By Ibrahim Shelleng
In today’s interconnected world, the concept of international trade is not new. Nations have been engaging in the exchange of goods and services for centuries. However, when it comes to trade within the African continent, there is still enormous untapped potential. Nigeria, with its population of over 211 million people and its booming economy, is the largest economy in Africa. It is also a major player in global trade. However, Nigeria’s intra-African trade is still relatively low, accounting for only about 13% of its total exports in 2020. This is in contrast to other regions of the world, such as the European Union, where intra-regional trade accounts for over 70% of total exports. Nigeria, as the most populous and economically influential country in Africa, has a crucial role to play in leading the way in intra-African trade.
There are a number of reasons why Nigeria must take the lead in intra-African trade. First, it is essential for the economic development of the entire continent. Intra-African trade can help to boost economic growth, create jobs, and reduce poverty. Second, intra-African trade can help to diversify Nigeria’s economy and make it less reliant on the export of oil and gas. Third, intra-African trade can help to strengthen Nigeria’s relationships with other African countries and promote regional integration. In this article, we will further explore the reasons why Nigeria must take the lead in this endeavour, highlighting the immense opportunities, challenges, and benefits that come with it.
The African Promise
Before delving into why Nigeria should take the lead in intra-African trade, it’s essential to understand the concept itself. Intra-African trade refers to the exchange of goods and services between African countries. This practice can take many forms, from the export of agricultural products to the import of manufactured goods. Historically, intra-African trade has been underdeveloped, with most countries on the continent trading more with partners outside Africa than with their neighbours.
Africa, the world’s second-largest continent by landmass and population, has long been touted as the continent of the future. With a youthful and dynamic population, abundant natural resources, and a rapidly urbanising society, Africa holds immense potential for economic growth and development. However, this potential remains largely untapped, primarily due to a lack of intra-African trade and cooperation.
Intra-African trade, or the exchange of goods and services among African nations, holds the key to unlocking the continent’s promise. While trade between African nations accounts for just 18% of the continent’s total trade, the European Union’s intra-regional trade exceeds 70%. The potential is evident, and Nigeria must spearhead this effort.
The Need for Unity
One of the biggest obstacles to intra-African trade is the lack of a unified approach. Africa consists of 54 diverse nations, each with its own culture, economy, colonial influences and challenges. However, these differences should be viewed as strengths rather than weaknesses. A harmonious coexistence, built on the foundations of trade, can transform the African continent.
Last week, I was privileged to attend the 3rd West African Capital Market Conference (WACMaC), which was organised by the Nigerian Securities & Exchange Commission (SEC) and held in Lagos, Nigeria. The theme of the conference was “Infrastructure deficit and sustainable financing in an integrated West African Capital Market”. Whilst various infrastructure funding solutions were proposed, the most fundamental realisation was that for the dream of West African development to manifest, it required cooperation from the various countries within the region. This is even more critical given the recent wave of military coups in Francophone speaking countries that surround Nigeria.
By taking the lead in promoting unity and collaboration, Nigeria can set an example for others to follow. Nigeria’s own diversity – with over 250 ethnic groups – demonstrates that it is possible to thrive in an environment of multiplicity. As a nation that has faced its own share of internal challenges and divisions, Nigeria is uniquely poised to be a role model for fostering unity on a continental scale.
The Current Challenges
https://images.app.goo.gl/fLr5na9pTMoZPUos5Whilst there is a recognised need to foster more trade within Africa, there are a number of issues that hamper this currently:High tariffs and non-tariff barriers: Tariffs and non-tariff barriers can make it difficult and expensive to trade goods and services between African countries.Poor infrastructure: Africa’s infrastructure is underdeveloped, which can make it difficult and time-consuming to transport goods between countries.Lack of information: There is often a lack of information about trade opportunities and regulations in other African countries.Capacity constraints: Small and medium-sized enterprises (SMEs) in Africa often lack the capacity to trade internationally.
The Economic Imperative
Beyond the moral and social reasons for encouraging intra-African trade, there is a compelling economic argument. As the largest economy on the continent, Nigeria has a critical role to play in driving economic growth.
Presently, intra Africa trade stands low at just 14.4% of total African exports. UNCTAD forecasts show the AfCFTA could boost intra Africa trade by about 33% and cut the continent’s trade deficit by 51%. ~ https://www.un.org/africarenewal/magazine/january-2023/africa%E2%80%99s-free-trade-track-more-efforts-needed
Intra-African trade offers significant advantages that can bolster the nation’s economy and help address various pressing issues.
