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Leveraging on Trade Facilitation to Grow the Economy

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Hakeem Adebayo reasons that the ratification of the Trade Facilitation Agreement by Nigeria is a major step towards diversifying the economy and taking advantage of global trade opportunities

Nigeria took a major step in its commitment to improve ease of doing business through trade facilitation on January 20 2017, when it submitted the instrument of acceptance of World Trade Organisation’s Protocol on Trade Facilitation Agreement (TFA) on the sideline of World Economic Forum in Davos, Switzerland.

Nigeria’s Minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah submitted Nigeria’s instrument to the Director General of WTO, Roberto Azevêdo at an event to mark the deposit. With this, Nigeria became the 107th WTO member state to ratify the agreement, while Nepal submitted its own instrument on January 26, 2017, thus needing just two more ratifications to reach the two-third threshold required for the TFA to come into force. Other African countries that have ratified include Botswana, Niger, Togo, Côte d’Ivoire, Kenya, Zambia, Lesotho, Mali, Senegal, Swaziland, Gabon, Ghana and Mozambique.

According to Enemalah, “Nigeria’s ratification of the Trade Facilitation Agreement is a reflection of our commitment to the WTO and a rules-based economy. It is evidence of President Muhammadu Buhari’s commitment to rapidly implement his presidential initiative on the creation of an enabling environment for business. Nigeria would like to see a strengthened WTO that reflects the development principles of developing countries like Nigeria.”

We believe that the minister and the Nigerian team worked tirelessly to push through the process, which I believe is another milestone for the country. This therefore positions the country on the right pedestal to harness expected gains of the TFA when it fully comes into force. TFA aligns with Nigeria’s objective of deepening the ease of doing business in the country through enabling policy environment.

Reactions continue to pour in since Nigeria submitted the Instrument to the WTO indicating that we are fully on board to harness immense opportunities offered by the protocol to global economy. Trade experts around the world see the ratification by Nigeria as an impressive step given her position in Africa as the continent’s largest economy.

Ease of Doing Business
President Muhammadu Buhari in October last year approved the establishment of the Presidential Council on Ease of -Doing Business to further strengthen the administration’s resolve to enhance ease of doing business. And in addition to correct the perception that Nigeria is a tough environment to do business. This will attract the much-needed foreign direct investment and local direct investment in Nigeria. Trade facilitation is a tool for economic development, inclusive growth and job creation. It is also in tandem with the policy of diversifying the economy from oil.

The WTO’s General Council adopted the resolution on protocol on Trade Facilitation Agreement at its summit in November 2014 to address challenges posed by barriers and constrains to trade across the member-states by the customs services. WTO during its 20th anniversary noted thus; “Under current border procedures, the average transaction can involve numerous steps. The Trade Facilitation Agreement (TFA) sets forth a series of measures for expeditiously moving goods across borders inspired by the best practices from around the world. The Agreement is ground-breaking in that, for the first time in WTO history, the commitments of developing and least-developed countries are linked to their capacity to implement the TFA. In addition, the Agreement states that assistance and support should be provided to help countries achieve that capacity.”

“An amendment protocol for the Trade Facilitation Agreement was adopted by the General Council in November 2014 to bring the TFA into the WTO’s legal framework. The Agreement will enter into force when two-thirds of WTO members ratify the TFA and deposit their instruments of acceptance with the WTO Secretariat. Hong Kong, China, became the first member to do so in December 2014.”

Domestication
The protocol on TFA was ratified by Nigeria’s National Assembly and subsequently assented to by President Buhari. The process for its domestication by Nigeria began in 2014, when the country submitted its Category A notification to the WTO outlining substantive provisions of the TFA it intends to implement upon entry into force of the Agreement. Observers see this as a good sign that the country is ready to align her economic strategic objectives and goals with results.

The protocol on Trade Facilitation Agreement aims to ease the flow of goods across the borders through removing several barriers that inhibits movement of goods across borders. Developing and least developed countries are beneficiaries of the TFA as it supports them to overcome seamlessly, several barriers and constraints that affect import and export across their borders. The immediate impact is that ease of doing business will improve by a wide margin resulting in improved revenue, reduction in customs processes as well as income for producers and traders. The TFA protocol is expected to usher in an era of ease of doing business by shortening requirements for documentations and number of days required to process them.

A WTO publication, Easing Flow of Goods Across Border: Trade Facilitation Agreement published to mark its 20th anniversary, notes that as at 2014, customs transactions from country to country records the following requirements for export and import respectively. For export, there are between two to eleven documentations, which span from six days to eight-six days to be concluded. While for import transactions, two to 17 documentations are required which span from four days to 130 days before finalization. The protocol on Trade Facilitation Agreement aims to ease the flow of goods across the borders through removing several barriers that inhibits movement of goods across borders.

