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AfCFTA: The state of the manufacturing sector in Nigeria and its ability to capitalize on open borders

Nigeria’s involvement in the AfCFTA should encourage flexible intra-African transactions while producing adequate output for generating income.

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Manufacturing sector in Nigeria and the reality of a "new normal"

The African Continental Free Trade Area was founded in 2018 across 54 African Union (AU) nations, which aimed to form a single marketplace for trades within Africa.

The agreement was brokered and signed on the 21st of March, 2018, in Kigali, Rwanda. With 1.2 billion people participating and a combined $3 trillion GDP, the African continental free trade area is the largest in the world concerning the number of contributing members.

READ: AfCFTA: Nigeria submits Instruments of Ratification, becoming the 34th State Party

Some of the African Continental Free Trade Area (AfCFTA) objectives were to strengthen Africa’s economic integration through a unified marketplace, facilitate investments and transportation, and promote competitiveness amongst member nations. The body also promotes gender equality, industrial development, and establishing a liberalized market through multiple negotiations.

The agreement required member nations to remove tariffs from about 90% of goods to encourage easy access to commodities across Africa. As said by the United Nations Economic Commission for Africa, by 2022, this agreement will increase intra-African trades by over 52%. The World Bank also sees this progress generating about $76 billion income for the world market.

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READ: GDP: Nigeria’s manufacturing sector on tight ropes

However, even with the deliberate efforts to increase intra-African trade rates, the statistical values remain low. In 2017, intra-African exports recorded only 16.6% in total, which is relatively low compared to 59% in Asia and 68% in Europe.

The African Continental Free Trade Area (AfCFTA) faces multiple limitations like inadequate information about processes, inadequate infrastructure, gender inequality, post-pandemic economic stress, etc. Some also fear that the significant financial gains from the diverse economies will be distributed unequally amongst member nations.

READ: AfCFTA: ACCI to launch Monitoring Review Roundtable to assess development

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Regardless of these many limitations, there are still hopes and efforts actively made to continue pushing.

The trade bloc’s secretariat, Wamkele Mene, told the Financial times, “We plan to transform Africa into an economy that no longer exports only primary commodities to be processed elsewhere.” He added their intention to stop using tariffs as an opportunity to generate revenues. Instead, these tariffs should be used for general economic and
industrial development.”

The state of the Nigerian manufacturing sector The National Bureau of Statistics, NBS, shows that a few major industries, including the food industry, dominate Nigeria’s manufacturing sector. Beverages, tobacco, cooking oil,
bread, and sugar have been some of the most manufactured products in the past few years.

READ: AfCFTA: Implementation will fulfill dreams of a united and prosperous Africa – Buhari

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This sector is responsible for about 10% of the nation’s GDP

Recently, the Nigerian manufacturing sector has shown significant growth owing to flexible policies that encourage local production. The government has been making efforts to reduce the costs of local consumer goods to promote more output of these products and other sectors.

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In recent times, the Central Bank of Nigeria, CBN, also took steps to allow loans with single-digit interest rates for companies in the manufacturing and agricultural sectors. The Nigerian government has also adopted several useful initiatives and port reforms to improve the manufacturing of goods within the country. Following these improvements, Nigeria has successfully ranked herself from 169th place in 2016 to 145th place in 2017
regarding the ease of doing business.

READ: FG tasks state governments to embrace AfCFTA’s economic opportunities

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Some of the benefits of the manufacturing sector in the Nigerian economy include job creation, increased GDP, provision of local consumer products, improved living standards, etc.

However, the manufacturing sector in Nigeria is currently underutilizing the natural resources available for processing. About 56% of the products consumed by the large Nigerian market are imported, whereas they can be manufactured locally. Common commodities like tomato purees, health products, vehicles, and even electronic devices are from foreign countries. It is a concern because most of the raw materials used to make these products are abundant and exported from Nigeria. Hence, the Nigerian manufacturing sector should expand on processing available raw materials instead of exporting them for processing in foreign countries.

The impact of the Nigerian manufacturing sector on the open borders

Nigeria has a significant impact on the African and world market, with almost 60% of its commodities imported from different parts of the world. However, The Nigerian open borders witness more imports than exports, which discourages local manufacturing and limits the revenue generated from the borders.

One of the primary sources of income of open borders in Nigeria is through tariffs collected from international trades. But, the African Continental Free Trade area’s policies encourage member nations to eliminate taxes on almost 90% of intra-African trades. Consequently, the value of tariffs generated for open borders will reduce by nearly 59%.

Fortunately, Nigeria is blessed abundantly with natural resources for manufacturing and exportation. With the government’s further investments in the manufacturing sector, the nation will produce goods locally and trade actively internationally.

In conclusion, the Nigerian manufacturing sector can contribute to the economy’s GDP by up to 23% and increase revenues generated from open borders via trades. Nigeria’s involvement in the AfCFTA should also encourage flexible intra-African transactions while producing adequate output for generating income. The initial contribution of the manufacturing sector summed up to about 24 billion naira. Expanding the sector, however, was supposed to increase its contribute to up to 32.5 billion naira.


