Managing Director, Development Bank of Nigeria (DBN), Tony Okpanachi has projected that the soon-to-be-implemented Africa Continental Free Trade Area (AfCFTA) holds great economic development potential for Nigeria.
Okpanachi believes that regional integration through trade would propel Nigeria’s economic growth by offering preferential access to a much bigger single continental market for goods and services worth $416bn and $121.8bn respectively.
According to the development banker, this will also lead to an increase in investments in the real sector which provides opportunity to grow and diversify non-oil exports, improve export capacity and the current government reforms will also improve the country’s attractiveness for foreign direct investments.
Okpanachi, who gave these figures in his keynote address at the 41st Kaduna International Trade Fair Seminar of the Kaduna Chamber of Commerce, Industry, Mines, and Agriculture (KADCCIMA), said unlocking the nation’s economic potential through regional trade is not the responsibility of the government alone, adding that raising the productivity growth of the private sector is key for regional integration to be beneficial to the country.
This is even as he pointed out that intra-regional trade in Africa remains relatively low compared to other continents, and this continues to make business environment challenging for Africans.
He clarified: “Comparative trade data shows why Africa is the least developed region of the world. Intra-African trade in goods was $135.4 billion in 2017, representing only 14.6% of Africa’s total trade. This means that over 85% of Africa’s total trade (exports and imports) was with countries outside the continent. This is in sharp contrast with intra-EU trade (69.8%), intra-American trade (46%) and intra-Asian trade (59.6%).
‘’There is no doubt the potentials that can be unlocked through regional integration particularly through trade. In fact, according to a study conducted by the IMF, a 5% increase in the export weighted growth rate of intra-regional partners is associated with about a 0.5% increase in the growth of a typical sub-Saharan African Country. Regional integration is pivotal to economic prosperity in Nigeria, hence an important step in unlocking Nigeria’s economic potentials”, the banker added.
For Nigeria to optimally reap dividend of AfCFTA, he said the country needs to operationalize existing trade agreements that include provisions to deal with trade barriers and settling trade disputes as well as implement policies, operational/technical, governance and financial interventions to restore the financial viability of the power sector, improve service delivery and reduce losses.
Okpanachi reiterated the DBN’s commitment to driving economic growth through funding and capacity building for MSMEs in Nigeria