Nigeria’s High Costs Trading Make Life Difficult For Businesses- Okonjo-Iweala

 

The Director General of the World Trade Organization (WTO), Ngozi Okonjo-Iweala, has revealed that Nigeria’s trade cost is too high and needs to be cut down to facilitate local and international investment.

 

Okonjo-Iweala stated this via a video link on the second day of the midterm ministerial performance review at the presidential villa, Abuja.

 

In June, the former finance minister said trade costs could be managed through channels like the African Continental Free Trade Area (AfCFTA), improving internet infrastructure to boost e-commerce, implementing regulatory reforms, and developing infrastructure in ports and roads.

 

Speaking virtually on Tuesday, the WTO DG said a lower trade cost from the factory or farm gate to the final consumer will attract trade-oriented investment into the country.

 

According to her, “Improving security and lowering transactions for foreign and domestic investments would be necessary,” she said.

 

“Nigeria is part of a group of countries negotiating an agreement on investment facilitation at the WTO. Once this agreement is negotiated, gratified and implemented, it could be instrumental in attracting additional trade-oriented investment.

 

“To complete investment facilitation, Nigeria has to cut down on trade cost, infrastructure cost, linkage costs, regulatory costs, customs costs, basically all costs associated with moving goods from the factory or farm gate to the final consumer. Nigeria’s trade costs are too high”, she stated.

 

Quoting the World Bank trade database for 2019, the WTO chief said trade costs for African countries are on average the equivalent of a 304% tariff.

 

For Nigeria, she said trade cost is slightly higher at 306 percent.

 

“These numbers are one and half times higher than the trade cost of high-income countries,” Okonjo-Iweala added.

 

“Such high costs are not conducive to forming regional value chains, congestion and capacity constraint of high cost in our ports make lives difficult for anyone seeking to base supply chain operations in Nigeria.”

 

She said Nigeria and other African countries need to implement the WTO trade facilitation agreement to help harmonise customs and transit procedures by reducing logistics and dramatically increase the potential income gains resulting from the AfCFTA.

 

“The WTO trade facilitation agreement facility has already worked with 44 African countries on their implementation efforts and stands ready to help Nigeria upon request,” she said.

 

“Nigerian businesses need to upgrade product quality to gain market share with better quality will come better reputation and branding and opportunities to capture more values from the products they make.

 

“In this regards, I must cite the micro small and medium enterprises (MSME) in the food, textile and fashion businesses, the quality of their products have improved considerably over time, thanks to the support of the ministry of industry, trade and investment and Nigeria Export Promotion Council.

 

“Women are now making export quality bags, briefcases, spices and condiments for household use. We should work to scale these products for export. Africa loves Nigerian fashion, and the rest of the world love our leather carpets, bags and other products, again a potential exists to do so much more.”