Trade agreements are veritable instruments through which countries open up their economies and markets to commercial opportunities available in the global market.
Like every other nation in the world, Nigeria has entered into several trade agreements to expand and strengthen the nation’s economic perimeters.
Nigeria has many trade agreements signed under the International trade agreements, regional trade agreements, bilateral trade agreements, and memorandums of understanding.
For instance, as of the last quarter of 2021, Nigeria had bilateral investment agreements with 31 countries, with 15 still in force.
Most of the agreements come with the benefits of tariffs reduction, tax incentives, and trade restrictions, among others.
They also boost foreign earnings, promote economic expansion and improve the balance of payments for the country.
The various trade agreements have positively impacted the Nigerian economy in terms of boosting revenue earnings and improved productivity.
The agreements have facilitated trade between Nigeria and its counterparts both at the continental and intercontinental levels in terms of imports and exports.
It is, however, important to state that Nigeria is yet to get the maximum benefits from these agreements due to some inadequacies.
For instance, Nigeria’s trade deficit with China worsened in 2021 as Nigeria imported N6.53 trillion worth of goods from China between January and September 2021, which is 14.8 per cent higher than the N5.69 trillion worth of goods imported from the country in the whole of 2020, and 51.2 per cent above total imports from the Asian nation in 2019 valued at N4.32 trillion according to the National Bureau of Statistics.
Going by the above, the importations are likely to turn the country into a dumping ground for imported products rather than grow the economy.
Taking the African Continental Free Trade Area, AfCFTA into consideration, though relatively new as it came into effect on January 1st 2021, the agreement is expected to reduce trade tariffs by over 90% by 2022.
It is expected to open up Nigerian businesses to a market of over 1.2 billion people and a GDP of $2.5 trillion.
Nigeria is one of the most competitive on the continent. It will also enjoy an expansion of markets for exporters and the creation of jobs through trade facilitation and ease of doing business which will impact economic growth.
According to the Secretary of the National Action Committee on AfCFTA, Francis Anatogu, “from the trade pact, Nigeria aims to double its export trade to $50 billion within the decade”.
But all these can only be achieved if the necessary infrastructure, quality control checks and relevant policies governing exports and imports are put in place.
Also, looking at the United States and Nigeria, the two countries have a bilateral Trade and Investment Framework Agreement, and Nigeria is eligible for preferential trade benefits under the African Growth and Opportunity Act (AGOA).
Under the AGOA, there is an opportunity for benefiting countries to export more than 6,000 commodities to the US without duty or tariff.
For Nigeria, this will mean exporting more than oil, diversifying the economy by growing other potential sectors and exploring areas such as agriculture, mining and others for export of produce, job creation, increased revenue and other opportunities that will enhance development and economic growth.
However, this has not been the case as Nigeria’s main export has been oil. In the years of exploring the trade act, Nigeria has only featured well in the energy-related products sector, leaving behind other sectors such as agriculture, minerals, metals, and textiles. These sectors also have huge potentials that can fetch more revenues for the Nigerian government and grow the economy.
Challenges such as inadequate infrastructural provision, weak manufacturing base, poor packaging standards, and the economy’s non-diversification have hindered Nigeria from benefiting optimally from most of these agreements.
Certain things need to be put in place to change the discourse and avail Nigeria of the numerous opportunities available.
Firstly, the government needs to see beyond oil and grow other sectors of the economy. Diversifying the economy will open up other sectors of the economy, thereby creating opportunities for manufacturing in such areas, which produce valuable products that can compete favourably with their counterparts and contribute meaningfully to export earnings and make effective use of existing bilateral agreements.
Also, investment in the development of Nigeria’s ailing manufacturing industry is of utmost importance. This can only come into being with adequate infrastructure, which will aid better manufacturing and tackle the issue of low quality, which arises primarily due to the high cost of production.
Building infrastructures such as road and rail networks are also crucial for cross border trade within the continent and must be given reasonable consideration.
Also, urgent reforms are needed to improve the country’s ease of doing business and competitiveness, which are crucial to investments by the various countries involved in the trade pacts as a conducive environment attracts valuable investments.
Another important aspect is that of improving on standards. Government must empower its relevant agencies like the Nigerian Export Promotion Council, the Standard Organisation of Nigeria and others to see to it that products from Nigeria meet up with international standards in terms of quality and packaging to compete favourably among others.
Nigeria also needs to build on its comparative advantage of a growing population and abundant resources by developing content. Doing this will encourage small and medium enterprises that will grow to become producers of exportable products that can contribute to foreign earnings.
Having noted all these, it is established that for Nigeria to get the best out of all its trade agreements and use such for the development of its economy, it must go beyond paper works and diplomatic nuances and cover up the inadequacies to maximise opportunities.