Despite Nigeria’s trades with other countries preceding its independence, it is yet to have an official trade policy that guides its trading activities; BENJAMIN UMUTEME notes.
Trade, which is basically an exchange, is voluntary in nature between two parties in need of each other’s resources i.e. goods and services. In other words, it is a fulfillment of desires by two individuals or groups via the swapping of their respective material goods and services.
For centuries, trade has been ongoing between individuals and later countries. It started as barter, and with the introduction of money as a means of exchange, trade was taken to another level.
In Nigeria, with the discovery of oil, trade in agricultural commodities was jettisoned. These used to be the pillars on which modern Nigeria was built.
Some of the benefits of trade are that it provides economic growth as trade leads to an exchange of cultures and opportunities leading to strives in development. Also, it improves the performance of a country in financial aspects by giving job opportunities to people and taxes to the government which improves the country’s financial standings and revenue.
In spite of its abundance of commodities especially agricultural produce, Nigeria does not seem to rake in much into its coffers due partly to inability to take advantage of it’s a waiting market among its neighbours and absence of a trade policy like other countries.
Within the West African sub region, in 2021, Nigeria’s total trade with the Economic Community of West African States (ECOWAS) amounted to N1.32 trillion comprising N1.24 trillion exports and N82.48 billion imports, a surplus of N1.11 in April 2022.
Experts say the amount is still a far cry from what it should be considering Nigeria’s strategic position in the sub-region. There are arguments that due to the high informal trading going on between Nigeria and many of its neighbours it would be difficult to get full monetary value of the huge volume of trade in the sub-region.
Data from the National Bureau of Statistics (NBS) show that the value of Nigeria’s total trade within Africa from 2013 to 2017 is N30.97tn less than the value recorded with Europe within the same period, giving credence to concerns that African countries are trading less in Africa than with other continents.
The question that continues to play on the lips of many is why is Nigeria’s intra-African trade stunted?
Analysis by the African Export-Import Bank (Afreximbank) shows that one of the main reasons why intra-African trade is low at around 15 per cent compared to Europe (59 per cent), Asia (51 per cent), and North America (37 per cent) is because of lack of access to trade and market information.
Experts’ take
Gabriel Idakolo told Blueprint Weekend that the lack of favourable trade policy is remarketing the country’s business environment.
“Nigeria has lost a lost revenue due lack of competitiveness which has made many companies relocate to neighbouring countries who have favourable policies and conducive environment to do business.
“The ease of doing business in Nigeria is still not as lucrative as its neighbours. Nigeria with a very modern port with huge potentials is still lagging behind ports in Benin Republic, Cote D’Ivoire, etc.
“Most manufacturing companies and technology firms have relocated to neighbouring Ghana and other West African countries due to a more conducive business environment,” he said.
He also noted that “Nigeria delayed signing on to the AfCTA because we know that we lack the comparative advantage to enjoy maximum benefit from the initiative.”
In a chat with our reporter, a political economist and development researcher, Adefolarin Olamilekan, said the inability of the country’s fiscal authorities to mainstream its trade policy is the reason for poor trade volume which he says, on the long run deprives the country of the much needed foreign exchange. He added that the lack of infrastructure is also a contributing factor as it robs the country of its competitive edge.
“Interesting, our challenge is in not mainstreaming and taking advantage of our numerous trade opportunities. Sadly, they are not far from poor state direction on trade policy formulation and operations.
“Nevertheless, strategically we are missing out on both competitiveness and clear cut trade policy. And this is what l mean.
“For instance, on competitiveness, the structural deficit in our economy greatly impacts us negatively. We see it from the angle of de-industrialisation of Nigeria, a situation that sees major manufacturing firms all closing shop due to losses arising from high cost of operations.
Meanwhile the structural deficits are demonstrated in our energy generation and access, debilitating road infrastructure, inadequate rail system and poor human capital as well inability to fast track local technology, innovation and research output linkage to our economy.
“More so, the managers of our economy have not shown serious commitments to pertinent economic factors that are very significant to our competitiveness, especially in our drive to economic diversification from petrol dollar revenues,” he said.
He said further that, “So, all this contributes negatively to our competitiveness that eventually denies the nation a clear cut trade policy.
“Hence we don’t have any tangible and valuable item of trade. In other words we became an import driven dependent economy which ends up at the mercy of industrialised countries, who now determine the bargain of the trade policy.
“Unfortunately this plays out not just at bilateral level; it also robs several of our multilateral trade agreements. Let not forget sub-regional, regional and global trade conventions.
Critically, the failure of having a sound trade policy as well as the lack of competitiveness is responsible for our inept trade volumes compared to other African nations.
“Although with AFCTA, we believe things have to be done right. The Nigerian state managers must see reasons to reverse the challenges in our economics structural deficits – energy, rail, roads and technology linkage to economy.
“Also, trade policy must be devoid of state bureaucratic biases that are not open to critical stakeholder’s input.
“A trade policy must however be encompassed with deliberate national economic interest that will improve state revenues.
“Another is that, at this time, the Nigerian state prioritises its roles in the commanding height of our economy. I believed the government has reasons to be in business, as not just the biggest spender in our economy.”
Moving forward
To revise this trend, Idakolo said there is a need to come up with a deliberate policy to improve the ease of doing business in the country.
“We need to start by increasing local content in manufacturing and ensure that locally produced goods in Nigeria can compete with its counterparts in other African countries.
“We need to reduce the cost of doing business by ensuring businesses are able to access forex for their business. Nigeria needs to sit up so that other countries will not take over the benefits due to us from AfCTA.”
In the same vein, Olamilekan said reviewing Nigeria’s trade policy was long overdue, especially in a complex, ever changing global market.
“In addition, reviewing all our trade policy at this time is very relevant especially if we want it to be operational in modern trends that target alternative revenue sources. As well as serving as a spring ball to our economic diversification goals.
“Furthermore, without mincing words, getting the best out of trade policy required a more robust international economic relation. In this way our trade policy must focus on competitive advantage from just importing dependent nations to exporting one. It’s a clarion call for not only the government alone but private sector drive.
“Lastly, with our huge population and market, we must seek a better model of improving our human capital resources. For us this remains the greatest potential in trade stock, especially with the height of local technology, innovation and research that are yet to turn to valuable products for trade,” he said.
