Nigerian manufacturers say high production costs could deny them the benefits that the African Continental Free Trade Area (AfCFTA) promises. Seleem Adegunwa, Chairman Manufacturers Association of Nigeria (MAN) Ogun State, said this at the 36th Annual General Meeting of the branch themed African Continental Free Trade Area Agreement and Nigeria’s Manufacturing Sector: Maximising the Gains and Mitigating the Drawbacks.
“There are concerns that the agreement seems to favour African nations that have lower costs of production, as they can export cheaper and gain market share unlike Nigeria where challenges confronting the manufacturing sector in Nigeria seem to grow by the day,” he said.
Manufacturers’ production and distribution costs increased by 21 percent in the second quarter of 2021 according to the MAN CEOs Confidence Index (MCCI) for the second quarter of 2021 and this stands as a hindrance to the competitiveness of manufacturers in Nigeria.
Adegunwa who is the Managing Director of Rite Foods Limited, noted that the purpose of the trade agreement was to create a Single Market for goods and services within the African continent by increasing trading among African nations; eliminating import duties, applying preferential tariffs to imports from other state parties and encouraging industrialisation by fostering competitive manufacturing. He stated that the trade agreement holds huge prospects for manufacturer’s growth by boosting intra-African trade by 52.3percent and providing between $50 billion and $70 billion in monetary terms.
“More worrisome, is the non- compliance of some African Countries with the AfCFTA Rules of Origin which may negatively affect Nigerian manufacturers who already operate in a harsh manufacturing environment that may render their products unable to compete with similar products from their African counterpart,” he said. Highlighting issues that drive poor competitiveness, Adegunwa said shortage of FX, unfavourable exchange rate, high interest rates, poor infrastructure, multiple taxes and levies by various tiers and arms of Government, high electricity tariffs and irregular power supply, insecurity, etc.
He urged that the government address these challenges and help boost the competitiveness of manufacturers, adding that passage of Bills that have direct or indirect impact on the manufacturing sector in the State should be done after due consultation with manufacturers.
“The state government should provide tools and equipment needed by the various security agencies to aid their operations geared towards tackling insecurity in the state. It would also help to curb the daily harassment of manufacturers by different agents of the governments for payment of various taxes, many of which are not legitimate,” he said.
Dapo Abiodun, governor of Ogun State said that in line with its economic diversification goal, the government has focused on re-tooling the manufacturing sector and harnessing its potential for economic sustainability. “As a government, we have focused on making the manufacturing sector a key component of building our future together, this informed the vision to provide focused and qualitative governance while creating an enabling environment for a Public Private Sector Partnership, which we believe is fundamental to the economic growth of the state and individual prosperity of our people,” he said.