Nigeria: AfCFTA to Push Nigeria, Other Economies to $29 Trillion - Report
"The elimination of tariff following the introduction of the African Continental Free Trade Area Agreement (AfCFTA) is expected to boost intra-African trade by 52 per cent and help Nigeria and others benefit from a $29 trillion market by 2050.
According to a report by Ernst and Young (EY), titled: "Diversification and Non-oil Export Opportunities for Nigeria States Post-COVID-19," which was commissioned by the PDF Bridge Programme, through the elimination of tariffs, the enlarged continental market will attract higher FDI flows into the continent to support infrastructure development, increase productivity, support diversification, value addition and structural transformation.
The emerging economic prosperity is also expected to trickle down to Nigeria given its large market and government's drive to grow the economy via its succeeding economic plans.
The report added that having ratified the AfCFTA, Nigeria would potentially access a largely underutilised intra-African market thereby driving the competitiveness and growth of local companies, consequently aiding the country's pivot away from crude oil.
The publication, however, stated that the period taken to achieve documentary compliance remained a major deterrent to trade in the country, largely due to the inadequate infrastructure to support the testing and verification process of products by certifying standards agencies.
It called for institutional discipline to drive the development, synchronisation and harmonisation of various government and organised private sector actions particularly as multiple players currently operate within the MSME and non-oil sector development space.
"However, these different players often operate in silos, with limited information sharing," it added.
The report noted that Nigeria currently operates a pseudo-closed economy, with restrictions on capital flows, restrictive capital repatriation processes and inconsistent foreign exchange policies.
It noted that the country in 2019 partially closed its land borders as part of its effort to curb cross border smuggling and strengthen local production, adding that although the land closure resulted in higher local production for some commodities including rice, the "inconsistency of this move vis-a-vis a recent signing of the WTO TFA and the AfCFTA indicates a lack of coordination by the policymakers and overall institutional environment in the country and further reduces the ability of the economy to garner required foreign direct investment."
It stated that some stakeholders had pointed out that in a bid to sustain production levels, foreign currency was sourced from the parallel market (N475/$) due to the low supply from the CBN.
"However, proceeds from exports are then received at the investors and exporters' (I&E) window rate (N390/$), thereby further limiting their constrained earning potential.
"Trade protectionist policies, such as the CBN's forex exclusion list, while stimulating local production may also have a regressive effect on economic growth... Read more on All Africa
Source: All Africa