Acting Director General of the Nigerian-American Chamber of Commerce, Wofai Samuel, in an interview with KOLAWOLE OLANIYIdiscussed relevant issues affecting the Nigerian economy and the role of the chamber in promoting trade
Nigeria’s annual inflation rate rose to 19.64% in July 2022, the highest since September 2005. Meanwhile, the national debt reached N41.6 billion in the first quarter of 2022, compounded by a unemployment of 33.3%. How concerned is the NACC about these negative indicators?
This is certainly a source of concern as Nigerians have also had to deal with the rising cost of goods and services as a result of the Russian-Ukrainian war, which caused energy prices to rise significantly, resulting in a global energy crisis and a food supply problem. Another source of concern may be related to the continued deterioration of the country’s macroeconomic performance over the past five years. Creditors are often concerned about debtor countries whose economies are not well managed and perceive them as risky borrowers.
To change its perception as a country at risk of debt, Nigeria must manage its debt very carefully and avoid a return to the era of the early 2000s, when the country’s debt-to-GDP ratio was close to 60%. Nigeria should reduce the high cost of governance, curb corruption and promote faster economic growth.
What pro-market and pro-investment policies does the chamber want to see the Nigerian government implement?
The government should encourage foreign direct investment through financial incentives, well-established infrastructure, desirable administrative processes and regulatory environment, investment in education, and political, economic and social stability. legal. Positive investment outcomes are not automatic for countries, and depend on policies and other factors. Specific industrial and macroeconomic policies should be used to attract and enhance FDI and strengthen linkages and spillovers to domestic firms.
The country’s industrial policy should offer permanent or temporary tax advantages to multinational companies and impose performance requirements. The government should also encourage interaction between multinational enterprises, research institutes and national enterprises through linkage programs, among others. As a trade policy instrument, the establishment of free trade areas or export processing zones in countries with a stable economic environment and a commitment to trade liberalization will also attract growth. export-intensive. Others may include overhauling infrastructure and human capital resources as well as revising foreign exchange policies.
As a 62-year-old organization and the oldest bilateral chamber in West Africa, can you briefly recall some of the NACC’s successes in promoting trade and development in Nigeria?
The chamber has organized trade missions to the United States, building on the Africa Growth & Opportunities Act, a US trade law enacted on May 18, 2000 as Public Law 106 of the 200th Congress, and has since been renewed until 2025. missions for our members have helped them minimize risk by exploring new markets by exposing their platforms more to new market opportunities.
We have an ongoing trade mission to Miami, Florida, and it is scheduled for October 8-15, 2022. The chamber will host nearly 20 delegates in its trade mission, with an additional opportunity to attend the annual AfrICANDO conference on the trade and investment and Expo.
In the area of networking, the chamber has organized a series of business conferences, seminars and forums with financial, multinational and diplomatic institutions such as the African Export-Import Bank, the United States Consulate General , Chevron, the United Bank for Africa, and the Nigerian Export Promotion Council, to name a few.
All of these served as channels for chamber members to explore new relationships, learn important new skills to grow their business, and meet new people. The chamber also launched the 13-13-13 project during its recent retirement. It is a roadmap and guide for future engagements which, if successful, will serve as a model for bilateral chambers across the country and the West African region.
Some proponents of ultra-nationalism believe that opening the economy through trade has zero-sum consequences. Well-industrialized economies, they say, have the means to widen market inequalities. Does the NACC have effective strategies to ensure that trade alliances and partnership between Nigeria and the United States are positive sum?
The United States has been a longtime partner and friend of Nigeria since independence, supporting our economic and social aspirations. The country is the second largest trading partner of the United States in Africa, with bilateral trade between the two countries totaling more than $10 billion in 2019. The United States is one of the largest foreign investors in Nigeria with its FDI totaling $5.5 billion in 2019. As a result, our alliances and partnerships cannot be overstated.
