Africa accounts for only 2.63% of global trade – Osinbajo

Despite accounting for 16 per cent of the world’s population, Africa accounts for only 2.63 per cent of global trade, Vice President Yemi Osinbajo has said.

According to him, there is a need for Africa to step up its trade volume to improve economic growth, especially with the signing of the Africa Continental Free Trade Area Agreement (AfCFTA).

Osinbajo stated this at the 2019 annual directors’ conference which had the theme: “The African Continental Free Trade Area Agreement” organized by the Institute of Directors (IoD) in Abuja yesterday.

“Africa forms 16 per cent global population, but only accounts for a paltry 2.63 per cent of global trade. Consequently, Asia has 59.6 per cent, Europe has 69.8 per cent and North America at 46 per cent. This by implication means that over 80 per cent of African trade is with non-African countries.” he lamented.

The vice president who was represented by the Special Adviser to the President on Ease of Doing Business, Jumoke Oduwole, said there is need for the continent to increase intra -African trade, by increasing trade ties which the signing of the agreement promises to bring.

Osinbajo said the Institute of Directors comprising captains of industries in both private and public sectors of the Nigerian economy, has continued to provide efficient and technical support for Nigeria’s policies and welcomes meaningful contributions from the discussions that will aid the government in the implementation of the agreement.

He underscored the need for Nigeria to take advantage of the trade agreement to improve economic growth as well as the Gross Domestic Product (GDP) of the country

“If we are able to establish a common market, we overcome difficult and be independent in relation to other parts of the world. The market of 1.2 billion Africans is said to be the largest market in the world with a Gross Domestic Product (GDP) $2.5 trillion with a corresponding 52.3 per cent improve trade.

“The implementation of the trade agreement by Nigeria is centred on four key policies which include trade capacity, infrastructure, environment and trade enforcement. As such, Nigeria will develop policies that will enhance free flow of the process and remove trade barriers and enhance competitiveness.

“In complementing the diversification effort of the government, the presidential report says the AfCFTA provides a market of half a billion dollars in import of goods and services, Nigeria stands to maximize benefits from this, it has transformed Nigeria from a target economy to a gateway economy, boosting growth and increased exports to eight per cent of total exports.

“The Nigerian manufacturing industry is about seven times more than the current average of the top 20 African countries, this suggest Nigeria’s productive capacity is at a higher level more than most African countries, and underscores the need for Nigeria to do take the opportunity to boost growth.

“Adequate power supply is central to implementation of the trade agreement which is why we are focusing on the power sector recovery plan and energising economies for SMEs as already implemented in Aba and Kano states.

“In July 2019, the president signed agreement with Siemens that will increase Nigeria’s power generation to 25, 000 megawatts by 2025 which emphasizes in ensuring efficiency and improved growth,” he added.

Earlier in his welcome address, the President and Chairman of Council of the Institute of Directors (IoD), Chris Okunowo said the conference centred on the African trade agreement as it serves as a focal point for Nigeria’s export growth.

He added that the institute has gathered experts from both private and public sector that will discuss in depth on the implementation of the policy and how it affects Nigeria’s growth and development.

“With a GDP of $405 billion and a population of about 180 million, Nigeria is considered the largest market and economy in Africa and its signing of the agreement was a major breakthrough for the proponent of AfCFTA.

“It is estimated that the implementation of the agreement could increase intra-African trade by 52 per cent by 2022 (compared with trade levels in 2010) and double the share of intra-African trade (currently around 13 per cent of Africa’s exports) by the start of the next decade,” he explained

He however, said there have been concerns and conversations around what is considered as one of the negative implications of the AfCFTA agreement for Nigeria, which is the likelihood of the country becoming a dumping ground for goods from other African nations.

He said fears are not unconnected with harsh business environment in Nigeria, which has dire consequences for the competitiveness of Nigerian manufacturers.

“Sceptics also believe that the Nigeria is not technologically advanced enough for this development and indigenous producers will lose market share to importation from other African states, who possess more advance production technology.

“The foregoing implies that Nigeria needs to take a closer look and critically examine the various challenges and proffer sustainable solutions, which will ensure that our country takes full advantage of all opportunities presented by this agreement.

“There is no doubt that this requires a serious engagement of all stakeholders from both the public and private sectors of the economy,” Okunowo added.

He further stated that the concerns being raised after signing the agreement is the reason for the selection of the conference theme as it will carefully explore the opportunities and challenges of the AfCFTA agreement for the benefit of businesses in Nigeria.