The Federal Government has called for more sensitisation of the Medium, Small and Medium Enterprises (MSMEs) to enable them benefit from the Africa Continental Free Trade Area (AfCFTA) agreement.
The Vice President, Prof. Yemi Osinbajo said this while declaring open a two-day programme on Organised Private Sector in Nigeria Roundtable Dialogue on Potential Impact of Africa Continental Free Trade Area (AFCFTA) Agreement on Tuesday in Abuja.
The programme was organised by the Nigeria Employers Consultative Association (NECA) in collaboration with Manufacturers Association of Nigeria, Centre for International Private Enterprise, among others.
Osinbajo, represented by Otunba Adeniyi Adebayo, the Minister of Industry, Trade and Investment, said the sensitisation was imperative to ensure that the MSMEs in the country benefited from the continental market.
Osinbajo in his report titled: “Continental Integration and the Nigerian Economy”, focused on the effect of AfCFTA on MSMEs in the country.
He said that the report was to fill the knowledge gap on the possible effects of AfCFTA on the economy.
He said the report was based on the surveys conducted for 1,800 MSMEs in five states, covering multiple sociocultural zones to evaluate the awareness and preparedness of MSMEs.
“The survey results disclosed that the majority of MSMEs are unaware of the existence of the trade agreement, especially smaller businesses.
“This is an important finding for the nation as this lack of knowledge will prevent their successful utilisation of the agreement.
“The key takeaway is that more needs to be done to adequately disseminate information to our MSMEs to ensure that they are effectively prepared in the post-integration era,” he said.
Osinbajo said that AfCFTA had the capacity to boost intra-African trade and was expected to deliver an integrated continental market consisting of 1.27 billion consumers with an aggregate GDP of 3.4 trillion dollars.
He noted that Nigeria as the largest economy in Africa, had the potential to greatly increase its trading volumes, production capacity and generation of foreign investments.
“However, as a country, we can only fully benefit from this opportunity if we are adequately prepared for the impending changes that will affect our business environment.
“It is necessary that we understand the full-scale impact that AfCFTA will have on all people and businesses, especially in terms of job creation and economic activities.
“We need to effectively utilise the opportunities that will be created by this trade agreement to develop our local production capacity and achieve our industrial aspirations.
“MSMEs form the backbone of the private sector and contribute more than 90 per cent of our GDP.
“With more than 40 million MSMEs in existence, employing close to 75 per cent of the Nigerian workforce, the impact of AfCFTA on the Nigerian economy will be significant,” he said.
He noted the challenges faced by MSMEs in trying to scale their business and capture a larger share of the market, included access to funding, access to markets, ability to attract quality talent.
He added that other challenges were relatively high cost of operations and the burden of regulatory compliance.
“Our vision is to eliminate these barriers to growth and improve their chances at succeeding in a post-AfCFTA economy. Accordingly, we have established the MSME policy to drive the growth and competitiveness of Nigerian MSMEs.
“We also concluded a landmark U.S.-dollar one billion syndicated term loan through the Bank of Industry (BOI) to provide affordable loans to MSMEs.
“Also, we have developed the MSME Portal to provide MSMEs with wider access to the market and the opportunity to be matched with customers.
“The outcomes documented in this report will play a key role in determining the strategies that Nigerian businesses will need to take in order to thrive post-AfCFTA.
“The Federal Government will continue to do our part in supporting MSMEs on this journey,” he said.
Also, the Minister, Ministry of Finance, Budget and National Planning, Mrs Zainab Ahmed said that Nigeria’s ratification of the AfCFTA provided a unique opportunity for Nigerian exporters to enhance their productive and export capabilities.
“It also places healthy competitive pressure on Nigerian producers serving the domestic economy as they are challenged to upgrade their operations and improve their product offerings to compete with other producers on the continent who gain access to Nigerian markets.
“To achieve positive results for exporters and the wider economy, we must be proactive and strategic in taking steps to improve the ability of Nigerian companies to compete with other producers on the continent,” she said.
Ahmed said that the roundtable dialogue was appropriately focused on the impact of Nigeria’s accession to the African Continental Free Trade Area on MSMEs.
She said MSMEs accounted for 96 per cent of all businesses in Nigeria, according to the 2017 Survey of MSMEs in Nigeria conducted by the National Bureau of Statistics (NBS).
She said that the survey was in collaboration with the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
Ahmed said that the same study finds that MSMEs contributed 49.8 per cent to total nominal GDP in the same year, in contrast with a contribution of only 7.6 per cent to total exports.
“The relatively low contribution of MSMEs to exports is concerning given their significant contribution to nominal GDP and for this reason, urgent steps are being taken to alleviate the binding constraints limiting MSME participation in cross-border trade.
“As work progresses on the preparation of the Finance Act 2021 for the 2022 fiscal year, policy actions to support MSMEs will continue to be prioritised,’ ‘she added.
Ahmed, however, restated the commitment of the Ministry of Finance, Budget, and National Planning and all its agencies to the facilitation of MSME participation in the AfCFTA through the ongoing domestication of trade protocols.
“Also as well as the continued use of appropriate and targeted fiscal policy tools at our disposal.
“It is my expectation that the discussions emanating from this roundtable will result in the identification of areas of success as well as those which require further action through fiscal policy, to support the strategic participation of MSMEs in the AfCFTA,”she said.
Mr Taiwo Adeniyi, the NECA President said the focus on MSMEs was imperative as they represented the core of the Nigeria economy.
Adeniyi noted that the MSMEs also contributed to the employment of the country, hence sustenance of some 75 per cent of the Nigeria’s workforce.
“Ensuring an optimal outcome for the MSMEs therefore must be paramount target in the policymakers’ effort to implement the AfCFTA nationally,” he said.
The Country Director, Centre for International Private Enterprise (CIPE), Mrs Omowunmi Gbadamosi, said free market capitalism and global trade had resulted in the greatest economic gains in the human history. (NAN)