About author

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Andrew Omosebi is an experienced and versatile writer, familiar with a diverse range of writing styles and formats. Andrew further bolsters his resume, with his impressive knowledge, that encompasses a wide variety of topics, niches, and genres. He incorporates this knowledge in his work remarkably, as he is able to create informative and captivating content under any niche. Besides his proficiency at content creation, Andrew is a business-savvy entrepreneur and a sports and arts enthusiast, with a few articles on both under his belt.

Nairametrics frequently publishes articles from experts such as financial analysts, economists, researchers and investors. We also feature articles from guest writers and bloggers who wish to push their views and opinions through our platform.To get your articles on Nairametrics, kindly send an email to [email protected] and we will publish it within 24 hours of approval by our editorial team.

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Nigeria’s high recurrent costs, low revenue and escalating debt numbers

Nigeria continues to face issues of poor revenue generation and a lack of will to efficiently manage its expenditure.

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Debt, Fitch downgradesS&P downgrades Nigeria, Nigeria’s credit rating faces downgrade by Fitch, Oil price crash, Coronavirus: The trouble that lies ahead for Nigeria, Avoiding 2016: What Nigeria should do to fight the coming economic storm, Fitch downgrades, federal government (FG)

In the recently released Q3 2020 debt report by the National Bureau of Statistics, the total public debt was N32.22trn as of 30 September 2020, with local debt making up 62.18% of the total public debt in the period while external debt made up 37.82%.

This is similar to the country’s debt structure in the same period of 2019 when domestic debt made up 68.45% of total public debt and external debt made up 31.55%. Whilst debt to GDP ratio remains within the acceptable threshold, we are increasingly concerned about the nation’s ballooning debt service to revenue ratio.

READ: U.S. budget suffers a deficit of $3.1 trillion in 2020, as pandemic slams the economy

Recall that the Federal Government of Nigeria following a series of revisions to the 2020 appropriation bill arrived at a fiscal deficit of N4.98trn. Based on the finance ministry data, an aggregation of debt monetization (N2.86trn) and New borrowings (N3.28trn) was used to finance the deficit.

READ: Heads of defaulting revenue generating agencies will be severely sanctioned – Buhari

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The 2021 appropriation bill forecasts a budget deficit of N5.60tn which would be financed mainly by borrowings of N4.69tn, privatization proceeds of N205.15bn and project linked bilateral & multilateral loans of N709.69bn. The country’s financing structure is of concern when one considers that the budget is tilted more towards recurrent expenditure than capital expenditure and raises questions on the sustainability of the current fiscal practices.

READ: FG directs the suspension of NIMC staff involved in extortion of NIN applicants

The significantly higher recurrent component of the budget continues to drag the country’s economic growth, resulting in poor infrastructural development. Spending more on capital projects can promote industrialization, improve local purchasing power and help the federal government’s diversification drive.

READ: NEM Insurance CEO/MD purchases 4 million additional shares worth N9.2 million

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Nigeria continues to face issues of poor revenue generation and lack of will to efficiently manage its expenditure. No significant cuts have been made to its overheads and statutory spending has continued to rise. Nigeria’s growing debt stock with little to show for it in terms of capital expenditure remains a major concern.

READ: Nigeria’s total public debt stock increased by N2.381 trillion in 3 months


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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How Africa’s youth contribute to the African society

The growth of technology has created an opportunity for several African youths to come up with new innovations.

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Africa has been called a lot of names – dark continent, the savage, the continent of Safaris, third world, emerging market continent and more recently, Sh**hole, but it is hardly called the Continent of Youths.

It is not a secret that the youths are the future of the African continent. They are already emerging and will be the next thought leaders, creators and innovators that will help galvanize the African continent to greater heights.

According to the United Nations in 2015, Africa has 226 million youth aged 15-24 and one-fifth of the world’s youth population. This means that one out of every five youth on earth is from Africa. The African Youth population is forecasted to grow by 42% by 2030. There should be a new focus on the youth in Africa, as we examine how much they contribute currently to the continent.

One area where youth are thriving well in Africa is in the tech sector. The sector has become an interesting source of Foreign Direct Investments and in 2019 accounted for close to half a billion-dollar raked into the continent. In 2020, – the Paystack/Stripes deal brought in about 200 million dollars. The growth of technology has created an opportunity for several African youths to come up with new innovations, which are even more helpful in the current fledging economic and social climate affected by the pandemic.

There are several examples of many African youths using technology to start new ventures. Mike Endale, an Ethiopian American based in Washington, D.C, who is the principal at BLEN Corp, an information technology firm that leads the Ethiopia COVID-19 Emergency Tech Volunteer Task Team and assists Ethiopia’s Ministry of Health. During the pandemic, they have recruited over 1,700 software engineers and have even created an Africa COVID-19 response toolkit.

