AfCFTA steps up local content initiatives in Nigeria
With the implementation of the African Continental Free Trade Agreement (AfCFTA) in January of this year, Nigeria has the opportunity to dramatically increase local content initiatives, expand economic activity beyond its borders and stimulate local capacities.
The AfCTFA is seen as the foundation for improved transcontinental trade in Africa. Signed by 54 countries, the agreement includes the reduction of tariff and non-tariff barriers, the simplification of customs procedures and the elimination of red tape with the aim of creating a single market for goods, people and services. Representing Africa’s largest economy with over $ 500 billion in gross domestic profit (GDP) and a population of 200 million, Nigeria is poised to take significant advantage of investment and trade opportunities created by the Agreement.
According to the African Development Bank (AfDB), the Nigerian economy is expected to grow 2.9% in 2021. With industries such as energy, manufacturing, agriculture and mining contributing significantly to GDP , all of which are expected to grow exponentially with the increase in technology and investment, the country is on its way to becoming a multi-sector giant. With AfCFTA, this goal can still be achieved as new and improved business opportunities create improved regional supply networks, national employment opportunities and capacity building.
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The AfCFTA strengthens the continent’s energy transition
AfCFTA benefits supply networks in Nigeria
One of the main benefits initiated by the AfCFTA concerns regional supply chains with abundant opportunities. First, local Nigerian businesses have new opportunities for regional exports, with newly created supply chains made both efficient and sustainable through the deal. Progressive policies and simplified customs procedures make regional trade more attractive to domestic producers and further increase foreign exchange in the country.
Second, established regional networks offer lucrative investment opportunities for local and international financiers. Requiring capital injections into the distribution and logistics supply chain, as well as transport infrastructure, the AfCFTA has created new business opportunities for multiple sectors while increasing direct investment in the economy.
Finally, supply chains help meet regional demand, with Nigerian products and services being used not only nationally but also in neighboring countries and across the continent. Nigeria is already exploiting regional trade opportunities, contributing around 76% of total trade volume in the Economic Community of West African States region. The AfCFTA will only reinforce this trend, creating new opportunities and stimulating economic and trade growth.
Job creation and capacity building
The AfCFTA has created important opportunities for Nigeria to stimulate job creation and capacity building. With the creation of a single liberalized market for trade in services for the continent, the agreement will enable both trade in goods and services as well as human capital.
As a result, Nigeria, with a high number of multisectoral professionals compared to other regional markets, will be able to extend its knowledge and expertise across borders. Nigerian workers will not only be able to take advantage of employment opportunities in the countries of the region, but these countries will be able to meet the demand for skilled workers, with increased knowledge sharing and skills transfer.
The result is therefore mutually beneficial, with the agreement serving as the foundation for the development of continental human capital.
Meanwhile, with Nigeria’s Oil and Gas Industry Content Development Act (2010) – a comprehensive policy to promote local participation, technology transfer and sustainable macroeconomic growth – already ensuring indigenous businesses the opportunity to become more involved in the oil and gas industry. , the AfCFTA will only reinforce this trend, as more opportunities are created not only at the national but regional level.
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Effect of the African Continental Free Trade Area on the Oil and Gas Sector
As more international oil companies enter African markets and governments push for increased capacity building and skills transfer, regional countries, and not just resource-rich countries, stand to benefit.
Verner Ayukegba, Senior Vice President of the African Energy Chamber (AEC) and Director of Operations at DMWA Resources: âRepresenting Africa’s largest economy and one of the most formidable oil and gas industries, Nigeria should benefit significantly from the opportunities created by AfCFTA. Specifically, the deal will dramatically improve local content, ensuring that the value created by the extractive industry goes beyond resource revenues, with job creation, capacity building and skills transfer. expanding throughout the region.
âNigeria has emerged as a leader in local content, with progressive policies and a supportive legislature ensuring that local people not only benefit from developments in the energy sector, but are a key catalyst for that growth. The AfCFTA will bring Nigeria into a new era of economic progress, with more countries to follow soon. “