Experts have highlighted ways Nigeria and other African countries can increase value-added goods and services in a bid to ramp up economic growth and development.
This comes at a time when Nigeria, Africa’s biggest economy, is in desperate need of foreign exchange inflows to stimulate its struggling economy.
Speaking at BusinessDay’s Africa Trade and Investment Summit and Investment Summit on Thursday, Ngozi Okonjo-Iweala, director general of the World Trade Organisation, said the continent is underperforming as it accounts for only three percent or less of global trade.
The event, themed ‘Reimagining Economic Growth in Africa’, provided a platform for industry leaders and policymakers to share insights and form strategic collaborations that drive economic growth and development across Africa.
“For African countries to successfully reglobalise, they need to offer an attractive macroeconomic environment that includes lowering trade costs. The countries continue to export mostly raw materials and commodities instead of adding more value,” she said.
According to her, to reimagine economic growth in Africa, there is a need to reimagine global trade and investment.
Okonjo-Iweala said: “I believe we have a window of opportunity to do so despite a global economic environment now marked by slow growth and increasing political uncertainty.
“In an aging world, Africa’s growing young population anchors the workforce and markets of tomorrow. Regional integration through the African Continental Free Trade Area (AfCFTA) offers potential investors the prospect of a large and unified market of 1.4 million people and a much stronger base to export to the rest of the world.”
She said the rapid growth in services over computer networks has created major opportunities for tech-savvy people as well as fintech and women-only businesses.
“For intra-African trade, trade costs are equivalent to a 435 percent tariff and electricity, road, and other processes are only part of the picture. We need a supportive external environment and an open and predictable internal economy,” she added.
Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said about 81 percent of people in Nigeria are engaged in a non-productive sector of the economy.
“They are doing things that do not add value in the real sense of the world. That is the reason why our unemployment rate, even though it is just 4.2 percent, similar to that of the UK, our poverty rate is still one of the highest in the world.
“So how is it that you have a high employment rate and you also have one of the highest poverty rates? That is the only explanation. We have working poor. We need to create decent jobs. Our job is just beginning.”
Olisa Agbakoba, senior partner and head of the arbitration and ADR Practice Group, said there are multidimensional poor people in Nigeria despite its resources.
“And this is because of the regulatory environment, which is in a mess. We can’t get resources or revenues because the legal framework is so weak,” he added.
He said the country must have critical laws in place, have an underlying policy statement and a strong executive agency that can investigate the policies. “Those in the National Assembly should pass laws and get them done.”
External trade in Africa is dominated by commodities and natural resources as key exports, and accounts for less than three percent of global trade ($49.88 trillion), according to a report by PwC.
The intra-African trade component grew by 18.6 percent to $193.17 billion in 2022 compared with 13.42 percent in 2021.
Olusegun Zacchaeus, partner, PwC Strategy and Practice, West Africa, said internal trade in Africa is growing slower than external trade, which means “we are trading less and less with ourselves as a continent and more externally, whereas the sad part of our external trade is that most of it is non-value driven trade, dominated by commodities and natural resources as key exports.”
“A very key imperative to transforming intra-Africa trade is enhancing the quality of infrastructure, especially transportation infrastructure. This will require $130-170 billion annually,” he said.
He identified other critical factors including strengthening institutional frameworks, investing in upskilling and education at a large scale, promoting well-functioning markets and regional integration, rebuilding fiscal buffers, and addressing non-tariff barriers.
“Trade is a pathway to prosperity for Africa, but in the last 10 years, Africa has grown at an average of less than three percent,” Zacchaeus said.
The AfCFTA was initiated to create a free trade area among the 55 countries on the African continent with a combined population of 1.3 billion people and a GDP worth $3.4 trillion.
According to the World Bank, the AfCFTA has the potential to lift 30 million Africans out of extreme poverty within a few years of its implementation.
Audu Maikori, CEO of Chocolate City and a creative industry expert, said for Africa to take its place, there is a need for proper intellectual property (IP) protection.
“They should be creative about how they protect their IP. 80 percent of the streams of music or films come from out of Africa; hence how well are we monetising it? It touches on fashion, software, tech and there is a need for the government to do more,” he said.
He added that copyright commission and proper funding should be ensured so that creatives will do what they need to do.
Sean de Cleen, former special adviser to the United Nations Office of the special representative of the secretary-general on food security, said if Nigeria and the region want to attract more foreign direct investment, regulatory frameworks must be clear and they must minimise the risk of unexpected changes and streamline administrative procedures.
“This helps to reduce crime or costs associated with licensing permits and approval,” he said.
Kalilou Troure, ambassador of Côte d’Ivoire’s to Nigeria, described Côte d’Ivoire as a channel of the free trade agreement.
“We are an agro industry-based country and we have a share of 37 percent of global trade with African countries, including 27 with ECOWAS countries. We have taken a number of measures to see benefits from national strategy possible for the creative economy and sectors where our economy has competitive advantages,” he said.