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Temie Giwa-Tubosun, the founder of LifeBank in Nigeria, is another African youth making strides in the tech scene. Since its establishment in 2016, it helps to deliver 22,830 units of blood, according to Next Billion, to hospitals in Nigeria, which help connect donors to blood banks. Next Billion also stated that LifeBank conducts drive through COVID-19 testing and supply oxygen to health centers. The Lifebank recently expanded in East Africa. In December 20280, the US- Africa Business Center of the US Chamber in conjunction with the American Business Council Nigeria in recognition of the great impact of start-ups in the wake of the Pandemic, inaugurated a digital entrepreneurship competition.

African youths are also thriving in the entertainment sector, particularly in the music business.  The Afrobeats genre continues to rule the music world and the likes of Burna Boy, Davido, Mr. Eazi and Omah Lay, who are still in their 20’s, spearhead and remain the face of the genre. The international recognition of Afrobeats has given artists more visibility on the global forefront. This was the case for Davido, Mr. Eazi and Tiwa Savage, who were featured on the cover of the Billboard magazine. Music remains of significant importance and the youths are a big factor to the success of the industry.

In Nigeria, the music revenue grew from $26 million in 2014 to $34 million dollars in 2018, according to Statista. The music revenue in Nigeria is expected to increase to $44 million by 2023 as reported by Statista.

Africa’s youth are also flying high in the area of sports, particularly in soccer. Wilfred Ndidi and Kelechi Ihenacho of Nigeria (both players at Leicester City in the English Premier League) come to mind. Also, Percy Tau, a South African soccer player, who was with R.S.C Anderlecht in Belgium, will now be returning to his parent club, Brighton & Hove Albion in the premier league. Tau plays in a forward position and he is expected to make his debut for the seagulls (Brighton & Hove Albion) in the 2020-21 season of the premier league.

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Lastly, youths in Africa have also been influential on the activism forefront, especially in the last couple of years. This was evident in October of 2020, when several Nigerian youths took to the streets to fight against police brutality in the End SARS protests. In Uganda, Musicians like Bobi Wine’s foray into Politics first as a parliamentarian and presidential candidate is attracting more youth to get into politics.

Other youths like Christelle Kwizera, founder of Water Access Rwanda, have been involved in helping communities with access to water. According to Global Citizen, Kwizera’s plan is to eradicate water scarcity and to provide clean water for people in local communities. Currently, her organization has supplied 70,000 people in Rwanda with clean water. Kwizera’s efforts earned her the Cisco Youth Leadership Award at the 2020 Global Citizen Prize.

African youths definitely have a lot to offer in several sectors and this would be vital to the growth of the continent. African governments need to understand this and invest meaningfully and in a sustainable way on the youth population to reduce the migration drain.

The enthusiasm, the work rate, and efforts are why the current children of Africa have an opportunity to be wonderful leaders of tomorrow. With the right nurturing environment in place, Africa’s future is in safe hands.

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Written by Paul Olele

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World Bank’s global outlook amid COVID-19 surge

The World Bank’s projection for Sub-Saharan Africa (SSA) is expected to grow by 2.7%, while the expected growth for Nigeria is set at 1.1% in 2021.

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Recently, the World Bank published its January 2021 global economic prospects. The bank expects global growth to expand by 4% in 2021 from an estimated 4.3% contraction in 2020.

In the report, the World Bank expressed concerns about the recovery phase of many economies, especially the emerging and developing economies except policymakers can put in place robust and comprehensive policy framework to improve the existing frail business and economic environment caused by the unprecedented coronavirus pandemic.

The bank’s growth projection for advanced economies (AEs) and emerging & developing economies (EMDEs) including China was 3.3% and 5.0% in 2021 respectively. Sub-Saharan Africa (SSA) is expected to grow by 2.7%, while the expected growth for Nigeria is set at 1.1% in 2021.

The World Bank appears less optimistic about the growth prospects across the globe including Nigeria as many countries are enfeebled as a result of the ripple effect of the pandemic causing elevated debt levels, rising unemployment and with the new strain of Covid-19 in many countries resulting in renewed lockdowns and restrictions, growth estimates may not be met. The bank stresses that quicker vaccination process across the world would aid faster economic growth which could step up to 5%, while a possible delay in rollout of vaccines amid rising infections could hamper growth expansion to 1.6% in 2021.

The prospect of quick vaccination appears a little bleak to us at this time. To give perspective, according to the Center for Disease Control (CDC) a few days ago, only 6.7 million Americans had received at least the first dose of the vaccine and that is roughly 2% of America’s population in 2 months.

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The bank extended its weakened optimism to Nigeria as the country faces severe pressures from dwindling oil revenues, weak private investments, eroding consumer spending power and declining foreign investor participation.

In our opinion, restoring the economy to the path of sustainable growth requires government’s conscious efforts in addressing structural challenges impeding growth in the economy.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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