Positioning Nigeria for AfCFTA through Efficient Quality Infrastructure
Chris Uba
Now that Nigeria has ratified the African Continental Free Trade Agreement (AfCFTA), the next line of action is to map out strategies on how the country can benefit maximally from the continental economic integration deal.
With a population of over 200 million, Nigeria is Africa’s most populous country and dwarfs the second and third most-populous countries: Ethiopia and Egypt, which each has a population around of 98 million.
With a nominal Gross Domestic Product (GDP) of US$376 billion, or around 17 per cent of Africa’s GDP, Nigeria is just ahead of South Africa, which accounts for 16 per cent of Africa’s economy.
Because Nigeria is such a significant country in terms of its population and its economy, its absence at the initial signing of the agreement was particularly conspicuous, hence it should launch fully to maximise the opportunities.
AfCFTA was designed, essentially, to establish a single market for trade in goods and services in Africa and improve intra African trade. By trading with one another, African nations will be able to retain more resources in the continent.
The scheme, it is gathered, could unite 1.3 billion people, create a $3.4 trillion economic bloc and boost trade within the continent itself. It is expected that it will help to: eliminate tariff and non-tariff barriers to trade in goods within Africa, liberalise trade in services, improve cooperation in customs matter and establish a mechanism for dispute resolution. Analysts say African and international investors will both benefit from the agreement, as it will make it easier for businesses to expand operations across the region.
Currently, intra-African trade accounts for 17 per cent of Africa’s exports compared to 59 per cent in Asia and 69 per cent in Europe. Manufactured goods also play a more limited role in Africa’s exports compared to other regions, highlighting the continent’s limited integration into global value chains. African countries traded more manufactured goods among themselves, making up 42 per cent of intra-regional trade, compared to 15 per cent of extra-regional exports.
Hence, implementation of the AfCFTA is expected to boost Africa’s regional and international trade.
An Executive Secretary of the United Nations Economic Commission for Africa (UNECA), Vera Songwe, expects the potential for intraregional trade to increase by between $50 billion and $70 billion by 2040 solely due to the removal of tariffs.
She noted that if the initiative is well implemented, intra-African trade could constitute up to 50 per cent of exports by 2040, up from the current 17 percent. However, Songwe argues that making trade more equitable and improving export diversification and product quality would also be important markers for the success of AfCFTA. Intra African trade is very important for the economic development and integration of the continent.
So, by signing the agreement, Nigeria stands to benefit as follows: increase sources of raw materials from the African continent, serves as a larger market for Nigerian goods and services, increased employment for Nigerian youth (who are able to provide cross-border services especially in technology) and increased market share for the Nigerian financial services sector (which are currently dominating the West African market).
But one of the ways Nigeria can gain from the upcoming scheme is to take a critical look at its quality infrastructure (QI).
Quality infrastructure refers basically to a system contributing to government’s policy objectives in areas including industrial development, trade competitiveness in global markets, efficient use of natural and human resources, food safety, health, the environment and climate change. It is an indispensable element in economic integration, which is what AfCFTA is all about.
Low level of quality infrastructure development has been identified as one of the main challenges in boosting export.
Lack of adequate capacity to provide quality assurance services by public institutions, inability of industries to meet target market standards, and unaffordable costs of compliance with international standards are the main development challenges in the QI. Nigerian non-oil exports are having problems penetrating European markets because of poor quality infrastructure
Nigeria should strengthen her quality infrastructure to go along with the country’s GDP.
Quality experts said the development of robust QI system enables a country to meet the demands of growing industries and increase competitiveness of products in global market by removing quality related constraints, avoiding duplicated testing and inspection and ensuring product conformity with technical requirements to conform required standards and certification.
The United Nations Industrial Development Organisation (UNIDO) was recently reported to have said the development of internationally accredited metrology systems and infrastructure in Nigeria would go a long way in reducing Technical Barriers to Trade (TBT) and enhance the country’s exports for regional and global markets.
As of now, there is National Metrology Institute (NMI) in Nigeria which is still under construction. Trade analysts said metrology is essential for trade, innovation and emerging technologies, technical cooperation, or even simple exchange of information. In a rapidly growing world, there is continuing increase in the requirements for improved measurement standards, and for adoption of metrological concepts in new areas such as chemistry, nanotechnology, biosciences, medicine, food and environment. They should be completed as a matter of urgency.
