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How the African Continental Free Trade Agreement (AfCFTA) is scaling up local content initiatives in Nigeria

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How the African Continental Free Trade Agreement (AfCFTA) is scaling up local content initiatives in Nigeria

AfCFTA will bring Nigeria into a new era of economic progress, with more countries to follow soon

JOHANNESBURG, South Africa, September 28, 2021 / APO Group / –

Implemented on January 1, 2021, the African Continental Free Trade Agreement (AfCFTA) 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 benefits (GDP) and a population of 200 million, Nigeria is poised to take significant advantage of investment opportunities and businesses created by AfCTA.

According to the African Development Bank, the Nigerian economy is expected to grow 2.9% in 2021. With industries such as energy, manufacturing, agriculture and mining contributing significantly to GDP, which are expected to grow. All growing exponentially with the increase in technology and investment, the country is on its way to becoming a multisectoral giant. With AfCFTA, this goal can still be achieved, with new and improved business opportunities creating improved regional supply networks, national employment opportunities and capacity building.

Regional supply networks

One of the main benefits initiated by the AfCFTA concerns regional supply chains with multiple 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 AfCFTA enables 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. 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.

“Representing Africa’s largest economy and one of the most formidable oil and gas industries, Nigeria stands to 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. Nigeria 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 also a key driver of that growth. The AfCFTA will see Nigeria enter a new era of economic progress, and other countries will follow soon, ”said Verner Ayukegba, Senior Vice President of the African Energy Chamber (AEC) and Director of Operations at DMWA. Resources.

AEW 2021, in partnership with the South African Department of Mineral Resources and Energy DMRE, is the AEC’s annual conference, exhibition and networking event. AEW 2021 brings together African energy players with international investors and partners to drive industry growth and development and promote Africa as a destination for energy investments.

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