Helping Niger Delta exporters identify opportunities for SMEs in AfCFTA regime
The Nigerian Export Promotion Council (NEPC) stormed Port Harcourt, Rivers State capital, last week, with the Guided Trade Initiative (GTI) tool for the African Continental Trade Agreement (AfCFTA) era application.
Realising that Nigeria is full of small and medium Enterprises (SMEs), NEPC seemed to resolve to equip that segment of the economy to break free from lethargy in export business and join efforts.
The training on AfCFTA GTI was spearheaded by Nonye Ayeni, the Executive Director/Chief Executive Officer (ED/CEO) of NEPC, who was represented in Port Harcourt by Arnold Jackson, the Director, State Offices Coordinating Department, NEPC Headquarters.
The Council drilled the exporters on entry into the inter-african trade, showing how SMEs ca play big. The presentation showed opportunities that abound for SMEs which make up 96% of Nigerian businesses contributing over 48% to the nation’s gross domestic product (GDP), according to experts at the event.
The SMEs who employ about 84% of workers operate in diverse sectors including agriculture, manufacturing, retail, ICT, and services. Experts say despite this huge potential, SMEs in Nigeria face challenges such as limited access to finance, poor infrastructure, and regulatory bottlenecks.
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Now, however, AfCFTA is said to have come to open up a transformative landscape for SMEs in Nigeria in so many ways.
Access to market is said to be one of the biggest openings. “SMEs can now trade across 54 African countries with fewer restrictions; This expands customer bases from local to continental, boosting sales and visibility.”
On reduction of tariffs, it is said that AfCFTA aims to eliminate tariffs on 90% of goods by 2030, a lower trade cost means Nigerian SMEs can price their products more competitively across Africa.
On business expansion and diversification, SMEs can diversify their offerings to meet regional demands. For example, Nigerian textiles, agro-products, and processed foods are in high demand in countries like Ghana and Kenya, which can create an opening for Nigerian products.
In terms of collaboration and networking, the agreement is said to encourage cross-border partnerships, joint ventures, and knowledge sharing. Some citizens in countries in West and South Africa are said to be forcing Nigerian business owners to make them partners as condition for being allowed to trade in their countries. This can be done through legitimate means and with mutual benefits rather than by force to the detriment of the visitors.
The presentation shows that SMEs can tap into new supply chains and innovation hubs across Africa. On increased competitiveness, it was held that exposure to regional competition pushes SMEs to improve product quality, branding, and service delivery. This is said to foster innovation and long-term growth.
Support from institutions is another avenue. This is because Nigerian agencies like NEPC, Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), and the National Associations of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) are said to be aligning programmess to help SMEs leverage AfCFTA. Training, export certification, and trade facilitation are being scaled up.
NEPC said its objective in coming to PH is to increase the exporter’s knowledge and understanding of AfCFTA; introduce the concept of Guided Trade Initiative (GTI) to exporters; create opportunities for shared learning; intimate exporters on ways of realigning their business models to leverage on AfCFTA tariff concession; offer expert advice on how exporters can leverage export opportunities provided by GTI to expand market frontiers; and to discuss appropriate packaging materials for AfCFTA market.
Giving an overview on the journey of the AfCFTA, the presentation said AfCFTA is the flagship project of the African Union to realize the aspiration outlined in Agenda 2063, a blueprint for attaining inclusive and sustainable development across the continent.
In 2012, it said, leaders of the African Union agreed to create a new Continental Free Trade Area, at a summit in Addis Ababa.
In 2012, 44 countries signed the AfCFTA at a summit in Kigali, Nigeria non-inclusive, but, on April 29, 2019, the agreement was ratified by 22 states, meeting the threshold for the free trade area to formally exist. As a result, the AfCFTA came into effect on 30 May 2019.
On July 7, 2019, Nigeria signed the agreement, making her the 53rd out of 55 African Union states to have signed the agreement (Eritrea yet to sign). In Dec 2020, Nigeria ratified the agreement making it the 34th State Party.
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Coming of PAPSS:
An important tool for AfCFTA to achieve effective operation was found to be a payment system. Thus, the Pan-African Payment and Settlement System, an operational instrument of the African Continental Free Trade Agreement (AfCFTA) designed to facilitate instant, cross-border payments using local currencies across Africa, was created.
The pilot for PAPSS was focused on the West African Monetary Zone (WAMZ). Nigeria and Ghana concluded a 1st successful transaction via PAPSS in October, 2022. PAPSS will save Africa over $5 billion annually due to foreign currency exchange and promote the use of African currency in trade.
The Adjustment Fund to respond to the challenges of short- term negative impact of the liberalization process on State Parties’ fiscal capacities was also created. An Agreement relating to the management of the Base Fund was signed on 9th February 2022 with Afreximbank
It consists of Base, General and Credit Funds: Base Fund – Contributions from State Parties, grants and technical assistance funds to address tariff revenue losses and support countries to implement the AfCFTA Agreement; General Fund – Concessional funding; Credit Fund – Commercial funding to support both the public and private sectors, enabling them to adjust and take advantage of the opportunities created by the AfCFTA.