UNIDO Representative to ECOWAS and Regional Director, Nigeria Regional Office Hub, Jean Bakole, said “it is in recognition of the importance of metrology for, trade and economic industrial development that in year 2013, UNIDO decided to support the establishment of National Metrology Institute for Nigeria in Enugu through UNIDO EU-Funded National Quality Infrastructure Project.”
Nigeria started a project tagged National Quality Infrastructure Project (NQIP) but from indications, it appears the project has been suspended. NQIP is tasked with achieving the second objective of the sector-wide programme funded by the European Union (EU) to support the economic competitiveness of the trade and investment sectors in Nigeria. This project is funded under the European Union’s 10th EDF Programme for Nigeria and implemented by UNIDO in coordination with the Federal Government of Nigeria.
The main beneficiary institutions are: Standards Organisation of Nigeria (SON),Weights and Measures Department of the Federal Ministry of Industry, Trade and Investment (FMITI),National Agency for Food and Drug Administration and Control (NAFDAC),Conformity Assessment Bodies (including private CABs) ,Organised private sector ( Nigerian Association of Chambers of Commerce, Industry , Mines and Agriculture, Manufacturers Association of Nigeria, National Association of Small and Medium Enterprises NASME, among others),Small and Medium Enterprises Development Agency of Nigeria (SMEDAN),Nigerian Export Promotion Council (NEPC) ,Consumers Protection Council (CPC) and Consumer Association.
On how all the existing government regulatory bodies would fit into the NQI, the framework created by the National Quality Policy is the one that may be referenced when examining the interrelationships of the regulatory bodies. The specific objectives of the policy is to create a streamlined and harmonised approach in the regulatory regime, particularly that which relates to quality infrastructure. What is being championed is that regulatory bodies must conform to the international best practices.
As has been indicated above, in Nigeria, there is not yet a nationwide recognised NMI to provide calibration services and traceability which will ensure that Conformity Assessment Bodies (CABs) in the country have appropriate competencies to carry out their operations. As a response to this, the UNIDO-EU project addresses these challenges by strengthening the institutional quality for national products in Nigeria.
As part of efforts to strengthen the quality infrastructure in the country, the federal government should, through its standards enforcement agencies, commission a comparative research study of quality infrastructure in other African countries. The outcome of the research will provide information on the state of quality infrastructure in the African countries. The bickering by the members of the local organised private sector (OPS) does not offer concrete suggestion on how Nigerian exports can compete with the ones from other African countries.
Local manufacturers have said there is a need for all stakeholders to discuss publicly the report of the Presidential Committee for Impact and Readiness Assessment of the African Continental Free Trade Area agreement before it is adopted. The President, Manufacturers Association of Nigeria (MAN), Mansur Ahmed stressed this much in a recent interview in the media when he said, “What we are saying now is that the report of that committee ought to be widely discussed and all stakeholders must be aware of what the costs and benefits are. All stakeholders need to see what the opportunities are and what the government will do to mitigate some of the adjustments.”
But the Director-General, Nigerian Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMA), Ambassador Ayo Olukanni, said the treaty is very important for Nigeria and the entire continent to increase intra-Africa trade and that the larger the market, the greater the opportunity to be able to increase trading and create jobs for the people. He advised that that the OPS must work closely together to enable the private businesses and manufacturers harness the potentials of the agreement.
The truth is that lack of internationally accredited product-testing laboratories has continued to hamper verification of imported products and the ones meant for exports, prompting regulatory agencies to go to Ghana for product testing, a situation which the Standards Organisation of Nigeria (SON) described as unfortunate. SON has just constructed five-storey product-testing laboratory in Ogba, Lagos.
The new laboratory is in keeping with the federal government’s vision of finding alternatives to oil exports.
The current drive of the government is to find ways to encourage and improve alternatives to oil as export products and this can only be done if the country can have quality infrastructure such as product testing laboratories.
This building houses engineering, chemical and food laboratories. The laboratories are not fully operational yet, meaning that Nigeria’s exports are still being tested outside the country.