Ports, Maritime and Trade conference: Connecting global value chains to accelerate growth
Nigeria can grow its way through trade, diversify its economy and generate jobs by strengthening intra-regional and global links. The maritime industry in Nigeria can accelerate this growth potential. Rapid urbanization, a huge working-age population, large market size, abundance of agricultural and natural resources together with seaports located across the country position the country for reaping the benefits of linking with
regional and global value chains.
Last year, Nigeria signed the Africa Continental Free Trade Agreement which is expected to boost trade in the continent by 52 percent in 2022. Global value chains (GVCs) – the import and export of raw materials, parts and components, semi- and finished goods between firms across countries – has evolved over 20 years. Complex production processes for making cars and computers have been broken up into smaller, simpler parts and specialized tasks performed by different countries, easing the way of less developed countries into the global trade.
Advances in ICT and transportation coupled with trade policies and cheap labor have delivered immense benefits to emerging economies in Asia and
Europe, integrating them into the global economy. GVCs rapidly expanded global trade, accelerated economic growth and reduced. poverty. It has allowed poor countries to converge i.e. catch up with richer economies – 1 billion people escaped poverty as a result of labor-intensive trade-led growth in countries like China, Vietnam, and Bangladesh.
Nigeria’s first deep seaport, located at the Lekki Free Trade Zone (LFTZ), will make the country the trans-shipment hub of the region. Once completed it will offer factories located within the LFTZ links to the region and global markets. The global pool of labor is shrinking in developed countries and China; their companies are relocating to attractive destinations with skilled labor, competitive wages and well-equipped and efficient ports. Chinese companies are looking to set up factories elsewhere, in Ethiopia and other East African countries, for example.
Nigeria, like most African countries, however, due to trade barriers, poor infrastructure and logistics has been unable to take part in global or regional value chains. For chief executives of manufacturing companies in Nigeria, poor accessibility/gridlock at the ports and the resulting high demurrage costs as well
as poor infrastructure (roads and rail) as their third and fourth biggest challenges, according to the Manufacturers’ Association of Nigeria CEO Confidence Index (MCCI) for third quarter of 2019.
Linking with GVCs still offers opportunities but economic fundamentals (abundance of labour, location and institutions) and policy (investment-friendly laws) choices matter. Regulatory reforms improved Nigeria’s position on the Doing Business Rankings in 2019; it moved up 15 places to 131st position. However, starting a business is still a challenge, so too are getting electricity, registering property, paying taxes and trading across borders. The GVC model of the past is being replaced. New technologies: automation, artificial intelligence (AI) and machine learning (ML) are improving efficiency, boosting productivity and reducing the need for labour.
Nigeria must rethink how it can drive growth, reduce poverty and generate millions of jobs from connecting to the GVCs – for example, how to adapt its ports, roads and rail infrastructure as well the skillsets of the labour to meet these changes.
The BusinessDay Maritime Conference will:
- Identify opportunities in regional and global value chains for the coming decades.
- Highlight benefits of economic diversification through trade integration for growth and jobs.
- Discuss policies and regulation to attract investment.
- Highlight lessons from local success stories (Tolaram/Lagos State) e.g. how to attract investments.
- Get stakeholders (Ministry of Transport, NIMASA, NPA, MAN, LCCI, chief executives etc.), move the needle with regards to the infrastructure required to make sub-Saharan Africa’s largest economy a key growth market for regional and global value chains.