About two weeks ago, President Muhammadu Buhari commissioned the newly built Lekki deep seaport and a 32-metric ton-per-hour rice mill in Lagos. I must say, these are key infrastructures that will improve the nation’s value chain and its capacity to facilitate trade, but there’s a need for more. Do you know why?
In 2021, trade accounted for 22.58% of Nigeria’s Gross Domestic Product (GDP). This means that almost a quarter of Nigeria’s total output relates in one form or another to trade services. Undoubtedly, trade plays an essential role in the smooth functioning of the Nigerian economy.
Since the ratification of the African Continental Free Trade Agreement (AfCFTA) on January 1, 2021, optimism has grown for the potential of intra-African trade and how it can contribute significantly to the Nigerian economy. It has been estimated that the AfCTA can lift 30 million Africans out of poverty, thereby raising the incomes of 68 million other Africans who live on less than $5.50 per day.
For Nigeria, the economic potentials of unencumbered African trade are no less staggering. In 2021, Nigeria’s trade deficit amounted to more than $5 billion. Nigeria, along with other countries in sub-Saharan Africa, spent over $43 billion on food imports in 2019 alone, a humongous sum of money that could have been used to develop critical infrastructures needed for the industrial base of the teeming population of these countries.
Importation of many foreign food items into Nigeria is nothing short of a deficiency of scholarship, as Nigeria has the potential of not only attaining food security but also becoming a net exporter
This point to the fact that Nigeria must invest seriously in trade infrastructure, and implement policies that will enhance its trade capacity to boost its economy and lift 133 million out of its 211 million population out of poverty. Moreover, investing in critical infrastructures will facilitate the efficient flow of goods across the west African supply chain and the entire continent.
That said, these are some reasons why Nigeria needs to invest in more trade-related infrastructure:
1. To Lift Its Citizens Out Of Poverty –
As earlier enunciated, 133 million of Nigeria’s 211 million citizens are in multidimensional poverty. However, if well harnessed, trade is a healthy buffer against the untoward spread of poverty amongst the Nigerian populace. Already, Nigeria holds the unenviable position of being the fifth-largest net food importer in Africa, just behind Egypt, Algeria, South Africa, and Morocco. This heavy food importation practice negatively affects Nigeria’s trade balance sheet, necessitating more external borrowing and replicating the country’s hardship cycle.
Investing heavily in trade-related infrastructure like large-scale transport services can benefit Nigeria’s trade potential as it will make the flow of goods smooth from the point of origin to point of use in and out of the country, and will thereby provide opportunities to lift people out of poverty. The World Bank reiterates that large-scale transport infrastructure between countries can reduce transport costs and supercharge inter and intra-regional trade.
2. To Reduce Borrowing And Balance Its Financial Position
As of September 2022, Nigeria maintains a public debt of ₦44 trillion, and it spent ₦1.17 trillion to service the debt within July-September 2022 alone. While Nigeria’s loans go towards many sundry needs, a substantial part of it goes towards importing food items from many nations across the western and eastern hemispheres of the world.
For instance, Nigeria remains a net importer of wheat, rice, vegetable oils, palm oil, poultry items, ethanol, condiments, sauces, and many other agricultural products. However, the net importation of many foreign food items into Nigeria is nothing short of a deficiency of scholarship, as Nigeria has the potential of not only attaining food security but also becoming a net exporter of food items to other regions of the world.
A thorough, careful, and incisive analysis of Nigeria’s food import content can lead to an import substitution procedure that helps Nigeria save much-needed foreign exchange earnings while simultaneously reducing Nigeria’s heavy debt burden.
Nigeria produced 5.4 million metric tons of rice in 2022 alone, a healthy rice production estimate showing that the country has the innate potential to turn its abysmal food production figures around while reducing its debt burden.
Read also: Nigeria’s debt servicing gulps thrice its infrastructure spend
3. To Become The Food Basket Of Africa
In an essay published by the Brookings Institution, authors Louise Fox and Thomas S. Jayne boldly proclaimed that Africa is unable to feed itself and that the continent has a food import bill that is fast getting out of hand. Indeed, any perceptive observer will find it hard to disagree with these most distinguished agricultural economists, given the outside food import bill emanating from the African continent.
The African Development Bank (AfDB) estimates that food imports by African countries could reach $90 billion at the current import rate. Still, despite many African countries’ ceaseless food importation practices, more than 10.5 million Africans are estimated to be facing malnutrition. As food crisis rage in Burkina Faso, Cameroon, the Central African Republic, Chad, the Democratic Republic of Congo, Ethiopia, Kenya, Mali, Niger, Nigeria, Somalia, Sudan, South Sudan, and many other African countries.
With more than 35 million hectares of arable land, Nigeria is undoubtedly blessed with the necessary land factors needed to quell endemic hunger in Africa; the country can do this by becoming the food basket of Africa. Since it has the necessary land to cultivate sustainable food products. Nigeria also has the required working population to achieve this worthwhile ambition. With more than 151 million youths available to render the mental and physical resources needed to support agriculture in Nigeria.
To boost agricultural production in Nigeria, the Nigerian government only needs to prompt favorable trade policies that support the farm sector and lure more young Nigerians into the agricultural industry. The Federal Government of Nigeria’s Anchor Borrower’s Program, targeted at financially equipping smallholder farmers in Nigeria, is pinpointed as a laudable agrarian policy in the country. However, the operational process of the program still needs to be straightened out. A situation where many Nigerian smallholder farmers continue to have an existing grouse with the implementation of the program means that the program could be better.
Conclusion
Trade is central to the growth of any economy that seeks to pull its citizens out of financial doldrums into wealth and prosperity. Trade fuels growth supports the creation of jobs, and raises the standard of living of many families. But without the necessary infrastructure, there will be too many hurdles in the entire supply chain which is what holds the center.
I would love to see Nigeria’s next president take this seriously and invest in critical trade-related infrastructures like ports, roads, railways, and more dry ports. This is the basic need for an efficient supply chain.
