Yewande SadikuExecutive Secretary/CEO

Virtual | 04 February 2021

PACKAGING NIGERIA INVESTMENT OPPORTUNITIES TO BENEFIT FROM AFCFTA

InvestAfrica Media Webinar

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• Participating countries may withdraw from the Agreement after 5 years

• Single market (largest in the world) for the free movement of goods, services and persons

• Progressively eliminate tariffs and non-tariff barriers

• Enhance competitiveness

• Double intra-Africa trade flows, currently at 15%

• Intra-trade in Europe (67%), Asia (58%) and North America (48%)

• Double Africa’s share of world trade from 3% to 6% over the next 10 years

• Provide rule-based engagement facilitating dispute resolutionand addressing injurious trade practices

• Deepen economic integration of the continent

• Improve and expand intra-Africa trade

• Foundation for establishment of a continental Customs Union Objectives

Impact Expected

Review & Withdrawal

Targets

African Continental Free Trade Area (AfCFTA)

“An integrated peaceful and prosperous

Africa”

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Nigeria in context

Land Size 983,213 sq km

Population 201 million (15%)

20 – 59 years old 85 million (15%)

Labour Force 61 million (12%)

GDP US$477 billion (19%)

Land Size 30,365,000 sq km

Population 1.3 billion

20 – 59 years old 588 million

Labour Force 500 million

GDP US$2.5 trillion

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No country is fully ready!

•Most plan to use the AfCFTA as a driving force to enhance their global trade competitiveness

How ready are African countries for the AfCFTA?

ECOWAS

Readiness

•South Africa•Nigeria•Morocco•Kenya•Egypt•Botswana

Seemingly competitive within the African context but require additional work to optimize the benefits of AfCFTA

•All other countries

Require material work to be competitive within the AfCFTAcontext

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Nigeria is more ready than most African economies

1. Enhances the potential for business growth

2. Many Nigerian companies, particularly in the servicessector, have long developed the capacity to serve the restof Africa

3. Large domestic market makes Nigeria the ideal gatewayeconomy

4. Expanded market for Nigerian goods and services, creatingjobs and economic growth

5. Provides opportunity for many informal enterprises toformalise operations

6. Nigeria’s manufacturing value addition is more than 7x theaverage of the top 20 economies in Africa

7. Effective trade remedies will allow action against injuriouspractices by foreign countries and companies

8. Complements Nigeria’s national development agenda andcan catalyse economic diversification

1. Nigeria can become target economy

2. Challenges with power, route to market infrastructure (road,rail, ports), security, that hinder competitiveness of Nigeriangoods and services

3. Urgent reforms needed to improve Nigeria’s ease of doingbusiness and competitiveness

4. Impact of legacy preferential or bi/multilateral agreements

Potential opportunities Potential threats

Implications of AfCFTA for Nigeria

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All members get preferential market access over non-members

Members to treat one another equally and fairly on all trade

matters

Preferential trade

agreements with third parties still

possible

Extending preferences in

legacy agreements is not obligatory

Non-members cannot get

better preferences than

members

Duly imported products from members receive

same treatment as domestic products

Trade liberalisation explained: preferential market access under AfCFTA

Members = Countries that have signed the AfCFTA

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General, 90%

Sensitive List, 7%

Exclusion List, 3%

Other, 10%

Allows strategic products to be safeguarded

Trade liberalisation explained: the 90/10 rule

5,516 tariff linesTarget: zero tariffs5 years to liberalise10 for those in CUs

429 tariff linesTarget: zero tariffs10 years to liberalise13 for LDCs

184 tariff linesNon negotiable: can be reviewed every 5 years

• Progressive elimination of tariff and non-tariff barriers • Development and promotion of regional and continental value chains

Objectives:

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Trade liberalisation explained: Rules of Origin

Wholly obtained within country

Substantially transformed within the country

• Live animals• Primary agricultural products • Mined mineral resources • Scrap and waste from manufacturing activities • Electric energy

Value added

Non-originating material content

Change in tariff heading

Specific processes

• Yeast – < 60% of price from factory of the product • Refrigerators or freezing equipment - < 55% of price of

the product • Motor vehicle – start from completely CKD kits - < 60%,

65%, 70%, 75% of price of product

• Carpets and other textile floor covering • Ceramic Products • Glass and glassware

ExamplesQualifying Criteria

• Vacuum distillation • Cracking • Extraction by means of selective solvent • Polymerisation

African Continental Free Trade Area (AfCFTA): Appendix IV to Annex 2 on Rules of Origin 1 – Nigerian Investment Promotion Commission (nipc.gov.ng)https://www.ngrafcfta.gov.ng/2020/06/16/afcfta-referencedocuments/#1611155976042-8aa31d0e-6472

• Certificate of Compliance to be issued for every product to be exported; one-off

