The Minister of Industry, Trade and Investment, Adeniyi Adebayo in this interview, talks about efforts by the Federal Government to improve local production and export profile at a time when the continent hopes to leverage its free trade area agreement to reduce poverty. FEMI ADEKOYA writes.
In November 2020, Nigeria ratified its membership to the African Continental Free Trade Agreement (AfCFTA). While there are concerns about the country’s readiness for implementation, what economic gains and impact could this journey to continental trade bring to Nigeria and vice-versa? What sectors and industries will benefit the most?
AfCFTA is expected to complement Nigeria’s national development agenda and act as a catalyst for export diversification, by providing preferential access to the huge African market for Nigerian products and services, which currently sources over 85% of its imports from outside the continent.
AfCFTA is interesting because Africa demands finished goods and Nigeria aspires to industrialize and progress beyond export of primary commodities. It also provides immense opportunities for Nigerian companies to provide services to Africa especially in financial services, e-commerce, and the digital economy where we have already developed significant domestic capabilities.
As with all other developmental initiatives, AfCFTA is not without its challenges, both in terms of its implementation and its overall outcomes. In the long run, and to be able to take full advantage of the AfCFTA initiative, Africa will need to harmonize the monetary policies of State Parties amounting to a loss of monetary policy independence for member countries.
We are aware that goods made in other continents could be disguised as made-in-Africa to qualify for duty-free treatment. However, we have already built-in specific safeguards to mitigate this challenge.
Nigeria’s export base is still dominated by oil and gas exports. How can this trend be reversed?
I have spoken extensively on our efforts to increase local production and reduce importation. Let me now turn to our ongoing efforts at growing export capacity and building export infrastructure. Export growth is at the centre of our strategy for diversifying Nigeria’s sources of foreign exchange and reducing the vulnerability of the economy to external shocks. We have witnessed time and again, the devastating impact that events outside our control can have on our livelihoods due to our reliance on a primary source of foreign exchange.
The Ministry is currently implementing the Export Expansion Facility, which is one of the projects of the Nigerian Economic Sustainability Plan. This Program aims to protect export businesses from the effects of the COVID-19 pandemic, safeguard jobs and de-risk the economy from shocks like COVID. Its primary goal is to increase Nigeria’s export capacity in the near term and its export volumes in the medium term. It represents a huge financial commitment from the Government and demonstrates President Buhari’s commitment to export diversification.
The Program consists of fourteen projects, which focus on providing capital for expansion, building export capabilities, export market entry and development, establishing export infrastructure and ensuring inclusiveness in export activities.
Local manufacturers continue to raise concerns about the challenges to industrialisation. How are you addressing these issues?
The Industrialisation Program requires unprecedented quantum of capital from the public and private sectors. We estimate that funding required for Government-backed programs such as provision of credit to MSMEs, credit for investment by the private sector in Backward Integration Programs, financing consumer credit to boost demand and enable economies of scale in capital-intensive sectors and financing the development of special economic zones all require significant financing.
Creating wealth in the Agriculture Sector is the FG’s primary strategy for ensuring inclusive and sustainable growth and this is reflected in our focus on Backward Integration Programs. Large expanses of land are required for commercial agriculture that accompanies agro-processing. However, such large expanses of land are difficult to acquire, and investors are unable to take full possession of land acquired due to insecurity, continuous community agitation and unending and unpredictable cost of compensation which are extremely disruptive. The result is project delays and disruptions to the Backward Integration Programs.
These challenges impact the competitiveness of our economy and ability to attract and sustain direct investment.
The Federal Government is working with State Governments and the Central Bank on several interventions and programs to address these issues holistically.
MSMEs appear to be highly impacted by the COVID-19 pandemic. What initiatives has FMITI taken to stimulate MSMEs during this period?
In the wake of the COVID-19 Pandemic, the Federal government launched the MSME Survival Fund which is one of the programs of the Nigerian Economic Sustainability Plan (NESP) aimed at protecting MSME businesses from the shocks of the Pandemic. The Fund comprises of the Payroll Support Scheme, which aims to support grant to support MSMEs in meeting their payroll obligations and safeguard jobs by paying up to N50,000 to a maximum of 10 employees in each MSME for a three-month period; the Artisan and Transport Grant, which supports self-employed artisans with a one-off payment of N30,000 targeting 333,000 individuals.
Further, the General MSME Grant is expected to provide 100,000 MSMEs with one-off grants of N50,000 each; and the Guaranteed Offtake Scheme will engage approximately 100,000 businesses across the country to produce items typically produced in their locality, targeting 300,000 beneficiaries. The Fund is estimated to save at least 1.3 million jobs across the country, while strengthening the growth potential of beneficiary businesses.
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