

"Nigeria will unfortunately not have the comparative advantage to succeed with this trade.

It is cheaper to produce everything else than in Nigeria, most likely the country will end up to be a dumping ground.

"I think West African will be really affected, there is already competition between the Anglophones in West Africa; we already know there are economic tensions between Nigeria and Ghana, it is going to continue even with the trade as everyone will be protective."

He also said, aside the issue of logistics, airlifting for the landlocked countries, the members of the Common Market for Eastern and Southern Africa (COMESA) are well ahead considering the level of free trade agreements within the region that is made up of about 21 member states stretching from Tunisia to Eswatini.

"Already in those areas they have their level of free trade; they can move freely, for example, my machines going to Zambia will move from Lagos to Durban, from Durban to Lusaka. I am not going to pay other than the handling and is not as if the South Africans will take fees from me.

"At their own level at COMESA they already have this working and have a lot of free trade movement already working for them.

"In Zambia, you will see many South African businesses there. If you go to Botswana you will see the same thing - everything is intertwine. So, they already have a lot of trade, banks are similar; the telecommunications is there; and the synergy is so strong," he stated.

Further speaking on the challenges that could arise from the trade pact at the sub-regional levels, Opeyemi opined that, "My major concern for the free trade is logistics; I think this will be a major problem for West Africa, moving trucks around East Africa is not a problem and not expensive.

"You may be paying $500 to $1000 depending on the country you are going to. This is scientifically calculated, even the local taxes, the meters are there, they keep reading as you move around. All these things are scientifically calculated.

"Logistics, in terms of air lifting will be a problem. Many countries are landlocked; it will be a problem for those landlocked countries within Africa. So the cost of moving freight will be a big problem," he added.

"The aim of exporting is to get foreign exchange and you do not need to export to America, because the processes and embargo are lesser in Africa.

"You do not need to get USDA certification to export to Ghana, Rwanda. Unfortunately, our people are not seeing these opportunities because when you are looking at western world they will kill you with policies as they do not want you to bring in the goods."

Similarly, the Nigeria Economic Summit Group (NESG) had warned that Nigeria and other resource -based countries would benefit less from the African Continental Free Trade Area than economies that are more diversified.

The NESG stated: "Another bone of contention is the issue of rules of origin, which constitutes a significant risk factor. This implies that protectionism practices by some countries could constitute a setback for the establishment of the ambitious single market for Africa. But there are several reasons to be optimistic."

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