The Nigerian Economic Summit Group (NESG) has said that, there is the need for an operational efficient and corruption-free land border system as the country partakes of the Africa Continental Free Trade Area (AfCFTA).
Chief Executive Officer (CEO) of NESG, Mr ‘Laoye Jaiyeola, advised the federal government on the imperative of such a system in the 2021 NESG Macro-Economic Outlook made available to newsmen in Lagos on Friday.
The AfCFTA is a trade deal which provides for the elimination of tariff on 90 per cent of traded goods.
It is expected to create a single market with a combined Gross Domestic Product (GDP)of US$2.5 trillion and total population or market size of 1.2 billion.
With AfCFTA, the United Nations Economic Commission for Africa (UNECA) expects the volume of intra African trade to grow by 15-25 per cent by 2040.
Jaiyeola also said a bone of contention in the AfCFTA is the issue of “rules of origin” which, according to him, constitutes a significant risk factor.
This, he said, implied that protectionism practises by some countries could constitute a set-back for the establishment of the ambitious single market for Africa.
According to him, evidence has shown that more diversified African economies with improved transport infrastructure will benefit more from the trade pact than others that are resource-based and agriculture dependent.
“Putting this in context, South Africa currently accounts for 40 per cent of intra-African manufacturing imports.
“On the other hand, resource-based countries, such as Algeria, Egypt and Nigeria – which collectively account for approximately 50 per cent of Africa’s GDP – contribute only 11 per cent to intra-African trade .
“Using a dynamic CGE modelling technique, the World Bank estimates revealed that AfCFTA would promote manufacturing exports over natural resources, agricultural and services exports .
“It showed that manufacturing exports would account for one-third of the projected total exports of US$2.5 trillion by 2035.
“On the other hand, natural resources, services and agriculture are expected to contribute 28 per cent, 10 per cent and 8 per cent to total exports, respectively.
“In terms of intra-African exports, the estimates also showed that manufacturing exports will have increased by 110 per cent followed by agricultural exports (49 per cent) and services exports (14 per cent) by 2035.
“Nigeria could reap more gains through export diversification away from crude oil, as manufacturing exports currently account for an average of 9 per cent of the country’s total exports.
“This suggests that efforts should be directed at strengthening domestic value chains, particularly the agro-allied industrial base,” he said.
Jaiyeola stressed the need to attract private capital, especially, Foreign Direct Investments (FDI), that would allow for knowledge and technological transfers in the AfCFTA.
He added that for Nigeria to maximally benefit from the trade deal, there was an urgent need to also address transport infrastructure bottlenecks and provide improved logistics.
“Finding a lasting solution to the Apapa gridlock by creating similar ports in other regions of the country, so as to ensure speedy clearance of consignments, needs to be prioritised.
“Nigeria also needs to set standards for locally-made goods to enhance their attractiveness in the regional market.
“It is only when these and many more reforms are implemented that Nigeria can begin to reap the benefits of the trade deal,” he said.
The NESG chief said four key priority areas would boost private sector investment which was central to economic recovery efforts in 2021 and
Jaiyeola listed the four areas to include macroeconomic stability, human capital development; holistic sectoral reforms, and policy and regulatory consistencies.
“In addition to these priorities, an exemplary leadership, alongside strong political-will to implement tough reforms, is needed to yield desirable outcomes,” he said.