- Economic Diversification: Nigeria’s overdependence on oil exports makes it highly susceptible to global oil price fluctuations. By expanding trade with African partners, Nigeria can diversify its export base, reducing its vulnerability to external economic shocks.
- Reducing Dependency on External Partners: African nations often find themselves heavily dependent on external partners for their economic well-being. This dependency can leave them vulnerable to global economic fluctuations and foreign policies that may not align with their interests. By boosting intra-African trade, Nigeria and other African countries can reduce their reliance on external actors and strengthen economic self-sufficiency.
- Job Creation: Trade creates jobs, and Nigeria has a burgeoning youth population in need of employment opportunities. By fostering trade within Africa, Nigeria can stimulate economic growth and create job opportunities, particularly in industries like agriculture, manufacturing, and services.
- Enhanced Competitiveness: Engaging in intra-African trade can help Nigerian businesses become more competitive, thereby raising the quality of their products and services. This can lead to an improved global standing and greater market access for Nigerian goods.
- Infrastructure Development: To facilitate trade, necessary infrastructure – such as roads, ports, and telecommunications – must be developed. This infrastructure investment can improve the overall quality of life in Nigeria and create opportunities for domestic and foreign investors.
The Cultural Connection
Nigeria’s cultural influence extends far beyond its borders. Nollywood, Nigerian music, and literature have garnered international acclaim, and they resonate with people not only across Africa but around the world. By taking the lead in intra-African trade, Nigeria can capitalize on this cultural connection to promote its products and services throughout the continent.
Furthermore, Nigeria’s diverse culture can serve as a bridge to understanding and building relationships with other African nations. When you appreciate and respect the cultures and traditions of others, it becomes easier to engage in mutually beneficial trade partnerships.
The Role of Government
Nigeria’s government has a crucial role to play in fostering intra-African trade. Here are some key actions that can be taken:
- Trade Agreements: Nigeria should actively participate in and promote regional trade agreements, such as the African Continental Free Trade Area (AfCFTA). These agreements facilitate easier movement of goods and services across borders and reduce trade barriers.
- Investment in Infrastructure: As proposed by various stakeholders at the WACMaC, the government should invest in improving infrastructure, including ports, transportation networks, energy supply, and communication systems, to facilitate trade within the country and with other African nations. However, this investment must not be monetary alone but more focused on providing the enabling environment to allow private sector funding & expertise to facilitate the development process.
- Business-Friendly Policies: Policies that encourage business growth, reduce bureaucratic red tape, and protect intellectual property rights can create a more conducive environment for trade.
- Education and Awareness: Government-led campaigns and educational programs can raise awareness about the benefits of intra-African trade and promote a culture of entrepreneurship.
The Role of Businesses
Nigerian businesses must also actively engage in the process of intra-African trade. They can contribute by:
- Exploring New Markets: Businesses can identify and target new markets in other African countries. This may require adapting products and services to meet the needs and preferences of these markets.
- Quality and Standards: Maintaining high-quality products and adhering to international standards can help Nigerian businesses compete effectively in regional and global markets.
- Collaborations and Partnerships: Partnering with businesses from other African countries can lead to mutual growth and success. Joint ventures and collaborations can help navigate complex regulatory environments and build trust with local consumers.
- Innovation and Technology: Leveraging technology and innovation can improve business efficiency, reduce costs, and enhance competitiveness. Nigerian businesses should stay current with technological advancements.
Leadership sans frontière (Leadership without borders)
Nigeria’s leadership in fostering intra-African trade is a beacon of hope for an entire continent. By embracing unity, economics, culture, and the interconnectedness of African nations, Nigeria can set an inspiring example for others to follow.
As we look to the future, it is vital that Nigeria recognizes its potential to drive intra-African trade and, in doing so, promote the prosperity of its own citizens and the well-being of the entire continent. Together, with vision, determination, and the right policies, Nigeria can lead Africa to achieve greater development and sustainability.
Through its leadership and example, Nigeria can drive economic growth, reduce dependency on external partners, and foster unity and peace on the continent. The road ahead may be challenging, but the rewards are immense. It’s time for Nigeria to step up, take the lead, and unlock Africa’s potential through intra-African trade. The world is watching, and Africa’s future is in our hands.
