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AfCFTA: Nigeria Imports to Rise by 251% -Report

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  • AfCFTA: Nigeria Imports to Rise by 251% -Report

A research conducted by the Centre for Trade and Development Initiatives, University of Ibadan, showed the newly signed African Continental Free Trade Area agreement could increase Nigeria’s import by at least 251 percent in the next 15 years.

The research was based on goods currently attracting 20 percent import duty.

Findings from the research showed Nigeria had the lowest import penetration from other African nations in Africa. Therefore, the inability to penetrate Nigeria, Africa’s largest market, has created interests among African nations, the report stated.

“This obviously makes the country an export target for many African countries in the AfCFTA. Nigeria is trailed by South Africa, Tanzania, Cameroun and Egypt in the same level recording about 30 per cent import penetration,” it stated.

The report categorically stated, “A three-phase liberalisation tariff rates from five per cent, 10 per cent, and 20 per cent to zero will likely generate higher surge of imported manufactured goods to the tune of about 159.5 per cent, 183 per cent and 251.4 per cent, respectively on the average during the 15-year period. The import growths would be higher if there were no room for exclusion.”

The research endorsed by the Manufacturers Association of Nigeria sought to investigate the likely impact of AfCFTA on the manufacturing sector.

It also explained that “Import will surge in all the manufacturing sectoral groups and by extension the77 subsectors in the third phase of the liberalisation. Particularly, tariff cuts would trigger increases in import for food, beverages and tobacco, 91 per cent; chemical and pharmaceutical products, 180.7 per cent; plastic and rubber products, 111.6 per cent; wood and wood products, 96.2 per cent; textile, apparel and footwear, 55.2 per cent; non-metallic, 67.2 per cent; electrical and electronics, 218.2 per cent; and motor vehicles and Assembly, 2000 per cent.”

The research concluded that because of the high manufacturing cost in Nigeria compared to the continental average, the trade agreement would have a negative impact on the sector.

It stated, “The change in domestic outputs of manufacturing sector is negative and ranges from -10.00 per cent to -0.228 per cent; thus indicating that operators in the sector may close shop.

“Investment and employment in all industries will fall in the third phase (2029-2033) implementation of AfCFTA.”

The research is in line with Investors King analysis that the AfCFTA agreement will turn Nigeria to dumping ground of African products given Nigeria’s current challenges.

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 long experience in the global financial market.

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Economy

Oil Prices Decline on Rising COVID-19 Cases

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Global Oil Prices Dipped on Friday as New COVID-19 Cases Jump Globally

Global oil prices decline on Friday as the number of confirmed COVID-19 cases surged across the world.

Brent crude oil, against which Nigerian oil is priced, declined from $43.47 per barrel it traded on Thursday during the Asian trading session to $41.60 per barrel on Friday at around 11:39 am Nigerian time.

global Oil prices While the price of US West Texas Intermediate (WTI) crude oil dipped from $40.97 per barrel it traded on Thursday to $38.78 on Friday.

Oil traders and investors are worried that the rising number of COVID-19 new cases would disrupt demand for the commodity and force refineries to shut down once again.

“I do not suspect many oil traders will be looking to place significant bids in the market today, suggesting prices may continue to wallow into the weekend,” said Stephen Innes, chief global markets strategist at AxiCorp.

Despite efforts by both OPEC plus and other top oil producers to halt falling oil prices and reduce global oil glut, the lack of a cure for COVID-19 remained global concerns.

As previously stated on this platform, until a cure is found the world would have to find a way to either work through COVID-19 or shut down activities completely.

This is coming a day after the Federal Government of Nigeria announced that it was putting school resumption plan on hold following the latest COVID-19 report that shows Nigeria’s confirmed cases crossed 30,000 on Wednesday.

In the United States, more than 60,000 new COVID-19 cases were reported on Thursday, forcing lawmakers to start contemplating the second phase of COVID-19 lockdown.

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Economy

We Are Losing N13.9bn Monthly Because FG Caps Tariff – Discos

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Discos Says it is Losing N14bn Monthly Because of NERC Capped Tariff

The Nigerian power Distribution Companies (Discos) have said they a losing N13.9 billion in revenue every month because the Nigerian Electricity Regulatory Commission, limited how much they can charge for consumption.

Ernest Mupwaya, the Managing Director, Abuja Electricity Distribution Company, made the statement during a presentation on behalf of the Discos to the House of Representatives Committee on Power.

The statement was after the Discos demanded realistic indices before the implementation of the proposed service reflective tariff, which was supposed to be implemented on July 1.

Mupwaya said there were some outstanding requirements before the service reflective tariff could be implemented.

“One of them is the removal of estimated billing caps. The financial impact of the Capping Order is an average loss of N13.9bn monthly, thereby, undermining or jeopardising the minimum remittance requirement,” Mupwaya stated.

The July 1 service tariff implementation was halted by members of the National Assembly, who prevailed on the Discos to shelve the date to the first quarter of 2021 due to the current economic challenges in Nigeria.

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Gbajabiamila Says Nigeria Can’t Compete in AfCFTA With Weak Industries

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Nigeria Must Ramp up Industrialisation to Prevent Dumping by Other Nations

The Speaker of the House of Representatives, Femi Gbajabiamila, has said the nation can not compete effectively in the African Continental Free Trade Area (AfCFTA) with weak industrialisation and manufacturing activities.

Gbajabiamila disclosed this while receiving Adesoji Adesugba, the newly appointed Managing Director of the Nigeria Export Processing Zones Authority.

The details of the visit were made public on Thursday in a statement titled, “AFCFTA: House Speaker tasks Nigeria on industrialisation through free trade zones.”

Gbajabiamila was quoted as saying “We must act proactively so that we don’t become a dumping ground for other African nations.

“Our best option in this circumstance is to immediately set machinery in motion to ensure the effective functioning and flourishing of our export processing zones.

“We must remove all bottlenecks and perfect all stumbling blocks. We will then be fully prepared for AfCFTA and also generate massive jobs for our unemployed youths and enhance our foreign earnings.”

He added that the nation must as a matter of national emergency ramp up industrialisation through free trade zones and other effective means to compete with South Africa, Africa’s most industrialised economy and other African nations.

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