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Economy & Politics

The opportunities in Africa’s $100 billion infrastructure deficit

The $100 billion infrastructure deficit is an opportunity for Africa to have greater investment.

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Take-off of Africa Free Trade Zone (AFCFTA) suffers set back

In 2012, the African Union planned to boost intra African trade and agreed on a plan, which it called Boosting Intra African Trade action plan (BIAT) in Accra, Ghana. The action plan was to place Africa on a path of industrial development, and to boost a very dismal state of intra Africa trade from 11% to a competitive level.

However, it appears that not much has been achieved as stats stand at a mere 18%, 18 years later. The continent is far behind when compared to the European Union (EU) trade, which is at 70%; intra-North American trade is 49%, while intra-Asian trade is at 35%.

During a webinar recently organized by the American Business Council, which Nairametrics was in attendance, Secretary-General, African Continental Free trade Area (AfCFTA), Wamkele Mene, explained that at the heart of the BIAT action plan is ensuring that Africa relies less on the export of primary commodities to develop markets by reconfiguring Africa as a structural economy foundation.

“So, this really leads to where we are today, which is African continental free trade area. The objective of boosting African trade, leveraging on regional supply chain is very important, and we’ve got to have industrial development for that.

“If we don’t make a very clear linkage between trade and infrastructure, this project that we have embarked upon is not going to be successful. We know that in Africa the deficit for infrastructure is over $100 billion. The $100 billion infrastructure deficit is an opportunity for Africa to have greater investment to enhance investment in infrastructure, like roads that facilitate our trade,” he said.

But how can the continent tackle the bottlenecks hindering it from achieving the goals? First, according to Mene, is to ensure that the agreement benefits both countries that already have a relative industrial base, manufacturing capacity and export capacity, and the smaller countries without such capacity.

He said, “We have to find ways of ensuring that the agreement benefits countries like Kenya, Morocco, Egypt, and South Africa equally as much as it benefits smaller countries today that don’t have the industrial base and manufacturing capacity.

“So, we have to actively work to build regional value chains that all countries can be part of. We have to identify these value chains so that each and every country in Africa that is part of this agreement can benefit. What we do require is an action plan of implementation of an industrial development strategy that would be applied on the African continent.”

Another major bottleneck to trade is the proliferation of various rules. This challenge could be huge, as every African state has different guidelines in certifications.

“Custom procedures in all circumstances is always the most challenging part of the trade agreement. It is even more challenging when you have big countries with many borders, some borders are remote from the capital.

“So enforcement is a big problem in a number of ways, like fraudulent invoicing. You have transhipment of goods that come into the border under a preference which these goods should not be enjoying this preference. So this is a problem. There is a general rule when it comes to trade agreement.

“What we have to do as a secretariat is to work with individual countries with regional economic communities such as Ecowas to ensure that we improve capacity of the customs officials, so that customs authorities know what preference to implement in relation to Africa continental free trade area,” he said.

Mene added that Africa and its leaders should see the adoption of AfCFTA as the last opportunity for the continent to be placed on a path for industrial development, and large scale job creation. “We establish value chains so that all countries can benefit from this agreement. So it is a step that will put Africa at the forefront of the leadership of the organization which is a step in the right direction,” he added.

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President, American Business Council, Dipo Faulkner, explained that the Council believes that the Africa Continental free trade area will improve industrialisation, and sustain growth and development in Africa.

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He said, “We believe that the Africa Continental free trade Area would hit a haven of challenges, some of which will include infrastructure logjam’s within the zone, protectionism, managing divergent views in interest and trade blocks, harmonisation regulations across the member countries.

“We believe that working with a coalition of stakeholders committed to the successful implementation of the Africa continental free trade area remains very critical for this area to be successful.

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“We believe the time is now and at the same time, we need to leverage the fourth industrial revolution which has come to stay. Today, this webinar will address the concerns of the private sector as well as those from the regulatory agencies across Africa.”

According to him, it is important to note that the American Business Council supports the Africa continental free trade area and looks forward to continuing the partnership with it and the African Union, in advancing a shared oath of creating economic prosperity within the region.

Chief Executive Officer, American Business Council, Margaret Olele, said, “African continental free trade area is our economic recovery plan, as economic stimulus for Africa. We are looking forward to the private sector partnering with African Continental free trade area to progress this dialogue even a lot further.”

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American Business Council is the voice of the American Business in Nigeria and an affiliate of the US chamber of commerce.

The council works with the US missions and other partners on various advocacies that impart social economy and regulatory reforms. As an affiliate of the US chamber of commerce in Nigeria, the council has become a powerful advocacy instrument in Nigeria for the private sector.

Abiola has spent about 14 years in journalism. His career has covered some top local print media like TELL Magazine, Broad Street Journal, The Point Newspaper.The Bloomberg MEI alumni has interviewed some of the most influential figures of the IMF, G-20 Summit, Pre-G20 Central Bank Governors and Finance Ministers, Critical Communication World Conference.The multiple award winner is variously trained in business and markets journalism at Lagos Business School, and Pan-Atlantic University. You may contact him via email - [email protected]

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Economy & Politics

Senate endorses ex-Service Chiefs as Non-career Ambassadors

The Senate has confirmed President Buhari’s nomination of the immediate past service chiefs as non-career ambassadors.