Nigeria will benefit immensely from TFA in terms of inflow of foreign direct investment, job creation, capacity utilization in view of emerging investment friendly policy framework it will usher in. The evolving opportunities through FDIs, technology transfer it creates in return would boost the economy. There is consensus among experts that the size of Nigeria’s market makes it the most lucrative investment destinations in sub-Sahara Africa with a high return on investment. Nigeria is an emerging market, which makes it one of the new frontiers for investment considerations.

The key thing Nigeria must do now is how to leverage on the TFA to grow her economy. There is no better time than now to explore the opportunities inherent in the WTO to grow our economy by positioning the country to reap benefits from other global pool of investments. Additionally, Nigerians still stands to gain from the export of its products to other countries within the WTO framework, which aims to increase opportunities for businesses in Nigeria. The recognition this brings to Nigeria to the world stage is immense. It could not have come at better time than now that every effort is geared towards increasing Nigeria’s share of non-oil revenue sectors of the economy.
– Adebayo, a trade expert, writes from Abuja

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

NNPC Supplies 1.44 Billion Litres of Petrol in January 2021

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The Nigerian National Petroleum Corporation (NNPC) supplied a total of 1.44 billion litres of Premium Motor Spirit popularly known as petrol in January 2021.

The corporation disclosed in its latest Monthly Financial and Operations Report (MFOR) for the month of January.

NNPC said the 1.44 billion litres translate to 46.30 million litres per day.

Also, a total of 223.55Billion Cubic Feet (BCF) of natural gas was produced in the month of January 2021, translating to an average daily production of 7,220.22 Million Standard Cubic Feet per Day (mmscfd).

The 223.55BCF gas production figure also represents a 4.79% increase over output in December 2020.

Also, the daily average natural gas supply to gas power plants increased by 2.38 percent to 836mmscfd, equivalent to power generation of 3,415MW.

For the period of January 2020 to January 2021, a total of 2,973.01BCF of gas was produced representing an average daily production of 7,585.78 mmscfd during the period.

Period-to-date Production from Joint Ventures (JVs), Production Sharing Contracts (PSCs) and Nigerian Petroleum Development Company (NPDC) contributed about 65.20%, 19.97 percent and 14.83 percent respectively to the total national gas production.

Out of the total gas output in January 2021, a total of 149.24BCF of gas was commercialized consisting of 44.29BCF and 104.95BCF for the domestic and export markets respectively.

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Economy

NNPC Says Pipeline Vandalism Decrease by 37.21 Percent in January 2021

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The Nigerian National Petroleum Corporation (NNPC) said vandalisation of pipelines across the country reduced by 37.21 percent in the month of January 2021.

This was disclosed in the January 2021 edition of the NNPC Monthly Financial and Operations Report (MFOR).

The report noted that 27 pipeline points were vandalised in January 2021, down from 43 points posted in December 2020.

It also stated that the Mosimi Area accounted for 74 percent of the total vandalised points in Janauray while Kaduna Area and Port Harcourt accounted for the remaining 22 percent and 4 percent respectively.

NNPC said it will continue to engage local communities and other stakeholders to reduce and eventually eliminate the pipeline vandalism menace.

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Economy

Nigeria’s Food Inflation Hits 22.95 Percent in March 2021

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Food inflation in Africa’s largest economy Nigeria rose by 22.95 percent in March 2021, the latest report from the National Bureau of Statistics (NBS) has shown.

Food Index increased at a faster pace when compared to 21.70 percent filed in February 2021.

Increases were recorded in Bread and cereals, Potatoes, yam and other tubers, Meat, Vegetable, Fish, Oils and fats and fruits.

On a monthly basis, the food sub-index grew by 1.90 percent in March 2021. An increase of 0.01 percent points from 1.89 percent recorded in February 2021.

Analysing a more stable inflation trend, the twelve-month ended March 2021, showed the food index averaged 17.93 percent in the last twelve months, representing an increase of 0.68 percent when compared to 17.25 percent recorded in February 2021.

Insecurities amid wide foreign exchange rates and several other bottlenecks that impeded free inflow of imported goods were responsible for the surged in prices of goods and services in March, according to the report.

The Central Bank of Nigeria-led monetary policy committee had attributed the increase in prices to scarcity created by the intermittent clash between herdsmen and farmers across the nation.

However, other factors like unclear economic policies, increased in electricity tariffs, duties, subsidy removal and weak fiscal buffer to moderate the negative effect of COVID-19 on the economy continue to weigh and drag on new investment and expansion of local production despite the Federal Government aggressive call for improvement in domestic production.

Nigeria’s headline inflation rose by 18.17 percent year-on-year in the month under review.

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