Nigeria needs to integrate MSMEs into AfCFTA for economic growth

By Steve Agbota
In order to develop the nation’s economy, Nigeria needs to integrate Medium, Small and Micro-scale Enterprises (MSMEs) into the African Continental Free Trade Area (AfCFTA) agreement.
To this end, the Center for International Private Enterprise (CIPE) has unveiled a survey and policy brief that would serve as a road map to show how MSMEs can play within the AfCFTA act and form sustainable policy reforms.
Speaking at the virtual launch in Lagos recently, CIPE who funded the survey, said the report aims to unlock economic opportunities, develop critical reforms for policy engagement with the government and other stakeholders as well as articulate policy positions so that local traders and businesses can benefit maximally.
The survey was formally launched by the Secretary of the national action committee, AfCFTA, Francis Anatogu, the launch had in attendance NECA, ANWBN, NASSI, MAN, NASME, FACAN, NANTS, NACCIMA, NASME and other industry stakeholders.
CIPE survey indicated that MSMEs remain critical constituents of the Nigerian economy as they represent about 96 per cent of Nigerian businesses and contribute 75 per cent to national employment, adding that that MSMEs can benefit from greater access to new markets and the possible economic transformation that competition could promote.
Focusing on four key sectors, wholesale/retail trade, the agricultural and food processing sector, manufacturing and service sectors, CIPE said these sectors were selected given their high business potential and contributions to GDP, employment and exports.
However, CIPE decried the low level of awareness regarding the existence of the AfCFTA agreement among MSMEs, saying there is a general optimism surrounding the prospective effects of its implementation among the minority aware of the agreement.
Speaking at the launch, Director of Education, Governance Research, Center for the Study of Economics of Africa (CSEA), Dr Adedeji Adeniran, said modest positive welfare gains to Nigeria with machinery, other transport, textile and metal products as well as textile industries account for most of the positive effects on real wage with the agreement.
Highlighting the potential impacts of economic integration, he said it would lead to an improvement in intra-African trade, net welfare improvement and better access to a larger market and skilled labour. Listing perceived threats of AfCFTA to MSMEs, he said businesses surveyed indicated that they are afraid that cheaper goods from other African countries will compete against local goods, an increase in foreign competition, neglect of important factors affecting MSMEs, reduction in demand for local goods and dumping of sub-standard products in the country.
Exploring the impact of COVID-19 on the MSMEs and identifying ways of mitigation that could facilitate an expedited and efficient implementation of AfCFTA in Nigeria, 25 per cent of surveyed businesses reported that the pandemic significantly impacted their preparations for AfCFTA; 46 per cent experienced significant effect of the pandemic on their future expansion plans to export abroad and 63 per cent experienced significant effects of the pandemic on plans to import from abroad.
He said while different sectors required different things to succeed within AfCFTA, Nigeria’s imports from several African countries including Botswana, Burundi, Ghana, and Namibia declined by more than 10 per cent as well as imports from China and Canada by 29.5 and 11.3 percent respectively.