The agreement also aims to eliminate tariffs on 90% of goods while allowing micro, small, medium and large enterprises to enter new markets and establish strong cross-border supply chains with trading partners on the market. continent.
Recent reports from the World Bank indicate that the deal would increase regional income by seven percent, raise women’s wages and lift 30 million people out of extreme poverty by 2035.
The AfCFTA National Action Committee in the first quarter of the year launched an awareness campaign to enlighten Nigerians on the benefits of the trade deal and the need for full participation.
Six months after the launch of AfCFTA, however, some believe that many Nigerian micro, small and medium enterprises (MSMEs) can do better with better knowledge of its intricacies and technical know-how, to maximize its benefits. .
MSMEs, relevant for the growth of gross domestic product (GDP) as well as for job creation, are considered to be the main engines of development of any economy, as they constitute the bulk of business activities.
The various interventions by the Federal Government and the Central Bank of Nigeria (CBN), such as reducing interest rates on CBN facilities from nine percent to five percent, and the creation of a An intervention of N50 billion for households and MSMEs is notable.
Others include the creation of a 1.1 trillion naira intervention fund for the manufacturing sector (including drugs sub-sector) and the temporary and time-limited restructuring of loan terms and conditions. for businesses affected by the pandemic.
The need to reposition MSMEs with context-specific awareness and education mechanisms, however, cannot be overstated.
Dr Muda Yusuf, Director General of the Lagos Chamber of Commerce and Industry (LCCI) noted the nationwide awareness by the Federal Government Action Committee on the AfCFTA.
He said, however, that there was still a lot of work to be done to create the desired level of awareness.
This, he says, is due to the size of the country and the investor population.
Yusuf said there was a need to better target desired outcomes, with a focus on international trade and the investment community.
He said the percentage of MSMEs engaging in international trade was perhaps less than 10 percent.
“The truth is that most MSMEs are domestically oriented and most exporters are not necessarily producers.
“The language in which the AFCFTA message is disseminated should be accessible, in particular to MSMEs thanks to the simplification of terms and terminologies.
“There is also a need to ensure a balance in the use of traditional media platforms and digital platforms.
“The government needs to devote more resources to the AFCFTA awareness campaign,” he said.
Mr. Segun Ajayi-Kadir, Managing Director of the Manufacturers Association of Nigeria (MAN), however, said more than 50 percent of manufacturers, most of whom were MSMEs, were aware of how the deal worked.
He said there had been high-level interactions with the upper echelons of the AfCFTA Secretariat, the African Union, the African Export and Import Bank and other ministries, departments and agencies. nationals concerned.
These, he said, have highlighted the need for a number of steps member companies need to take to get the most out of the deal.
He cited the need to start accelerating export diversification by targeting products that are in high demand on the continent but which mainly come from outside as one of those steps.
The MAN DG also called for the realignment of production processes with the rules of origin agreed for the product lines, to ensure qualification for the preferential tariff that the AfCFTA seeks to build.
Ajayi-Kadir stressed the need to continue to develop capacities for understanding AfCFTA rules of origin and trade redress mechanisms and skills needed to participate effectively in the continental value chain.
“We must also start to embark on capacity building on export trade logistics and shipping modalities amid the huge infrastructure deficit that prevails on the continent, and adopt an entry strategy. in the market that best suits their products, paying adequate attention to the culture of the people in the target market.
“We need to improve product packaging to generate increased market penetration, with MSMEs providing quality assurance before products are shipped to the final destination.
“Although the price competitiveness of Nigerian manufactures remains a challenge, stakeholders in the MSME group need to adopt the best pricing strategies by ensuring the efficiency of their production and logistics processes.
“There is also a need to build capacity in the area of paperwork, as there is a tendency for a transaction to fail and ultimately losses when documentation is faulty, hence the need documentation before and after export.
“Appropriate familiarization with payment systems such as letter of credit, invoice to be collected, account opening and prepayment is also required as it will be necessary to seek funds to pay local suppliers and obtain payment. from the buyer after shipment, ”he said.
Mr. Eke Ubiji, Executive Secretary of the Nigerian Association of Small and Medium Enterprises (NASME), for his part, underscored the need to include MSME stakeholders in government information and awareness advocacy, in order to to engender grassroots participation.
Ubiji urged the governments of countries that had already ratified the agreement to set up an intra-African rail transport system to comprehensively address the transport infrastructure gaps acting as a trade barrier for MSMEs.
He also recommended the use of non-formal and very simplified means of transmitting information to actors in the MSME space.
“It is incumbent on the government and the organizations concerned to have a way to convey this relevant information to the players, even at the grassroots.
“As it is, we are landlocked and cannot move anywhere.
“Many MSMEs may not be able to fly their products, but with a connecting rail system to connect all of Africa to each other, trade barriers would be removed.
“If we can develop the continent economically, the rush to relocate to all of these European countries would be greatly diminished,” he said.
Without a doubt, all hands must be on the bridge to ensure that MSMEs are well placed to make the most of the estimated market of 1.3 billion people and the economic benefits provided by AfCFTA. (NANFeatures)