• Certificate of Origin, issued by Chamber of Commerce; valid for 12 months

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ECOWAS

Africa’s main imports are manufactured goods, many of which are priority products for Nigeria’s industrialisation and economic diversification

Services: financial, communication, tech-enabled ecosystem

Mineral fuels, lubricants and related materials

Agricultural products (food and live animals)

Manufactured products

beverages and tobacco

machinery and transport equipment

chemicals and related products

…

Nigeria’s key comparative advantages

▪4 International airports and major seaports in Lagos, Calabar and Bonny island

▪3,798 km of railway tracks and 168,000 km road network

▪Land borders with Benin, Cameroon, Chad and Niger and a natural hub for the continent

5’45” Cairo

5’40” Johannesburg

5’ Dakar

5’20” Addis Abba

3’05’ Tunis

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Company Sector African operations

Banking 20

Benin, Burkina Faso, Cameroun, Chad, Cote d’Ivoire, Congo Brazzaville, Gabon, Ghana, Guinea Conakry, Kenya, Liberia, Mali, Mozambique, Nigeria, RDC, Senegal, Sierra Leone, Tanzania, Uganda, Zambia

Manufacturing (Industrial, Food & Beverages)

12Cameroun, Cote d’Ivoire, Congo, Ethiopia, Ghana, Liberia, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania, Zambia,

Banking 10Cote d’Ivoire, Gambia, Ghana, Kenya, Liberia, Nigeria, Rwanda, Sierra Leone, Tanzania, Uganda

Telecommunications 5 Benin, Cote d’Ivoire, Ghana, Nigeria, The Gambia

Fintech and e-Commerce 3 Kenya, Nigeria, Uganda

Fintech 2 Ethiopia, Nigeria

Selected Nigerian companies and their networks in Africa

Plus Nigeria’s fashion, music and movies, which are

consumed all over Africa

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Nigeria’s key competitive advantages...

Strategic location Strategic time zoneGMT +1

Favourable weather Language: English

Large growing population –3rd largest by 2050

Growing middle class population

Young, energetic, tech-savvy entrepreneurial population

Optimistic mobile population

Resilient, hard-working “can-do” spirit

Large population of consumers

Huge unfilled demand Improving businessClimate

Abundant natural Resources

Abundant economicopportunities

Generous investment incentives

Sophisticated financial markets

Generous investor protections

Private sector-led economy

Home to many large localand international brands

Fast growth economicprojections – aspires to be

14th by 2050

Two decades of political stability An essential component of

every Africa strategy

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One of the most entrepreneurial, innovative and

ingenious economies…

…scale of opportunities, quality of talent, scale of ambition and aspiration

of government…

…adaptability and agility of the people

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The full implementation of the AfCFTA should drive investment interest in African countries that are the most suitable locations for production and investment

Government’s efforts are focused on ensuring Nigeria’s attractiveness as a destination and Nigeria’s competitiveness for production

CAMA 2020 and Finance Act 2019 and 2020 have improvements aimed at helping small businesses better survive

Government engagements with the private sector have been with the organised private sector

Chambers of Commerce, sector associations, industry groups, etc

Information, education and pro-active engagement with the relevant associations are important

Seek expert advise

Understanding how your products relate to the 90/10 rule and rules of origin are important for appropriate positioning

Consistent quality and standards must be appropriate for a wider, competitive market

Export opportunities have increased

Market access will be important in going beyond Nigeria’s shores

Consider partnerships and collaboration with partners

Opportunities for Nigerian SMEs

About NIPC

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NIPC was established by the NIPC Act* in 1995 to encourage, promote and co-ordinateinvestments in Nigeria

• Promote Nigeria as an attractive investment destination

• Provide information on investment opportunities and capital sourcesProject Attractive Investment Image

• Promote investments in Nigeria, by Nigerians and non-Nigerians

• Co-ordinate all investment promotion activities in Nigeria

Investment Promotion

• Provide support services to investors and register enterprises in Nigeria

• Match-make investors with specific projects and advise on partners for JVs

• Provide information on investment incentives and approve Pioneer Status Incentive applications

Investment Facilitation

• Initiate and support measures that enhance the investment climate

• Evaluate the impact of investments and incentives in Nigeria and make appropriate recommendations

• Advise Government on policy matters to promote Nigeria’s economic development

Policy Advocacy

NIPC’s principal functions

*Nigerian Investment Promotion Commission Act, Chapter N117, Laws of the Federation of

Nigeria 2004

Plot 1181 Aguiyi Ironsi Street Maitama District

Abuja

infodesk@nipc.gov.ngosicinfodesk@nipc.gov.ng

www.nipc.gov.ng

For further details, please contact us

Yewande SadikuExecutive Secretary/CEO

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Investment informationwww.theiguides.org/nigeria