AfCFTA: CBN moves to support greater intra-regional trade

The Central Bank of Nigeria (CBN) is making effort support greater intra-regional trade which will increase trade opportunities for businesses in Africa.

The CBN Governor, Godwin Emefiele said this at the Zenith’s Bank 2021 Export Seminar held on Tuesday in Abuja

Emefiele who commended the organizers of the seminar, Zenith Bank for their focus on growing non oil exports, said non oil exports if well harnessed can enable greater growth and improved foreign inflows for the economy.

He disclosed that the CBN has taken considerable steps improve the productive capacity of businesses, which would enable them take advantage of export opportunities in Africa. 

Emefiele mentioned that the CBN has setup intervention programs in the agriculture and manufacturing sectors which help businesses expand their scale of production.

He said,”Our intervention programs in the agriculture and manufacturing sectors, are helping enable businesses expand their scale of production, which is meeting growing domestic demand for goods, but also providing goods for the export market. 

“In addition, we have set up a N500bn non-oil export stimulation facility with the Export Import Bank (NEXIM). 

“This initiative will also help to enable greater exports of processed agriculture commodities into other markets in Africa and in the global market.Improving the business environment in Nigeria is also vital if we are to harness the gains from the AFCFTA. 

“The Central Bank through our Trade Monitoring System portal (TRMS) is also helping to reduce the time it takes to complete the export documentation process, as faster turnaround time could help to reduce delivery time for goods destined for exports, and enable businesses expand their output. 

“Today, businesses can complete their NXP applications on the TRMS portal in 30 minutes relative to two years ago, where it could take as much as two weeks to complete the process. 

“We are also working with stakeholders in repositioning the Nigerian Commodity Exchange, which would help to support greater trade for operators in these vital sectors earlier mentioned. 

“Once the exchange becomes fully operational in the 2nd half of the year, buyers of raw and processed agricultural commodities will be able to enter into forward contracts with domestic suppliers on the exchange, and they can be assured of not only the quality of the goods sold through the exchange, but on the expected date of delivery. 

“We believe these forward contracts will help to support improved productivity for farmers and agro-processors, it will also help to improve access to credit for these entities  using the forward contracts as collateral. Supporting greater trade within Africa would also require the presence of a viable payment settlement system. 

“In this regard, the CBN is working with key stakeholders in the African continent, particularly the Afrexim Bank to improve the underlying payment to support greater intra-regional trade, through the Pan African Payments and Settlement System(PAPSS). 

“This initiative will enable payments in our local currency for goods in other African countries and vice versa, without the need for a third-party currency. 

“This initiative will help to reduce the cost of cross border trade, improve convertibility of the Naira, and increase trade opportunities for Nigerian businesses in Africa.

“Although Nigeria stands to gain from expanded trade, I believe it is also important that we pay attention to the cost that expanded trade through the AFCFTA could have on local businesses and communities.”

The CBN Governor stressed that supporting greater trade within Africa as well as with the global community is indeed vital to the CBN’s objectives of enabling greater economic growth and creating employment opportunities for the country’s growing population.

According to him, trade enables specialization, economies of scale and it also provides significant rewards to those who are innovative, as they can sell their goods and services to an expanded market. 

He noted that the COVID-19 pandemic and its resulting implications on crude oil prices in 2020, which led to a significant decline in government revenues, as well as in Nigeria’s foreign exchange earnings, to strengthen the case that Nigeria must diversify its economy and create new trade opportunities for Nigerians, as part of its recovery efforts. 

“Fortunately, the Nigerian economy was able to emerge out of the recession in the 4th quarter of 2020, following two quarters of negative growth. 

“This was due to significant interventions by the monetary and fiscal authorities in Nigeria , aimed at stimulating consumption expenditure. 

“However, a strong and well-balanced recovery will require additional contributions from the private sector in supporting greater growth of our non-oil exports. 

“The volatility in the oil markets which has exposed the Nigerian economy to significant exogenous shocks, along with the growing trajectory lesser use of fossil fuels in the near future, by some advanced and emerging market countries, makes it imperative that we  work to significantly improve our non-oil exports earnings. 

“We believe that the African Continental Free Trade Agreement (AFCFTA) offer significant opportunities for the Nigerian private sector to expand into new markets, and seek new export opportunities, particularly in the area of Manufacturing, ICT, Agriculture and Financial services, given our growing advantage in these areas relative to our counterparts in other parts of Africa. 

implementation of the  AFCFTA, is expected to give Nigerian firms preferential access to markets in Africa worth $504.17billion in goods & $162bn in services. 

“I believe that we should seize this opportunity to ensure that Nigeria serve as a significant hub for and domestic manufacturing companies seeking to serve the West, Central and East African Markets. 

“In addition, we have a very young energetic, technological savvy population that have been leveraging technological applications to improve service delivery in the areas of finance, logistics and agriculture to consumers in Nigeria,” he said.

Emefiele also stressed that the AFCFTA will provide an opportunity for young talented Nigerians to expand their services across the African region. 

He further said that developing trade portals that could support instant sales of goods manufactured in Nigeria to consumers in other parts of Africa is one aspect that can help to support the creation of jobs in Nigeria and improve foreign exchange inflows for the country.

“Our banks are already playing a significant role in expanding across the African continent. 

“I would like to encourage them to also leverage their presence in other parts of Africa, to support Nigerian businesses seeking to expand into new markets in Africa, by providing trade facilities to those with strong potentials for growth,” he said.

Emefiele stressed to that the initiatives being put in place by the CBN would help to ensure that Nigerian businesses are able to take advantage of the growing opportunities in the African Market. 

According to him, ensuring that procedures on rules of origin are strictly adhered to by other African countries would also help to reduce the negative that come with the implementation of the AFCFTA.

He however, noted that it is vital that for stakeholders to work together to support increased growth of Nigeria’s non-oil exports as it would help to enable greater economic growth and improve the country’s foreign exchange earnings.

Emefiele reiterated the commitment of the CBN to working with all stakeholders achieving these objectives.