African Continental Free Trade Area Report rates Nigeria's Business Enviroment as Hostile

Fri, Jul 6, 2018 | By publisher


Business

 

A recent report on the potential benefits of the African Continental Free Trade Area to Nigeria lists what the  gains for the country as well as decribing its buisness environment as hostile  

By Anayo Ezugwu

 

DESPITE the federal government’s effort on the easy of doing business in Nigeria, the business environment still remains hostile.  An independent report on the potential benefits of the African Continental Free Trade Area, AFCFTA, on Nigeria, indicated that 55 percent of the businesses rate the environment as hostile, either unsupportive or very unsupportive.

This percentage comprised of 58 percent of small businesses, 46 percent of medium businesses, and 48 percent of large businesses. The report also identified power supply, access to credit, roads, taxes and levies as the top four challenges in decreasing order of importance to Nigerian businesses.

It stated that 69 percent of businesses believe AfCFTA would be advantageous to the country, while 20 percent of businesses believe AfCFTA would be disadvantageous to the country and 11 percent are unsure about how AfCFTA will impact the business environment.

“The top three advantages are better business environment, promotion of local business and business expansion. Top three disadvantages are influx of sub-standard goods, discouragement of local businesses and loss of revenue for Nigeria. Top three sources of uncertainty are possibilities that AfCFTA will boost the economy, need for time to understand its impacts and the chances of collapse of local industry.

“Overall, 78 percent of businesses believe that AfCFTA will make a positive impact on local businesses; 10 percent believe that the impact will be negative while the remaining 12 percent believe it will have no impact,” it said.

According to the report, Nigeria does not have the infrastructure necessary to reap the benefits and gains of AfCFTA. However, there is an understanding among business leaders that the country should not wait until the infrastructure gap is fully closed before participating in the AfCFTA.

It recommended that government and policymakers need to listen and comprehend the subject of AfCFTA the way businesses and stakeholders appreciate them. It noted that AfCFTA is located at the spots where the rubber meets the road on trade and economic growth. “Clearly, Nigeria stands to benefit more from the AfCFTA with better business environment and improved infrastructure.

“In this regard, more concerted efforts are required to bridge the internal infrastructural inadequacies especially in areas of power supply and access to credit, which most businesses identify as their top challenges. Nigeria needs to take Continental leadership of the regional infrastructure projects to lead other African countries toward bridging the continental infrastructure gaps.

“Road and rail connections to neighbouring countries need to be facilitated by ECOWAS or other bilateral protocols to boost regional trade and enhance mutual economic benefits. Policymakers should see the AfCFTA as an opportunity for Nigeria to pursue and achieve its goals of export-led growth as elaborated in the ERGP (2017-2021) and set up the institutional capabilities needed to take advantage of the orders contained in the agreement while minimising the threats it may pose.

“The likelihood of AfCFTA contributing to accelerate or impede Nigeria’s industrialization depends on government policy response to its provisions, and the system of assessment, monitoring and evaluation put in place by the government to guide its implementation. Based on the foregoing, the Nigerian government should sign the AfCFTA and follow the action by setting-up the policy institution necessary for its successful implementation.”

The report said the cornerstone of the AfCFTA is promotion of industrialisation, sustained growth and development in Africa. The agreement is being pursued based on its potential to “boost intra-African trade, stimulate investment and innovation, foster structural transformation, improve food security, enhance economic growth and export diversification, and rationalize the overlapping trade regimes of the main regional economic communities.”

Similarly, the broad vision of the Economic Recovery and Growth Plan, ERGP, of Nigeria is to turn around the country’s economic performance and lay the foundations for sustained inclusive growth. The report stated that regional integration is inevitable for economic transformation and sustainable socio-economic development in Africa.

“On one hand, it is a development strategy aimed at aggregating Africa’s small countries into one large market that can deliver economies of scale, improved competitiveness, foreign direct investment, FDI, and poverty reduction.

“On the other hand, regional integration helps in addressing non-economic problems such as recurring conflicts and political instability as well as increasing the continent’s bargaining power in the multilateral front. Despite the recent shift in the growth poles of the global economy from developed countries to emerging and developing countries, Africa lags behind and remains marginalised.

“This is partly because the continent remains a fragmented bundle of small resource-rich but commodity-dependent economies. For Africa to optimise its resource endowments and translate them into welfare gains for its teeming population, regional integration is inevitable. The eight regional economic communities are at various stages in the integration process, and it is not certain that all the obstacles could be addressed in order to achieve the African economic community, AEC, in line with the timelines of the Abuja Treaty.”

 

– July 6, 2018 @ 18:35 GMT |

 

 

 

 

 

 

 

 

 

 

 

 

Tags: