Making AfCTA more impactful

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THE African Continental Free Trade Area (AfCFTA), was established as a flagship project of the African Union’s Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent over the next 50 years. It aims to boost intra-African trade by providing a comprehensive and mutually-beneficial trade agreement among the member states, covering trade in goods and services, investment, intellectual property rights and competition policy, as AfCTA officially commenced in January 2021. The importance of AfCTA to the development of the continent formed the main message of the President, Lagos Chamber of Commerce and Industry (LCCI), Asiwaju (Dr.) Michael Olawale-Cole, at the Export Group Symposium themed, “AfCTA: Nigeria’s Preparedness and the Role of Logistics in its Successful Implementation”, which was held recently in Lagos.

Dr. Olawale-Cole, who was chief host at the occasion, stressed the importance of exports to the business community and the nation’s economy, saying that one of the goals of the LCCI is to promote trade and boost exports, which would invariably open new vistas for Nigerian businesses. He described the Pan-African Payments and Settlement System (PAPSS) as a centralised payment and settlement infrastructure for intra-African trade and commerce payments, which is being developed in collaboration with the African Export-Import Bank (AFREXIM Bank) by facilitating payments and formalising some of the unrecorded trade due to the prevalence of informal cross-border trade in Africa. Not only that, he added that there are several programmes and opportunities at the regional, continental and international levels that exporters can tap from to their advantage.

For instance, the African Growth and Opportunity Act (AGOA), a United States Trade Act, was enacted on May 18, 2000 as Public Law 106 of the 200th Congress, is one, which has since been renewed to 2025. The legislation significantly enhances market access to the US for qualifying Sub-Saharan African (SSA) countries while the Trade Liberalisation Scheme (ETLS) is a trade instrument designed by the Economic Community of West African States (ECOWAS) that allows unhindered market access to member countries by promoting economic relations within the sub-region. The LCCI President observed that exporting of primary products to the global community without value addition, through processing, would not generate the desired amount of foreign exchange because Nigeria’s non-oil export sector is dominated by raw materials and primary products such as cocoa, cashew, and leather exports, saying “We could generate more foreign exchange earnings if these primary products are processed into finished goods for the international markets. The potentials of non-oil exports are largely untapped due to over dependence on crude oil exports”. Quoting the International Logistic Performance Index, which was last published by the World Bank Group in 2018 that ranked Nigeria at 113 out of 140 countries assessed, showed that Nigeria still has a long way to go as its performance in different aspects of logistics is just average, at the best.

With the AfCFTA coming on board and the significant opportunities it presents for various sectors, especially for Small and Medium Enterprises (SMEs), it is paramount that the nation revolutionises its logistics sector, which can be either a huge impediment or enabler to trade and to maximise the benefits of the trade deal, logistic challenges must be tackled, as a matter of urgency. Dr. Olawale-Cole advised the government to help in quality profiling of the export-ready goods, packaging, and ports logistics for several exporters or potential exporters are not able to pull through the procedures for exporting from Nigeria. He stated further that the country needs to promote digitisation and automation of processes and procedures to reduce the level of manual and paper works. The LCCI President highlighted the importance of improving on the export of other products beyond agricultural products by looking at textiles, solid minerals, and creative arts, among others.

In the same vein, the Chairman, Export Group of LCCI, Mrs. Bosun Solarin, who gave further insights into the discourse, admitted that the symposium was timely and coming up when Nigeria was in dire need of foreign exchange, and that the world was earnestly waiting to see the effective take-off of AfCFTA that is capable of elevating 30 million people out of abject poverty and generating market hub that would connect 1.3 billion people from 55 countries with US$3.4tn aggregate Gross Domestic Product (GDP). She said the actualisation of the benefits of the legislation remains elusive without effective distribution channel in which logistics play an indispensable role of bridging the gap between the dreams and realities of AfCFTA. Mrs. Solarin informed that the presence of experts in the logistics industry, and captains of export business would make it possible do a critical examination of the role of logistics in AfCFTA from trajectories with insightful contributions for all participants. The chairman, while reiterating the fact that reliable transportation was critical to trade and development, tasked relevant stakeholders to put in place policies that would make Nigeria’s export very competitive.

In summary, what we need to put in place to make AfCTA impactful includes tapping from several programmes and opportunities at the regional, continental and international levels that exporters can benefit from such as the African Growth and Opportunity Act (AGOA) as well as Trade Liberalisation Scheme (ETLS); exporting of primary products to the global community with value addition; need for regulatory agencies to strengthen the means of communication, to close the information gap between the agencies and players; incorporation of communication plan and strategy for feedback and continuous interactions; promotion of digitisation and automation of processes and procedures; creation of more awareness; building of capacity of the public sector trade regulators; embracing Public-Private Partnership (PPP) model; putting in place effective distribution channel whereby logistics play an indispensable role of bridging the gap between the dreams and realities of AfCFTA, among others.