IEOM business roundtable CEOs call for expedited domestication, infrastructure development and proactive state-level action to ensure Nigerian MSMEs get the most out of AfCFTA.
In an effort to engage business leaders and equip them with the knowledge and insights required to take advantage of the Africa Continental Free Trade Agreement (AfCFTA), the Institute of Export Operations and Management (IEOM) – an independent trade support institution established with the aim of boosting the drive toward a non-oil based economy in Nigeria – hosted its first-ever business roundtable on Thursday 25th January, 2021, which saw CEOs and business leaders from over 50 companies, across various economic sectors come together to discuss the recently operational Africa Continental Free Trade Agreement (also known as AfCFTA).
The Roundtable event aptly themed “Repositioning Nigerian businesses in the AfCFTA era: business strategies and support services” was well-attended physically and included participants joining in via video link.
It featured presentations by Prof. Jonathan Aremu, a renowned Professor of International Relations and economics at Covenant University, Ota, and member of the National Action Committee on AfCFTA in Nigeria. Mr. Theodore Kofi Markham (Ghana), well-known trade and regional integration expert, provided the keynote and shared his experience from a Ghana perspective. Mr. Francis Anatogu – Secretary of the National Action Committee on AfCFTA in Nigeria joining via video link, provided key insights on the journey so far.
The start of trading under the AfCFTA regime which began on January 1st 2021 brought to a climax a march towards a more economically-integrated African continent which began with the Lagos plan of action in 1980. The AfCFTA in itself is the realization of a dream which dates even further back to the founders of the organization of African unity (OAU) which later morphed into the African Union (AU).
After an initial period of delay, Nigeria finally added its name to the list of countries to have ratified the Africa Continental Free Trade agreement. This was a significant step on its own and the right step to take, considering Nigeria’s foremost leadership role in the process that resulted in the creation of the AfCFTA.
With the launch of trading under the FTA regime, it is clear that the real work has now just begun.
The promise of the AfCFTA is ultimately to drive economic growth in Africa and economic integration between African nations through increased Intra-Africa trade. In joining the list of ratifying countries, Nigeria has signified its intention to remain a key player and beneficiary of the AfCFTA.
Despite this promise and potential, there is the need for proactive measures by the government (both Federal and State) to ensure that Nigeria reaps the full benefits of being a signatory to AfCFTA.
Critical to this is an increased focus on MSMEs. According to the Federal ministry of Industry, Trade and Investment, Nigeria has about 37.07 million micro, small and medium scale enterprises and collectively, they account for over 80% of total jobs in the country and over 45% of GDP. Additionally, this subset of the business community accounts for just over 7% of goods and services exported out of the country.
Importantly, MSMEs make up over 80% of businesses in the country.
It goes without saying that if the AfCFTA works for Nigerian MSMEs, the AfCFTA works for Nigeria.
There is the need for a well-designed, market-based national strategy and supporting policies (at state-level) to provide certainty among MSMEs and unleash innovation to drive economic growth and prosperity through AfCFTA.
Without a doubt, Nigeria has made significant progress in recent years in certain areas as a result of private sector Innovation and supportive Federal and State policies and investment. Specifically, progress has been recorded in infrastructure development and ease of doing business.
However, the existing incoherent patchwork of Federal and State regulations, tax incentives and other policies is inefficient at best, and continues to negatively impact long-term investment of MSME businesses by creating regulatory uncertainty. There is the need for a new approach.
IEOM Business Roundtable believes that businesses should take the lead in supporting sound public policies aimed at integrating the country into the continental trade framework, and driving the innovation needed to make the AfCFTA work for every Nigerian.
To this end, Nigeria should adopt a national strategy which aims to foster innovation and industrialization, boost competitiveness of Nigerian MSMEs, maximize compliance flexibility and minimize cost to businesses and society. From a federal government perspective, there is also the need to expedite measures aimed at domesticating the AfCFTA within the Nigerian legal framework. Additionally, infrastructure development should be fast-tracked to drive down the cost of production and access to other markets.
Additionally, business support service providers should be resourced with grants and capacity building opportunities to be able to help MSMEs and other businesses navigate trade within the AfCFTA regime.
IEOM Business Roundtable believes that value-chain and market-based solutions are the best approach to ensuring that MSMEs across the country benefit maximally from the AfCFTA. To this end, State governments on their part, should develop suites of policies aimed at integrating local businesses within their domains into global and regional value chains, focusing on products and services in which they have a comparative advantage.
From a business perspective, the private sector should support and adopt strategies that ensure seamless integration within the AfCFTA based on the following approaches:
• Investment in technology
• Adoption of global best practices in production, management and communications, energy-efficiency and,
• Innovation across board.
The IEOM Business Roundtable believes that these measures taken together will position Nigerian Businesses and MSMES in particular, to reap the benefits of the AfCFTA, and Nigeria to play its role in delivering the promise of this Agreement.
(Source: Anderson of PHCCIMA)