Nigeria’s exports to the United States increased by $2 billion in 2021, according to the latest data from the African Growth and Opportunity Act (AGOA).
Africa’s largest economy exported goods valued at $3.48 billion to the United States in 2021, representing an increase of $2 billion from $1.48 bllion recorded in 2020. In the last 10 years, exports to the United States increased just three times, in 2016, 2017 and 2021.
Nigeria exported the most in 10 years to the United States in 2011 when it exported goods worth $33.85 billion. This declined by 43.8% to $19 billion in 2012. The value moderated further in the following year of 2013 to $11.7 bllion and then $3.8 billion in 2014.
The decline continues in 2015 as exports value dipped once more to $1.9 billion. However, grew for the first time in five years in 2016 when it rose to $4.17 billion.
The momentum was sustained in 2017 when it grew to $7.05 billion before continuing its decline in 2018. Nigeria’s exports valued stood at $5.62 billion in 2018 and $4.6 billion in 2019.
COVID-19 lockdown, however, plunged exports to United States by the most in 2020 to $1.48 billion. Reopening of global economy bolstered exports value in 2021, but still below pre-pandemic value of 2019.
“COVID was a very important factor and not just export to the US but there was a general business decline. Not just locally but globally,” said Sola Obadimu, DG, Nigerian-American Chamber of Commerce (NACC). “It wasn’t anything peculiar to Nigeria by a long shot,” he said of the recovery in exports by 2021.
AGOA is a United States Trade Act enacted in May 2000 to enhance market access to the US for qualifying Sub-Saharan African (SSA) countries.
“Under AGOA, there is a continual attempt to educate people, particularly on the issue of packaging and also in terms of supporting SMEs that are into exports in the areas of finance, quality issues, keeping to timelines and whatever letters of contracts they have with their clients,” Obadimu. “We hope things will get better particularly as we are on the final home lap to 2025, which is the terminal date for AGOA unless there is any form of extension.”
Zambia’s Finance Minister Faces Dual Challenge in Upcoming Budget Address
As Zambia’s Finance Minister, Situmbeko Musokotwane, prepares to present the nation’s budget, he finds himself at a pivotal crossroads.
The second-largest copper producer in Africa is grappling with two pressing concerns: debt sustainability and soaring living costs.
Debt Restructuring Dilemma: Musokotwane’s foremost challenge is finalizing the $6.3 billion debt-restructuring deal with official creditors, led by China and France.
Delays have hindered disbursements from the International Monetary Fund (IMF) and left private creditors in limbo.
To reassure investors, a memorandum of understanding with the official creditor committee is urgently needed.
President Hakainde Hichilema emphasizes the importance of sealing these transactions to signal closure on this tumultuous chapter.
Plummeting Tax Revenue: The key copper-mining industry, which accounts for 70% of Zambia’s export earnings, is in turmoil.
First-half mining company taxes and mineral royalty collections have nosedived, adding to economic woes.
This, in turn, has depreciated the local currency, exacerbating imported inflation, particularly in fuel prices.
Rising Food Inflation: Musokotwane faces mounting political pressure to combat soaring living costs, with annual inflation reaching an 18-month high of 12%. Corn meal prices, a staple in Zambia, have surged by a staggering 67% in the past year.
Neighboring countries’ demand for corn has led to smuggling and further price spikes, raising concerns about food security.
Currency Woes: The kwacha’s value has been a barometer for the nation’s economic health. It depreciated by 16% since June 22, the worst performance among African currencies, reflecting the ongoing debt-restructuring uncertainty.
In his budget address, Musokotwane faces the daunting task of striking a balance between debt management, economic stability, and alleviating the burden on Zambia’s citizens.
The international community will keenly watch to see if his fiscal measures can steer the nation toward a path of recovery and prosperity.
IMF Urges Sub-Saharan African Nations to Eliminate Tax Exemptions for Fiscal Health
Sub-Saharan African countries have been advised by the International Monetary Fund (IMF) to tackle their fiscal deficits by focusing on eliminating tax exemptions and bolstering domestic revenue rather than resorting to fiscal expenditure cuts, which could hamper economic growth.
The IMF conveyed this recommendation in a paper titled ‘How to avoid a debt crisis in Sub-Saharan Africa.’
The IMF’s paper emphasizes that Sub-Saharan African nations should reconsider their overreliance on expenditure cuts as a primary means of reducing fiscal deficits. Instead, they should place greater emphasis on revenue-generating measures such as eliminating tax exemptions and modernizing tax filing and payment systems.
According to the IMF, mobilizing domestic revenue is a more growth-friendly approach, particularly in countries with low initial tax levels.
The paper highlights success stories in The Gambia, Rwanda, Senegal, and Uganda, where substantial revenue increases were achieved through a combination of revenue administration and tax policy reforms.
The IMF also pointed out that enhancing the participation of women in the labor force could significantly boost Gross Domestic Product (GDP) in developing countries.
The IMF estimates that raising the rate of female labor force participation by 5.9 percentage points, which aligns with the average reduction in the participation gap observed in the top 5% of countries during 2014-19, could potentially increase GDP by approximately 8% in emerging and developing economies.
In a world grappling with the weakest medium-term growth outlook in over three decades, bridging the gender gap in labor force participation emerges as a vital reform that policymakers can implement to stimulate economic revival.
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