Another important aspect of the GTI is the Rules of Origin (RoO): A regime governing the conditions under which a product can be traded duty free across the region. It shows that 88.03% of the tariff lines have been concluded –what remains are automotive industry and textiles.
The manual spells out in detail guidelines on the application of the rules used in determining the origin status of Goods, procedures of administering the rules and the institutional framework for the implementation of the AfCFTA Rules of Origin.
The manual aims to enable uniform interpretation and application of the AfCFTA Rules of Origin in the State Parties. A certificate of origin (CO) is the document declaring in which country a commodity or good was manufactured. The certificate of origin contains information regarding the product, its destination, and the country of export.
It is required by many treaty agreements for cross-border trade. The Certificate of Origin helps to determine whether certain goods are eligible for import, or whether goods are subject to duties. Nigeria Customs Services is the Competent Authority that issues Certificates of Origin. The AfCFTA e-Tariff Book is part of the Digitalisation and Trade Facilitation journey of the AfCFTA Secretariat.
It is said to include of Rules of Origin with the customs procedures applicable to each product traded under the AfCFTA. It allows traders to identify their products with the product-specific RoO and customs procedures that is necessary to fulfil in order to qualify for preferential trade under the AfCFTA.
The NTB Portal is said to serve as Reporting, Monitoring and Eliminating Mechanism; Private sector/traders can file complaints on specific trade obstacles; Procedure – Reported complaint is transmitted for reaction and resolution within time; The resolution of NTBs will boost intra-African trade; Elimination of NTBs in line with Annex 5 on NTBs.
The Observatory serves as a repository of trade information; allows for monitoring pace of trade; provides updated and reliable data for informed business and policy decision; and helps in monitoring the implementation process and impact of the AfCFTA Agreement.
Read also: Nigerian SMEs compete for relevance in AfCFTA era
Voices at the workshop:
Earlier, NEPC gave Nigerian exporters list of products with which to attack the export market in Africa. The products are believed to move fast in export market.
These were highlighted in the keynote speech presented by Nonye Ayeni, the ED/CEO of NEPC at the AfCFTA GTI workshop.
The keynote address said at the last Intra-Africa Trade Fair (IATF) held in Algiers (Algeria), Nigerian enterprises generated millions of Dollars in signed deals and Nigeria won the ‘Best Pavilion for Doing Business’.
Ayeni said in order to ensure active participation in AfCFTA, the Guided Trade Initiative (GTI) was conceived. “This is a practical, pilot programme designed by AfCFTA Secretariat to move the agreement from theory to practice. It started in 2022 with seven countries (Ghana, Rwanda, Cameroon, Egypt, Kenya, Mauritius and Tanzania) to test the trading documents, customs procedures and the rule of origin on pre-selected shipments.”
She said the range of products being prioritized under the expanded GTI were value-added agricultural products, manufactured products, garment & textile, pharmaceuticals, automobiles, and services, all of which are in abundance in Nigeria.
Ayeni said the day’s focus was to ensure that Nigerian exporters were not left behind. “We must actively position our businesses especially SMEs to seize the early mover advantages that GTI offers.”
Arnold added that NEPC wants to mainstream the initiative because each of the 774 local government areas in Nigeria has one thing to produce and export.
In a welcome address, Benedict Itegbe, the NEPC regional coordinator, harped on the need for Africans to trade among themselves to unlock the major opportunities that are available in the continent. To that extent, he said, AfCFTA Nigeria has been able to create structures and platforms that would facilitate trading among African nations with the GTI.
He said: “First stage was a huge success, second stage is ongoing and today we have the privilege of having some experienced professionals in the venue to explain the processes with all round information on the opportunities.
“We have a lot of women in our midst. We are committed to empowering women in non-oil export. We are all aware of our latest partnership with World Trade Centre (WTC) and the World Trade Organisation (WTO) headed by our own sister (Dr Ngozi Okonjo-Iweala) and a lot have been done to empower women through discoveries and grant.”
Read also: Nigeria’s SMEs at a Crossroads: Competing for Relevance in the AfCFTA Era
Promotion of non-oil export has been intensive in the Niger Delta in recent years.
The seminar was expected to rouse interest of Nigerians in the south-south to participate in AfCFTA with huge enthusiasm.
NEPC said the Guided Trade Initiative is the Special Purpose Vehicle (SPV) to the African Continental Free Trade Area. The CEO said: “Let us be the generation of Nigeria business leaders who looked out at the continent and saw not barriers, but boundless opportunities. Let us be the ones who moved from aspiration to operation, who turned the promise of 1.4 billion people into prosperity for our people.”
The clarion call seems to be to rouse Nigerians of this generation to make the Guided Trade Initiative the springboard for Nigeria’s exporters to conquer African markets and beyond.
