Tag: Nigeria

Nigeria raises hope on Africa free trade deal, commits to signing pact

Nigeria, the largest economy on the continent, was one of the last countries that had not committed to signing the deal and its decision to join the bloc will significantly bolster its clout.

The African Continental Free Trade Agreement (AfCFTA) aims to eliminate tariffs between member states, creating a market of 1.2 billion people with a combined GDP of more than $2.2 trillion.

Apart from Nigeria, only Eritrea and Benin have chosen not to join the zone. President Muhammadu Buhari had expressed concern it could allow neighboring countries to inundate Nigeria with low-priced goods, and confound efforts to encourage moribund local manufacturing and expand farming.

But a panel set up to assess the impact of joining the bloc recommended last week the president “should consider joining.”

“Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis,” the Twitter feed quoted Buhari as saying.

It added Nigeria would sign onto the deal at an upcoming African Union summit in Niamey, Niger. The agreement with the other signatories came into force on May 30.

Culled from businessday.ng

REALITY CHECK: WHAT ARE THE TARIFFS ON TRADE WITH AFRICA?

Prime Minister Theresa May’s trip to Africa has generated vigorous debate about how easy trade is between Africa and the EU and whether the UK can keep the same arrangements or even lower barriers.

The European Union’s critics sometimes invoke the presence of tariffs – effectively taxes on imported items – on African goods when they accuse it of being a protectionist club or racket.

So how much is there to this?

The relatively simple element is the EU’s arrangement for a group of nations known as Least Developed Countries (LDCs.)

Of these LDCs, there are currently 33 in Africa – most of the countries on the continent. These “are low-income countries confronting severe structural impediments to sustainable development”.

They have duty-free access for their goods to the EU under an initiative known as Everything but Arms (EBA).

If it’s not a weapon or ammunition, and it is made or grown in one of the countries concerned, it has duty-free access to the EU. If the product is from Ethiopia, Uganda or Malawi, for example, there would be no tariffs.

There may be other barriers – such as regulations, product standards and customs documents to complete – but that also applies to goods from other countries outside Europe’s single market, including the US, Japan and Canada.

None of the three countries the prime minister is visiting – South Africa, Nigeria and Kenya – are on that United Nations list of LDCs. That is probably one of the reasons she chose them. They are bigger economic players and there is more to be gained from commercial relations with them.

But all three of them do get some degree of relief from EU trade tariffs.

There is an arrangement that covers other developing countries beyond the LDCs. It’s known as the Generalised System of Preferences (GSP). Other rich countries, including the US and Japan operate their own GSPs.

The EU’s version applies to Nigeria and Kenya but not to South Africa.

It doesn’t open the tariff-free gates as wide as EBA does. The EU says it gives tariff-free access for 57% of products and reduced rates for most of the rest. But the minority of goods still subject to full tariffs are often farm produce.

Both the Everything but Arms and the Generalised System of Preferences are unilateral. The EU simply lowers or eliminates tariffs and the partner country is under no obligation to reciprocate and cut their own tariffs on imports from the EU.

But there are wider deals known as Economic Partnership Agreements (EPA). These go further and also mean a country like Kenya opening its market to the EU, though not as much as the EU does.

Kenya is part of an EPA through an East African regional group. But three other countries in the group must sign and ratify it before it comes into effect.

South Africa, together with five other countries, has another partnership. The EU says it gives fully or partly duty-free access to 98.7% of imports coming from South Africa.

So there are tariffs that affect some South African goods. And it can get very complicated. For many types of agricultural products there are quotas at zero tariffs. For others there are reduced tariffs on a certain quota and higher duties on quantities above that.

Some tariffs vary seasonally – oranges have higher tariffs when the EU crop is available.

There are tariffs imposed on specific products from some African countries. Atiku Abubakar, a former vice-president of Nigeria writing in the Daily Express, was concerned about his own country. Mr Abubakar wrote that refined sugar from Nigeria faces a tariff of more than 300% if it’s exported to the EU.

The EU tariff on imports of refined white sugar – not covered by any preferential arrangement or a reduced duty quota – is 419 euros per tonne. That probably would apply to sugar from Nigeria as it does not have an EPA and is not eligible for the EU’s scheme for the least developed countries.

Whether or not that tariff works out as high as the percentage figure cited by Mr Abubakar depends on the price per tonne. But it is certainly true that the EU’s tariffs on sugar are seen as high.

But there is another point about the EU’s tariffs. Countries that don’t face EU tariffs often welcome them being applied to other countries. Dr Peter Holmes of the UK Trade Policy Observatory at Sussex University points out some African sugar producers take that view. Without the tariff they would struggle to compete against the giant of the industry, Brazil.

When Mr Abubakar writes that “if Nigeria and other African countries could export agricultural products tariff-free to Britain”, the fact is that most of them already can.

Moreover Nigeria could get improved access to the EU if it accepted an EPA agreement negotiated with the EU and a group of West African nations. But President Buhari decided not to sign it, saying he wanted to protect the industries that provide jobs for Nigerians.

Culled from BBC UK

AFRICA: The Agricultural Productivity Needed For Economic Growth.

Agriculture is the next big thing in Nigeria, and the time to act is now.

In order to sustain economic growth, we will require fiscal discipline, productivity improvements, infrastructure improvements, increased regional trade, and greater focus on stimulating and supporting innovation. All stakeholders – including government, donors and the private sector – must align and target their investments towards a shared goal of sustainable and inclusive growth.

Agriculture is a key sector in the sustainability of economic growth. A developed economy cannot be termed ‘developed’ if its citizens are hungry.

How can we transform the agricultural sector in Africa?

