United States-based media company, Bloomberg has warned that the poverty level in Nigeria is bound to multiply if it refuses to drop import barriers and join Africa’s free-trade zone.
In a piece written by Noah Smith, an assistant professor of finance at Stony Brook University, the newspaper lamented that, while Nigeria’s population is growing at the fastest pace in the world, the government has failed to create the prosperity that will sustain that future population.
“Its oil-dependent economy has struggled after oil prices plunged five years ago. The number of Nigerians in extreme poverty — generally defined as living on less than $1.90 a day — is estimated to be increasing by six every second.”
It said Nigeria has to end its dependence on oil by spending energy revenues on education, health and infrastructure.
However, considering that this plan might take decades to bear fruit in the best of circumstances, the paper notes that job creation is a priority, and that one of the best ways to create those jobs would be to increase international trade.
It said that the quickest way to boost trade would be to join the African Continental Free Trade Area.
The AfCFTA now includes 52 countries and more than $2 trillion of economic activity. Entering that agreement, which would eliminate tariffs on 90% of goods, would open up plenty of new markets for Nigerian-made products.
It laments the fact that Nigeria’s manufacturers see the AfCFTA as more of a threat than an opportunity.
Bloomberg quoted Frank Jacobs, president of the Manufacturing Association of Nigeria (MAN), who recently declared that “When they open our borders for all manner of products to come into this country, most of our industries will be out of business.”
“The Nigeria Labor Congress, an umbrella organization of trade unions, called the AfCFTA an “extremely dangerous and radioactive neo-liberal policy initiative.” As a result of this political opposition, Nigeria has balked at joining the agreement,” the paper said.
According to Bloomberg, maintaining a protectionist stance is often tempting for a country as large as Nigeria, whose manufacturers are always clamouring for the prize of a captive domestic market.
However, it states that this approach merely provides a crutch that ultimately preserves industrial weakness.
“Instead of hiding behind trade barriers, Nigeria should focus on aggressively promoting manufactured exports. Gaining access to nearby African markets would be one step toward doing that. Courting foreign-direct investment, depreciating the currency and pushing companies to export are other important steps.”
“And in the long run, investments in education, health and infrastructure will make Nigeria an attractive platform for labour-intensive manufacturing. This is the giant African country’s best hope for escaping a looming tsunami of poverty.”