…to expose them to Billion Dollar Deals for AFCFTA
The Central Bank of Nigeria has pledged to continue to sustain various interventions to enhance private sector capacity ahead of full implementation of the African Continental Free Trade Agreement (AFCFTA).
This was disclosed by the CBN Governor, Godwin Emefiele, in his speech presented at the Zenith Bank 2021 Export Seminar. He emphasised that Nigeria should seize this opportunity to serve as a significant hub for international and domestic manufacturing companies seeking to serve the West, Central and East African Markets.
Emefiele said that the full implementation of the AFCFTA was expected to give Nigerian firms preferential access to markets in Africa, worth $666.17billion, which in specific terms is $504.17billion in goods and $162billion in services.
“Supporting greater trade within Africa as well as with the global community is indeed vital to the CBN’s objectives of enabling greater economic growth and creating employment opportunities for our growing population in Nigeria. Trade enables specialization, economies of scale and it also provides significant rewards to those who are innovative, as they can sell their goods and services to an expanded market,” Emefiele stressed
He recalled that the COVID-19 pandemic and its resulting implications on crude oil prices in 2020, which led to a significant decline in government revenues, as well as in foreign exchange earnings, served to strengthen the case that Nigeria must diversify its economy and create new trade opportunities for Nigerians, as part of recovery efforts.
“Fortunately, the Nigerian economy was able to emerge out of the recession in the 4th quarter of 2020, following two quarters of negative growth. This was due to significant interventions by the monetary and fiscal authorities in Nigeria, aimed at stimulating consumption expenditure,” the Governor said.
However, he explained that a strong and well-balanced recovery would require additional contributions from the private sector in supporting greater growth of our non-oil exports,. He noted that the volatility in the oil markets which had exposed the Nigerian economy to significant exogenous shocks, along with the growing trajectory towards lesser use of fossil fuels in the near future, by some advanced and emerging market countries, made it imperative that the country worked to significantly improve non-oil exports earnings.
Emefiele stated, “We believe that the African Continental Free Trade Agreement (AFCFTA) offer significant opportunities for the Nigerian private sector to expand into new markets, and seek new export opportunities, particularly in the area of Manufacturing, ICT, Agriculture and Financial services, given our growing advantage in these areas relative to our counterparts in other parts of Africa.
“In addition, we have a very young energetic, technological savvy population that has been leveraging technological applications to improve service delivery in the areas of finance, logistics and agriculture to consumers in Nigeria.”
The Governor said, “I believe the AFCFTA will provide an opportunity for these young talented Nigerians to expand their services across the African region. Developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country. ”
He observed that the banks were already playing a significant role in expanding across the African continent, adding that he would like to encourage them to also leverage their presence in other parts of Africa, to support Nigerian businesses seeking to expand into new markets in Africa, by providing trade facilities to those with strong potentials for growth.
He said the CBN had taken considerable steps to improve the productive capacity of businesses, which would enable them take advantage of export opportunities in Africa.
Emefiele stressed that intervention programmes in the agriculture and manufacturing sectors, were helping to enable businesses expand their scale of production, which was meeting growing domestic demand for goods, but also providing goods for the export market.
“In addition, we have set up a N500billion non-oil export stimulation facility with the Nigerian Export Import Bank (NEXIM). This initiative will also help to enable greater exports of processed agriculture commodities into other markets in Africa and in the global market,” he said.
The CBN boss noted, “Improving the business environment in Nigeria is also vital if we are to harness the gains from the AFCFTA. The Central Bank through our Trade Monitoring System portal (TRMS) is also helping to reduce the time it takes to complete the export documentation process, as faster turnaround time could help to reduce delivery time for goods destined for exports, and enable businesses expand their output. Today, businesses can complete their NXP applications on the TRMS portal in 30 minutes relative to two years ago, where it could take as much as two weeks to complete the process.”
“We are also working with stakeholders in repositioning the Nigerian Commodity Exchange, which would help to support greater trade for operators in these vital sectors earlier mentioned. Once the exchange becomes fully operational in the 2nd half of the year, international buyers of raw and processed agricultural commodities will be able to enter into forward contracts with domestic suppliers on the exchange, and they can be assured of not only the quality of the goods sold through the exchange, but on the expected date of delivery.”
We believe these forward contracts will help to support improved productivity for farmers and agro-processors, it will also help to improve access to credit for these entities using the forward contracts as collateral,” he said.
“We believe the African Continental Free Trade Agreement (AFCFTA) offers significant opportunities for the Nigerian private sector to expand into new markets “
Supporting greater trade within Africa would also require the presence of a viable payment settlement system, said the Governor, adding that in this regard, the CBN is working with key stakeholders in the African continent, particularly the Afrexim Bank to improve the underlying payment infrastructure to support greater intra-regional trade, through the Pan African Payments and Settlement System(PAPSS).
This initiative he believed will enable payments in our local currency for goods in other African countries and vice versa, without the need for a third-party currency. This initiative will also help to reduce the cost of cross border trade, improve convertibility of the Naira, and increase trade opportunities for Nigerian businesses in Africa.
Although, Emefiele said that Nigeria stands to gain from expanded trade, it is also important that attention is paid to the cost that expanded trade through the AFCFTA could have on local businesses and communities. He warned of consequences of smuggling of goods produced in non-African countries into Nigeria, and abuse of rules of origin.
These actions he said has often resulted in significant job losses and displacements of workers in key sectors of our economy such as agriculture and manufacturing, adding, “It is vital that we work with the governing body of the AFCFTA in addressing these concerns, as it has profound implications on unemployment and security in Nigeria.”
He urged existing exporters, to endeavour to repatriate their export proceeds as required by law as CBN guarantees that exporters will have unfettered access to their export proceeds and the Bank expects that exporters would reciprocate the good gestures of the Bank by repatriating their export proceeds to improve foreign exchange inflows into the country.
He commended organizers of the event for their focus on improving Nigeria’s non-oil exports and expanding intra-regional trade.
“The initiatives being put in place by the CBN would help to ensure that Nigerian businesses are able to take advantage of the growing opportunities in the African Market.
“Ensuring that procedures on rules of origin are strictly adhered to by other African countries would also help to reduce the negative effects that come with the implementation of the AFCFTA. Nevertheless it is vital that we all work together to support increased growth of our non-oil exports as it would help to enable greater economic growth and improve our foreign exchange earnings.” he advised
