African countries must right policy actions to actualize AfCFTA benefits ---Osinbajo
(Nigeria) Vice President Yemi Osinbajo, has said that while
African Continental Free Trade Area, AfCFTA, offers limitless opportunities for
the industrialization of Africa, authorities across the continent must take the
right policy actions to actualize them.
He stated that such actions include the protection of local
industries and improving value chains.
Osinbajo stated this in a message delivered today at a
‘Roundtable on Industrialization in Africa themed “Positioning African
Industries for Economic Transformation and Continental Free Trade," organised
by the Manufacturers Association of Nigeria, MAN, to celebrate its Golden
Jubilee.
According to the Vice President, “for certain, the AfCFTA is
indispensable if industrial development is to take off in Africa because it
offers wider markets and economies of scale which are 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.”
Speaking on actions that will boost manufacturing, Prof.
Osinbajo said “on the industrial side, policies like tariffs, quotas, subsidies
and non-tariff barriers which protect our infant industries so that they can
create jobs and enable learning are vital.”
He then added that “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. 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.”
Prof. Osinbajo observed that it is 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,” the VP added.
Emphasizing the point about enhancing industrial
competitiveness, Prof. Osinbajo noted that “one of the ways to increase the
competitiveness of African industries is 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.”
Citing examples of Nigeria and South Africa, the VP
explained thus: “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.
He said there are a number of other things that need to be
put in place quite quickly "if we are to see the kind of manufacturing
activity that we desire. First of all,
we need to develop a strong infrastructural base. Extensive, cheap and
affordable infrastructure is vital for the success of our economies.
“We must build a network of roads, bridges and rail that
will facilitate the movement of goods and people just as we build the
electricity plants to power our 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.”
Osinbajo added that another major objective of policies
aimed at preparing industries for AfCFTA “must be to ease payments across
borders and implementation of the protocols on free movement of persons”.
The VP said in the pre-recorded message “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 per annum.”
Meanwhile, Osinbajo is leaving Abuja today on a short visit
to Arusha, Tanzania where he will be received by his Tanzanian counterpart, Dr
Philip Mpango.
While in Arusha, Osinbajo would visit the African Court of Justice and Human Rights, ACJHR, an African Union agency in Arusha, among other engagements before he returns to Abuja on Monday.
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