Firstly, we need to increase our productivity. With the right policies, institutions, and resources, Africa can benefit from productivity increases by adapting some of the techniques that raise agricultural productivity in Asia and Latin America, particularly in wheat, rice, and maize. Increased productivity and output in a modern agricultural sector would, beyond improving food security, sustain agro-processing, create employment, and boost incomes across society.

To also increase productivity, farmers will need to increase the adoption of several productivity enhancing measures, some of which are; irrigation, planting improved seeds, applying fertilizers, modern farm management practices.

When it comes to Agriculture, Africa is lagging behind and we need to align with the positive transformations that are obtainable in other climate regions. We need to act now!

Please share your comments on other Agricultural productivity strategies.

 

Nigeria: Austria, Germany, Switzerland Foresee More Foreign Investments in Nigeria

Representatives of Austria, Germany and Switzerland have reiterated commitment to expanding business activities and workforce in Nigeria, following the recent ranking by the World Bank Ease of Doing Business index which placed the country among the 10 most improved economies.

The delegate of German Industry and Commerce in Nigeria, Marc Lucassen, said foreign businessmen were optimistic about the economic climate in Nigeria, noting that German companies were becoming more interested in the market.

At the third presentation of Austria-German-Swiss Business Outlook (AGSBO) in Lagos on Wednesday, Lucassen said though Nigeria moved up 24 points in the World Bank Ease of Doing Business index and was among the 10 most improved economies, its business prospects in the next one year might be static.

According to the survey, 47.2 per cent expressed strong believe in general growth of businesses before the end of the year, as against the 8.3 per cent, who thought otherwise.

Lucassen, however, stressed that finding skilled workforce, especially in the field of engineering, was a major challenge, hence, most foreign companies result to recruitment and training of staff in-house.

“Nigeria has to invest heavily in education, as human capital is key for industrialization and diversification,” he advised.

He listed the major factors affecting investment activities in the country as forex supply, transport infrastructure and security.

The Deputy Consul General of the German Consulate General in Lagos, Ms. Alexandra Herr, said a German business desk was launched last year at Access Bank in Lagos in conjunction with the Deutsche Investitions-und Entwicklungsgesellschaft (DEG), aimed at addressing the particular needs of German firms and their local partners seeking financing solutions to enter the Nigerian market.

“I am confident that the interest in the Nigerian market will continue to translate into a series of initiatives, including visits of trade delegations in the months to come.

We will continue to work tirelessly in order to promote our bilateral trade relations,” she said.

Read more on Guardian

HOW THE AfCFTA CAN IMPACT LOCAL BUSINESSES IN NIGERIA

So far, 44 out of 54 African countries have signed for the establishment of an Africa Continental Free Trade Area (AfCFTA) which would make it one of the largest free trade blocs in the world today. Nigeria and South Africa are among the 10 nations which are yet to sign the AfCFTA for numerous economic and political reasons. However, recent reports show that Nigeria is on the verge of signing this historical pact which will transform intercontinental trade in Africa forever.
A poll initiated by the Federal Government of Nigeria on the benefits or otherwise of signing the AfCFTA revealed that 78 percent of businesses surveyed from a total 512 companies across the 6 geo-political zones believe that signing the agreement will bring about a positive effect on businesses in Nigeria.
Here is how the implementation of the CFTA can likely affect local businesses in Nigeria.

What is the AfCFTA?
The AfCFTA is a movement by African heads of states to put in place a single continental market for goods and services with free movement of people and investment in order to expand intra-African trade which accounted for a mere 10.2 percent of African trade in 2010.
The agreement signed in March 2018 by 44 African nations implies that African countries will be committing to removing 90 percent of tariffs imposed on goods and services, while the remaining 10 percent will later be phased in on certain identified “sensitive items”.
The goal of AfCFTA is to bring together all 54 African nations into a single market with a total population of more than one billion people and a combined Gross domestic product (GDP) of $3.4 trillion.
How will the CFTA benefit local businesses in Nigeria?
Estimates from the United Nation’s Economic Commission for Africa (UNECA) suggest that intra-African trade could increase by 52 percent in 2022 following the full implementation of the agreement.
With a single continental market for goods and services and a combined population of over one billion people in Africa, Nigerian businesses are expected to gain as the level of exports could rise due to an open access to markets previously unavailable to them.

Bongo Adi, economist at Lagos Business School opined that opening up the barriers to trade through the AfCFTA will help enhance trade as there are many things that Africans can trade with each other.
‘‘Nigerian traders are settled and well established in most African countries, therefore, by signing the AfCFTA, it will enable them make Nigeria the country of choice for the importation of finished goods for retailing in these African nations. These traders will leverage their networks and already established contacts to get best prices for products to stock their shops. This sudden demand for Nigerian products all over Africa through these traders will push non-oil exports in Nigeria higher in years to come,’’ he added.
The free trade agreement committing African nations to removing 90 percent of tariffs on goods and services will help cut down the cost of importing of goods, thereby allowing for cheaper importation of some raw materials needed by Nigerian businesses. This will, therefore, relieve the cost of production of local produced goods allowing these companies to grow and expand.
A stepping stone towards an integrated single continental market with a harmonised trade regime and trade liberalisation strategies will help stabilise the exchange rate, thereby making Nigerian local businesses to thrive in the international market.
Henry Okodua, an economist at Covenant University asserted that “productive businesses in Nigeria will benefit from the tariff reduction as it will enhance business welfare.”
As a result of a larger market induced by the CFTA, Okodua explained that “productive businesses in Nigeria will be able to produce more goods, thereby generating positive economies of scale and creating employment opportunities at the macro level.”

 

Culled from Business Day

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