It is no wonder that US Vice President Kamala Harris on September 2, 2022 said: “More broadly, leadership from Africa is critical to addressing all of the global challenges we face, and to that end , Nigeria is essential.
Trade is essential to ending global poverty. Countries that are open to international trade tend to grow faster, innovate, improve their productivity, and provide higher incomes and more opportunities for their people.
The proof of this is clear with industrialized economies such as the United States, United Kingdom, Germany, Japan and France and newly industrialized economies such as Malaysia, South Africa, Thailand, Brazil, among others. Our strategy to ensure that business alliances and partnership between Nigeria and the United States are productive is primarily suited to a consistent analysis of the results of alliances already formed. These reviews help improve what exists, ask our partners what value they would like to see from their alliances, and further strengthen engagements and activities around those value propositions.
What is the chamber’s position on the African Continental Free Trade Agreement, given that industry operators like the Manufacturers Association of Nigeria once opposed its implementation?
The chamber was enthusiastic about the AfCFTA since its inception in 2018 and has worked closely with institutions aligned with the AfCFTA. One of them is the African Export-Import Bank. One of the many initiatives we have initiated with AFREXIM is the collaborative breakfast we hosted, tasking trade experts and government with rolling out mechanisms to maximize AfCFTA opportunities one year after the launch. implemented. Our call became relevant following observations that the country was not leveraging the benefits of the AfCFTA due to structural and business issues such as inadequate payment system integration, logistics and trust.
Nigeria is to use the Pan African Payments and Settlement System, a product of AFREXIM Bank, which is an efficient payment system to facilitate intra-African trade. It is one of the main pillars of the AfCFTA, a platform that facilitates instant cross-border payments in local African currencies. We highlighted that the platform, if used, would save African traders $5 billion a year in currency convertibility. Under the AfCFTA, West Africa will experience the largest drop of 12 million people living in extreme poverty, more than a third of the total for all of Africa.
Nigeria’s annual GDP growth averaged 7% between 2000 and 2014. The highest we have had in the last 3 years is 3.65% in 2021. How can the country’s growth return in the glorious era of the 2000s?
These are crucial times, with great challenges, no doubt. But there are opportunities for gains ahead. If our leaders put in place policies to revitalize the economy and address common priorities in the short, medium and long term, there is a chance to fuel confidence and build resilience – key ingredients for growth current and future economy. First, we need inclusive growth. To achieve this in the country, there is a need to attract more unbanked transactions via SME growth through interest-free and collateral-free loans. In the immediate term, Nigeria needs to ensure that economic growth is more inclusive.
A good reform of the energy sector will be essential. The cost of doing business is very high due to inefficiencies in the electricity sector. Getting policies to make sure the country resolves this case once and for all is also important. The federal government should improve factor quality by strengthening tenure security, improving educational outcomes, liberalizing the trade regime, and improving trade and transport facilitation to help develop value chains and facilitate the efficient reallocation of labor. production factors. More fiscal space needs to be created through domestic revenue mobilization, investments in health, education and infrastructure.
In your dealings with potential US investors, what do they cite as their biggest concern about investing in Nigeria, and why is the country not seeing an influx of US investors into the sector? electricity ?
Nigeria’s trade regime is protectionist in key areas. The high tariffs, restricted foreign exchange availability for 44 import categories, and the banning of many other import products are intended to stimulate the growth of the domestic agricultural and manufacturing sector. The 2020 economic downturn put pressure on Nigeria’s foreign exchange reserves. Both domestic and foreign companies frequently cite lack of access to foreign currency as a significant impediment to doing business.
The country’s underdeveloped energy sector is a bottleneck for large-scale economic development and has forced most companies to generate a significant share of their own electricity. The World Bank ranked Nigeria 169 out of 190 countries for the ease of getting electricity for businesses. Reform of the country’s power sector is underway, but investor confidence is still weakened by price and regulatory uncertainty. Security remains a concern for investors in Nigeria due to violent crime, kidnapping for ransom and terrorism in some parts of the country.