Business/Economy

AfCFTA: Osinbajo highlights policy actions

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2 Sep 2021 8:42 AM GMT
AfCFTA: Osinbajo highlights policy actions
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Vice President Yemi Osinbajo says the African Continental Free Trade Area (AfCFTA) offers limitless opportunities for the industrialisation of Africa. Osinbajo said that authorities across the continent must take the right policy actions to actualise the prospects in AfCFTA such as the protection of local industries and improving value chains. Osinbajo’s spokesman, Laolu Akande, in […]

Vice President Yemi Osinbajo says the African Continental Free Trade Area (AfCFTA) offers limitless opportunities for the industrialisation of Africa.

Osinbajo said that authorities across the continent must take the right policy actions to actualise the prospects in AfCFTA such as the protection of local industries and improving value chains.

Osinbajo’s spokesman, Laolu Akande, in a statement on Thursday in Abuja, said the vice president delivered a pre-recorded message at a Roundtable on Industrialisation in Africa.

The theme of the event organised by the Manufacturers Association of Nigeria (MAN) to celebrate its Golden Jubilee, is “Positioning African Industries for Economic Transformation and Continental Free Trade.”

The vice president said that AfCFTA was indispensable if industrial development was to take off in Africa because it offered wider markets and economies of scale which were essential for manufacturing to be competitive.

“We must take policy actions to create an environment in which businesses can thrive.

“To start with, we must adopt the right type of macroeconomic and industrial policies.

'It is important for African governments to provide a stable macroeconomic environment which avoids and smoothens out volatility in prices, sharp deteriorations in the current account and budget deficits and of course, rapid accumulation in debt burdens.”

Osinbajo said that on the industrial side, policies like tariffs, quotas, subsidies and non-tariff barriers which protected infant industries so that they could create jobs and enable learning were vital.

According to him, well negotiated rules of origin are important in the context of the free trade agreements as they are key to preventing trans-shipment and the deflection of trade.

He said that, without them, firms from non-state parties could set up simple labelling operations in one member state with a view to shipping already finished products to another member state without really adding any value.

Osinbajo said that it was important for MAN to involve itself in an advisory capacity to government negotiators.

“As we go further into the rules of origin negotiations–these rules negotiations have, of course, started– but I think as we go on, we should get more contributions and advise from MAN.

“Our manufacturers must also strive to become competitive after clearly specified time periods so that they can withstand the ever present danger of stiff competition from imports.

“In other words, while our manufacturing industries must be nurtured and supported, they cannot remain infants forever.’’

He emphasised the need to enhance industrial competitiveness, citing Nigeria and South Africa.

Osinbajo said that one of the ways to increase the competitiveness of African industries was to develop and deepen regional value chains.

“Wherein production systems starting from conception and design right through to supply of raw materials, processing, transport, storage, marketing and sales take place within our countries and continent.

“ When we export commodities to the rest of the world, we are also exporting jobs and the positive spillover effects such as learning that come with manufacturing are lost.

“Happily, we are already beginning to see some green shoots emerging in this regard as Nigerian fertiliser blenders obtain phosphates from Morocco for blending with urea produced in our petrochemical plants.

“Similarly, South African car manufacturers already buy leather for car seats from Botswana; we however need much more of such activities.

“If we are to see the kind of manufacturing activity that we desire, first of all, we need to develop a strong infrastructural base.’’

He said that extensive, cheap and affordable infrastructure was vital for the success of African economies.

According to him, there is need for a network of roads, bridges and rail that will facilitate the movement of goods and people alongside building electricity plants to power factories and the broadband networks that lubricate modern business.

“It would also be essential in the interim to develop sites with dedicated infrastructural and regulatory structures like Special Economic Zones and Shared Facilities for small businesses.

“There must be to ease payments across borders and implementation of the protocols on free movement of persons.

“It is particularly important in this regard to rapidly operationalise the effort by Afreximbank to establish a Pan-African Payments and Settlement Platform.

“ This will go a long way in creating the desired continental payments system and also in facilitating cross-border informal trade which is estimated to be about 93 billion dollars per annum,” he said.

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