Out of all the sub-saharan nations participating in the African Growth and Opportunity Act (AGOA), you can say Nigeria recorded the lowest gain.
Sadly, Nigeria has failed to take advantage of the AGOA trade pact, between the U.S. and sub-saharan nations.
While most other participants keyed into the trade pact for economic gains, even with a challenged economy, Nigeria remained passive.
However, the government of the United States of America has extended the timeline of the AGOA trade till 2041.
Other African countries are also beneficiaries of this extension.
It is expected that the Federal Government will take full opportunity of this extension to strengthen naira.
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What’s In It For Nigeria?
However, experts are wondering if Nigeria will actually benefit from this trade pact, to earn foreign exchange and strengthen the naira amid acute dollar scarcity.
Under the AGOA trade pact, Nigeria export its local products to the world’s biggest market.
AGOA allows sub-saharan countries to export up to 7,000 products duty and tariff-free to the U.S. extended to 2041.
The initiative was established in 2000, to allow African nations export products, especially non-oil goods, to the United States on favourable terms.
It was created with a view to promoting economic development and trade on the continent. It was supposed to end next year.
The programme has been a crucial lifeline for many African economies, gaining opportunities to access the vast American market.
Beneficiaries Of AGOA Trade Pact
Countries like South Africa, Kenya, Madagascar, Lesotho, and Ghana accounted for 90% of the total non-oil in 2022.
Nigeria’s non-oil AGOA exports have remained stagnant, primarily comprising a few agricultural products and handicrafts.
Experts attribute Nigeria’s low non-oil AGOA exports to the lack of competitiveness of the country’s manufacturers.
They stated that the country must make its products competitive by addressing major challenges limiting manufacturing in the country.
Also, they urge the Federal Government to build an export capacity and culture that will ensure the country does not miss out on this opportunity.
Why Nigeria Is Yet To Benefit From The Program
The CEO of Centre for Promotion of Private Enterprise (CPPE) Muda Yusuf said: “Nigeria’s low non-oil export shows how challenged our manufacturing sector is.”
“Cost of production is too high to be able to make any significant impact as far as export is concerned. And this is why primary products export has continued to dominate,” Yusuf said.
Logistics is also a critical issue, importing inputs and taking them to factories is a big issue, given the state of Apapa and Tin Can ports in Lagos.
Delays and gridlocks at the ports increase companies’ production costs, thereby lowering their productivity.
Funding is also a problem for manufacturers. Nigeria’s benchmark interest rate is among the highest in Africa at 24.75%.
Kenya’s is 13%; South Africa is 8.25; Rwanda is 7.5%; Algeria is 3% and Botswana is 2.4%
All these challenges among others have made Nigerian manufacturing remain uncompetitive.