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The Nigerian Senate has endorsed the nomination of the past serving Military Service Chiefs as Non-career Ambassadors.

This was confirmed during Tuesday’s plenary session and announced in a social media statement by the Nigerian Senate.

Their confirmation follows the consideration of the report of the Senate Committee on Foreign Affairs, Chaired by Senator Adamu Bulkachuwa.

According to reports, the Senate Minority Leader Enyinaya Abaribe, however, questioned the nomination and confirmation of the ex-service chiefs when the Senate had on 3 different occasions called for their sack.

Senator Abaribe also raised issues on the petitions against the former service chiefs and questioned why they were dismissed without explanations.

But Senate President Ahmad Lawan dismissed Senator Abaribe’s concerns, ruling that the nomination of the former service chiefs cannot be nullified simply because the upper chamber had called for their sack, noting that this is totally a different assignment.

In his concluding statement, the Senate President, Senator Lawan added that these nominees that have just been confirmed have served this country to the best of their abilities. He appealed to the executive to make sure they use their experience as military men to the best.

“These nominees that we have just confirmed are nominees that have served this country to the best of their ability. Our appeal to the Executive is to make sure they use their experiences as military men to the best,” Lawan said.

Lawan, on behalf of the senate, wished them a very successful career in their capacity as Non-Career Ambassadors.

What you should know 

  • Recall Nairametrics reported earlier this month that President Muhammadu Buhari nominated ex-Service Chiefs for Senate approval as non-career Ambassadors-Designate.
  • Their appointment came barely a week after their retirement as service chiefs and their replacement with new ones.
  • This led to a spate of criticisms from some Nigerians who felt that the nation’s security situation got worse under their watch.
  • They were reported to have tendered their resignation from their positions amid heightened calls that they should be sacked due to the increasing rate of insecurity across the country.

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Economy & Politics

2020 budget performance: FG achieves 89% capital release in December 2020

The Minister of Finance has revealed that the FG achieved 89% release of the capital component of the 2020 budget to MDAs as of December 2020.

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The Minister of Finance, Budget and National Planning, Zainab Ahmed, has revealed that the Federal Government achieved 89% release of the capital component of the 2020 budget to Ministries, Departments and Agencies (MDAs) as of December 2020.

She said that the 89% capital funding for MDAs was achieved with the release of N1.74 trillion.

According to a report by the News Agency of Nigeria (NAN), this disclosure was made by Ahmed at an interactive session with the leadership of the National Assembly on Monday, February 22, 2021.

She also revealed that the government had disbursed N118.37 billion for Covid-19 capital expenditure from the fund.

READ: Recession: Senate attributes recovery to it’s cordial relationship with Executive

What the Minister for Finance is saying

Ahmed said the Nigerian economy faced serious challenges in 2020, with the macroeconomic environment significantly disrupted by the Covid-19 pandemic.

She said this led to a 65% drop in projected net 2020 government revenues from the oil and gas sector, which adversely affected foreign exchange inflows into the economy.

On the delayed release of funds to implement the 2020 capital budget until March 31, the Minister said the complaint had decreased.

She said, “I think the complaint was earlier in the year when we were trying to transfer the balances. As far as I know, in the past three weeks, I haven’t heard any such complaints and we have been able to address them.

“But when we started the transfers, we couldn’t transfer to some agencies because of some limitations in the system, but we have since been able to transfer the capital component that is being utilised by the agencies budget to the system.

READ: Nigeria receives $9.68 billion capital inflows in 2020, lowest in 4 years

While pointing out that the implementation of the MDAs projects was tied to procurement processes and capacity of the MDA, Ahmed also said the extension of the 2020 capital budget implementation to March 31 had recorded 30% performance as at January.

However, Ahmed said that she expected that the extension would record 100% performance in March.

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Speaking during the interaction, the Senate’s Chief Whip, Senator Orji-Uzor Kalu, commended the Minister on the capital performance of the 2020 budget.

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READ: FG to reopen Kano and Port Harcourt airports for international flights

He said, “I want to commend the minister and her team because this is the first time in the history of Nigeria that by December 31, we are having 89% performance expenditure of the budget. It has never happened before; Last year was the very first.

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“The budget had been going 49%, 27%; this means from what the Senate President was asking, it means by March, we should be looking at implementing the budget 100%.’

Earlier, President of the Senate, Ahmad Lawan said the meeting was to get an update on the capital implementation of the 2020 budget given its extension for implementation by the national assembly to March 31.

What this means

  • The 89% capital release for the 2020 budget as of December 2020 is quite encouraging as it occurred despite the economic challenges and disruption caused by the outbreak of the coronavirus pandemic.
  • There seems to be an improved effort by the Federal Government at the budgeting process with the early passage of the 2021 budget and the implementation of the capital component of the 2020 budget.

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