AfCTFA: High Shipping Cost Making Nigerian Exports Uncompetitive—Don

The federal government has been urged to design an export strategy if it wants to benefit from the African Continental Free Trade Area (AfCFTA).

The export strategy will detail the processes that guide products meant for export.

A Faculty member of the Lagos Business School (LBS), Dr Frank Ojadi made this revelation in Abuja yesterday at a five-day training programme aimed at equipping participants with relevant knowledge, tools and skills required to develop their export business in line with global best practices.

The African Continental Free Trade Area (AfCFTA) agreement will create the largest free trade area in the world measured by the number of countries participating.

The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4trn.

It has the potential to lift 30 million people out of extreme poverty, but achieving its full potential will depend on putting in place significant policy reforms and trade facilitation measures.

The AfCTA is also projected to lift 30 million Africans out of extreme poverty and boost the incomes of nearly 68 million others who live on less than $5.50 a day; increase Africa’s exports by $560bn, mostly in manufacturing; spur larger wage gains for women (10.5 percent) than for men (9.9 percent) and boost wages for both skilled and unskilled workers—10.3 percent for unskilled workers, and 9.8 percent for skilled workers.

Ajadi warned that the absence of clearcut guidelines on exports may hinder Nigeria from benefiting maximally from the AfCFTA Agreement when it takes off.

He urged the federal government to take deliberate steps to address the challenges confronting coastal shipping as well as the high costs of shipping.

According to him, “I was examining the coastal shipping which ought to boost the African Continental Free Trade Area (AfCFTA) and I discovered that high costs in our ports and shipping are contributing to our not being competitive enough to export products.”

He noted that “coastal shipping will help in properly placing Nigeria to reap bountifully from the AfCFTA. Infrastructural deficits that are associated with shipping will affect trade going to different parts of the world from Nigeria.”

Ojadi identified lack of capacity as another factor impeding export trade in Nigeria.

“Government and other stakeholders such as banks need to prioritize equipping people and building their capacities to understand what export means. It is very important for people to know the process and learn the procedures.

“Some of these activities required, need infrastructure capabilities of the country. As long as that continues to be a problem, they will impede export trade,” he said.

With regards to the dynamics of export trade, Ojadi said “the external dimension of the challenges confronting exports by Nigeria has to do with understanding the market we are exporting to. These days, most countries are wary of the products that come into their territories.

“Foods and drug agencies are very strict on what should get into their countries. For example, Ghana with about 30 million population exports more than Nigeria which has almost 200 million people.”

Team Lead, Export and Agriculture of Fidelity Bank (organizers of the export clinic), Emmanuel Nwalor, said the event was organized with the aim of empowering exporters and non-exporters to develop interest in the export space for everyone to be able to contribute to the growth of the economy.”

He stated that what Fidelity Bank Plc has discovered that is hampering export is lack of capacity among the stakeholders.

“People that are interested in going into export must have adequate knowledge about the terrain. It is not an area one goes into without cultivating enough knowledge otherwise one could lose his money easily,” he said.

He dispelled the notion that export is meant for big companies with massive resources, saying, “ Export is not only for big companies. Small and medium scale businesses can also go into export. What they need is to build their capacity by learning the trade.

“That is the essence of this programme which is to build the capacity of small and medium scale enterprise to see the huge opportunities that are available in the sector. This programme started in 2016 and the bank has consistently built the capacity of participants.”