The recent report that Nigeria and the rest of Africa account for only two per cent of global trade is disturbing. It is a reflection of the consumption nature of African economy and our seeming inability to expand our export trade. Specifically for Nigeria, the report is even more depressing because of her infrastructure deficit estimated at $100 billion annually.
This represents 189.77 per cent more than the current 2021 budget, and it may take three decades to close the gap. Meaningful development and sustainable trade growth will be hard to achieve until Nigeria and other African countries shift from import-dependence to manufacturing of goods for export.
There is also need to focus on non-oil sectors for export. It is laudable that these concerns dominated discussions at the recent Intra-Africa Trade Fair, in Durban, South Africa, where the Secretary-General of the African Continental Free Trade Area (ACfTA), Mr. Wamkele Mene, lamented that Africa’s over-dependence on export of raw commodities will impede the continent’s trade growth.
If Nigeria should take full advantage of the opportunities that exist in the ACfTA, the government must address the problems that hamper the industrialisation of the country. Though Nigeria is endowed with abundant human and natural resources, it still depends heavily on imports, while exporting very little. This is why Nigeria continues to have negative trade balance. A recent data from the National Bureau of Statistics (NBS) showed that in the first half of 2021, Nigeria recorded an import bill of N13.8 trillion, while export stood at N5.81 trillion.
The fact is that the economy has been performing poorly because of lack of adequate production of goods to satisfy local consumption and for export. Government should give adequate support to private sector participation and reduce drastically public sector wastages and bureaucratic bottlenecks which impede higher productivity. When this is eliminated, it will boost the manufacturing sector and create more jobs.
There is no doubt that the worsening insecurity could adversely affect Nigeria’s hope of benefiting from AfCFTA) agreement that came into being in January, 2021. While Nigeria should participate actively in AfCFTA, government must protect investments in the country.
There is no doubt that the general insecurity across the country has affected investors’ confidence. A recent United Nations Conference on Trade and Development (UNCTAD) stated that Nigeria’s Foreign Direct Investment (FDI) dropped to $3.3billion annually from 2015-2019.
It was $5.3billion between 2005 and 2007. In 2020, it further went down to $2.6billion. This will also impact negatively on the Gross Domestic Product (GDP). In an insecure environment, manufacturing suffers. Statistics have also shown that Nigeria can only benefit more and compete effectively in trade and commerce if it manufactures products for export.
The implication of the current security situation on the economy will be huge because of the unstable business environment. The economy is still contending with inflation and unemployment, while farmers are abandoning their farms. The distributive trade is also being disrupted by the activities of bandits.
Available figures from the NBS show that about 73 million Nigerians are unemployed. This is about 33 per cent of Nigeria’s workforce. Small and Medium Enterprises (SMEs) should be encouraged to grow the economy through soft loans at single digit rate. More importantly, government at all levels should give attention to the agricultural and solid mineral sectors. Interestingly, every state in the country has one or more solid mineral deposits that need to be exploited for export.
In 2007, Nigeria’s food security programme, which aimed to make the country a food exporter, was launched. Since then, not much has happened in that direction. There is no doubt that doing business in Nigeria can improve the nation’s global competitiveness if wide-ranging economic and institutional reforms are put in place. There must be a deliberate effort to increase Nigeria and Africa’s share of global trade through massive export drive. The Nigeria Export Promotion Council (NEPC) has a role to play in the promotion of export trade, especially in improving the quality of Nigerian exports. The reported rejection of some of our export products at international market, on account of poor quality or packaging, is untidy and unacceptable.