As the world warms up to Nigeria, others for improved trade

The AfCFTA holds the ace for African countries to improve intra-African trade and replace activities that were hitherto dominated by third-party countries to Africans. Despite this potential, there are challenges about the ability of African countries to remove red tapes and encourage trade.

Indeed, the recent African Trade Report by Afreximbank showed that despite ranking the third contributor to intra-African trade, Nigeria’s share of trade remains low considering its status as the biggest economy on the continent. This is even as raw commodities dominate items exported from the continent.

The report showed that though the outlook for 2021 is positive and Africa’s trade is expected to rebound strongly as global economic activity picks up and demand for African exports increases, informal cross-border trade (ICBT) remains dominant.

The report by Afreximbank notes that ICBT, which is a key component of intra-African trade, is wide-spread in its composition and estimates that in Eastern African ICBT is very high and could be worth as much as 80 per cent of the value of formal trade in some countries.

South Africa was the biggest contributor to Intra-African trade, accounting for 23 per cent of total trade, in 2019. The biggest jump came from DR Congo, which became the second intra-African trading nation, accounting for 10.4 per cent of total intra-African trade and Nigeria was third with seven per cent. Despite declining by 4.7 per cent, Nigeria’s share of intra-African trade remained constant at about seven per cent and Nigeria emerged as the third-largest intra-African trade country.

While the AfCFTA provides a vehicle for systematically dismantling trade-distorting tariffs across the continent, non-tariff barriers (such as inefficient, dilapidated or non-existent road, rail or port infrastructure and automated border systems and procedures, as well as strict phytosanitary and other administrative requirements) are often considered to be more harmful than tariffs and the leading contributor to the high cost of intra-regional trade.

This has reinforced the need for trade partners like the United States and Europe to offer opportunities that aid trade. Experts note that how the European Union responds to and interacts with the new trade area to its south will be key to determining the success of the AfCFTA.

Until now, the European Union’s Economic Partnership Agreement (EPA) remains a stumbling block for trade with Africa as a bloc. With the integration, the EU is exploring new ways to woo major stakeholders like Nigeria.

Recently, French President Emmanuel Macron inaugurated the France-Nigeria Business Council.

The Council is a private sector initiative to enhance business relations between the two countries with Abdul Samad Rabiu, Founder/ Chairman of Nigeria’s BUA Group, as its inaugural President.

The newly-inaugurated council also has Gilbert Chagoury of Chagoury Group, Mike Adenuga of Globacom and Conoil, Aliko Dangote of Dangote Industries, Tony Elumelu, Chairman UBA & Heirs Holdings, and Herbert Wigwe, CEO, Access Bank as the Nigerian members of the council.

The largest French companies, including Dassault and Total Energies, are also members of the council.

Speaking at the inaugural meeting of the council in Paris on the sidelines of the Business France Summit in Versailles, France, Abdul Samad Rabiu thanked President Macron for his vision in creating the French Nigeria Business Council.

He said the move has led to a reset in the business relationship between Nigeria and France and had created a viable platform for business from both countries to partner and improve business ties

According to Abdul Samad Rabiu, “Nigeria is blessed with numerous potentials for French companies to do business across different areas, notably solid minerals, and mining, manufacturing, agriculture, associated equipment, power, food processing and even in the business of associated equipment or infrastructure for the value chains of these sectors.