How Nigeria Will Disrupt Trade in Africa
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HOW NIGERIA WILL DISRUPT TRADE IN AFRICA Victor Uche Obioma is Chairman, VICFAUS INTEGRATED SOLUTIONS LIMITED (Division of VIEWS GROUP Co.), He is International Partner for Nigeria; World Business Angels Investment Forum-WBAF and Member; Global Start Ups Committee. He is Member, Global Chamber of Business Leaders-GCBL; Global Entrepreneurs Network (GEN) Startup Founders Mentor at Tony Elumelu Foundation (TEF), TAKWEEN Accelerator- his Mentee placed 03rd to WIN $15K USD Seed Fund, He is Advisor at Prosper Advisors Network, Kenya; Ambassador for Western Africa at Global Startup Awards- GSA. He is Founder of STARTUP AGENDA, Judge at 2021 Africa’s Business Heroes- Jack Ma Foundation & Draft/Research Committee team Member of The Nigeria Startup Bill. OVERVIEW - Statistics have shown that Nigeria is a top Investment destination having attracted the highest VC Startup Activities in Africa; over the next two or more Decades Nigeria will lead a trade disruption in Africa that will feature duplication of manufacturing, mass trade, increase in MSME activities and multiplication of new Industries across key sectors like Agriculture, human capital, Labor Force, Manufacturing, technology, Organized Private Sector etc. that boost economic growth. This will be direct outcomes of innovative support systems created by her predominantly young, agile and aggressive population who will pilot production of innovative superior breakthrough products, goods and services utilizing new technology backed by Data Driven Policy Initiatives from the Government. Currently Data Gathering, Research and Economic Growth Policy engagements has gained vested stimulated interest amongst Civic Society Groups, State Actors, Stakeholders, Private Sector Organizations and Agencies of the Government of Nigeria; deepening the functions and activities of the National Bureau of Statistics-NBS and leading to the emergence of Indigenous Data Companies like Data Science Nigeria, Statisense, Nairametrics and interesting Civic Tech Companies like-BudgIT who have functioned as monitoring Organizations to check accountability, compliance of the Federal Government to standards in her spending and ensuring alignment of project execution to regulatory guidelines. The current Administration of President Muhammadu Buhari appears to be getting it right with addition of key Development Infrastructure that enables trade, commerce and sustainable economic growth like Improved Railway Transport System, Water Transport, New Airports, upgrade of existing Sea Ports, Commissioning of new Sea Ports, construction of new bridges for inter- state linkage, construction of roads to improve the existing road network, general improvement in Nigeria’s trade and commerce support Infrastructure; in addition to implementing empowerment initiatives to drive local production of goods and services, development of feeder MSME communities which interconnect to boost expansion of MSME clusters that will become growth drivers for proper Manufacturing. In June 2021 for instance, Lagos overtook Nairobi as home to most start-ups, Ibadan jumped to second position on the national hub in 2021 while Enugu State made a first appearance in global business ranking https://technext.ng/2021/06/17/lagos-displaces-nairobi-as-africas-top-startup-city-enugu-makes-the- global-ranking-for-the-first-time/ Lagos State, Nigeria’s busiest city with a massive consumer market has Over 500 active start-ups operating within her confines- As the most populous city in Nigeria, she gained five spots in 2021 to attain a global ranking of 122nd (from 127th in 2020) after switching places with Nairobi, Kenya which now ranks 136th, according to the Global Startup Ecosystem Index 2021 by Startup Blink that ranked 1,000 cities and 100 countries. Nigeria saw a notable increase, leaping 5 spots to now rank 63rd globally. This was fueled by its massive consumer market and more than 500 active startups, one of the largest in Africa. https://businessday.ng/news/article/lagos-overtakes-nairobi-as-home-to- most-start-ups/amp/ The implementation of The Economic Sustainability Plan of the Federal Government of Nigeria- FG will speed up trade progress, MSME Cluster growth and duplication to impact Local production of commodities, goods and services to grow Nigeria’s economy and save the Naira as mass production of finished goods will trigger saturation and outflow sales channel for products into other African Countries. This will be a direct outcome of The Federal Government’s stimulus package of N2.3 trillion NGN to support the economy across various sectors. “The size of the stimulus is about 1.5 percent of national income or GDP given existing fiscal and monetary constraints. The ESP is replete with opportunities for MSMEs to expand their activities in manufacturing and local production and to participate in supply chain activities across various industrial and service sectors. https://www.vanguardngr.com/2020/08/fg-has-started- implementing-economic-sustainability-plan-osinbajo/ these are part of the reason for the rise in volume of trade between Nigeria and South Africa which hit $2.9 billion USD in 2020 with expectation of rising further with the African Continental Free Trade Area (AfCFTA) agreement. Nigeria’s Consul General, Malik Abdul, in a statement noted that Nigeria accounts for 64% per cent of South Africa’s trade in West Africa and is one of the country’s top three sources of crude oil. https://www.thisdaylive.com/index.php/2021/06/16/nigeria-south-africa-trade-hits-2-9bn/ Interventions by Nigeria Export-Import Bank- NEXIM, Nigeria’s Export Credit Agency has contributed in resuscitating moribund Industries while adding new ones to boost the industrial cluster indices to strengthen Inter Trade and exchange within Africa. Some of the interventions aimed at driving industrialization and job creation include Free Trade Area development by The FG to drive diversification of Nigeria’s exports away from oil. This is the reason Adesoji Adesugba was named the new MD of Nigeria Export Processing Zones Authority (NEPZA), a parastatal under the Federal Ministry of Trade and Investment with approval of the President given in a letter addressed to the Minister of Trade, dated 26th June 2020 and signed by Professor Ibrahim Gambari, the Chief of Staff to the President https://guardian.ng/news/buhari-names-adesoji-adesugba-as-new-nepza-boss/ Adesoji was brought in from the private sector to give the scheme renewed momentum as only 15 of the 42 special economic zones that fall under NEPZA are operational, with the rest in various stages of development. Collectively, there are more than 400 registered enterprises operating in these areas, of which about 25% are foreign companies from China, the US, UK, South Korea, Singapore and Russia. A number of free trade zones can be found on the edge of the teeming commercial capital of Lagos State. The Lagos Free Trade Zone- LFZ. 65km east of the city, is a private sector initiative developed and managed by a Singaporean firm- The Tolaram Group. About 16 companies have invested more than $150m USD in the zone, providing nearly 1,000 jobs. These include Raffles Vegetable Oil, Kellogg’s Cereals, Dano Milk and a Colgate toothpaste factory. The zone is integrated with a massive new deep sea port development, scheduled to be completed in 2022. Adjoining this is the Lekki Free Trade Zone along the peninsula, a collaboration between the Lagos State Government and China, which is home to Dangote Group’s new 650,000m barrel-per-day oil refinery and fertilizer factory. The investment by the 36 companies there is valued at $432m USD, with well over 3,000 jobs created. The zone is designed to be an industrial reserve plus a self- contained satellite city of Lagos State for companies wishing to move out of the center. The two are part of a cluster of free zones around the Lagos Lagoon; which also include the Snake Island Integrated Free Trade Zone, the Eko Atlantic zone and the Lagos Deep Offshore Logistics Base (LADOL) https://newafricanmagazine.com/24692/ Exports of commodities (oil and natural gas) were the main factors behind Nigeria's growth and accounts for more than 91% of total exports. In 2014, 43% of total sales went to Europe; 29% to Asia; 13% to America and 12% to Africa. https://tradingeconomics.com/nigeria/exports Nigeria is perhaps the best single national market with superior factors and input mechanism to support venture scale businesses, including a 208+ million population, strong tech talent, robust angel networks, impressive innovators and revolutionary Startups like Flutterwave, Paystack, Appzone, Kuda, Interswitch and so on all based in Lagos State. As these businesses suggest, Nigeria is popular for its Fintech scene, which continues to grow. It’s perhaps no wonder, then, that the country retained its title as No. 1 “#1 destination” for investment, receiving 21% of funding; while retaining her place as 3rd in Africa behind South Africa and Kenya. Exports in Nigeria increased to 1070267.12m NGN in March from 949123.09m NGN in February of 2021. Source: National Bureau of Statistics, Nigeria. Nigeria no doubt is on a path to explosive trade and commercial activities; going by the implementation of policies like The Economic Sustainability Plan-ESP of the FGN, push for e-Governance by civil society groups and the full operation of the Free Trade Zones scattered across Calabar, Onne, Lagos, which is meant to diversify Nigeria’s economy from Petroleum, drive Industrialization and Foreign Direct Investment- FDI. Nigeria ranked 131 in the Ease of Doing Business ranking in 2020, moving 05 steps upward from 146th position in 2019. The latest SMEDAN/NBS MSME Survey indicates Nigeria’s MSMEs contribute nearly 50% of the country’s GDP and account for over 80% of employment in the country. This is further re affirmed by PwC’s 2020 MSME Survey. https://www.pwc.com/ng/en/assets/pdf/pwc-msme-survey-2020-final.pdf which indicates that The MSME sector is the growth engine of any economy contributing to its development, job creation and export amongst others.