Building Trade Synergy for Nigerian Development
International trade, over the years has been recognised as one of the major factors in building global economies. Involving the movement of goods and services across national boundaries, it facilitates globalisation. As a vital part of a nation’s economic activity, international trade also improves a nation’s economic scale as well as its gross domestic product (GDP).
Being able to trade on an international level allows nations to obtain products they cannot produce on their own, thus improving the macroeconomic status of the country.
Despite the benefits of international trade, several barriers exist that hinder trade between countries. A few of them include linguistic and communication difficulties, unfavorable terms of trade, international liquidity problems, import and export restrictions, amongst others. These challenges have continued to mitigate the economic development of underdeveloped and developing countries.
For Nigerian businesses, these challenges are highly problematic, as they encounter regulatory barriers, currency, and logistic concerns, thus limiting their negotiating power and hindering economic development.
Furthermore, communication difficulties have made international trade cumbersome. A good example is the trade relationship of Nigeria and China, one of Nigeria’s closest trade partners. Relations between Nigeria and China have expanded on growing bilateral trade and strategic cooperation but have not been fully optimised. China is also considered as one of Nigeria’s important trading and export partner.
Regardless, communication barriers, trade deficits and restrictions have hampered trade and hindered opportunities that could be harnessed between the two nations.
To mitigate the impact of these barriers, Stanbic IBTC Bank, a subsidiary of Stanbic IBTC Holdings PLC recently held an African Trade Expo, focused on providing solutions to these issues. Themed: Synergy for Growth, the expo featured a panel session and a masterclass.
The masterclass, featuring Seun Ogundolapo, Head, Trade, Transactional Products and Services, Stanbic IBTC Bank centered on the opportunities to be harnessed in Nigeria’s untapped non-oil exports and solutions that ease trade, offered by Stanbic IBTC.
Analysis from the masterclass revealed that total trade between Nigeria and Asia in 2020 amounted to ₦14.12 trillion ($37.15 billion), while the total import trade resulted in ₦9.81trillion ($25.81billion). Export Trade stood at ₦4.31 trillion ($11.34 billion) and trade balance is ₦5.50 trillion ($14.48 billion).
The session also addressed the opportunities in the agro-allied and agricultural sectors, with the facilitator speaking about agricultural produce and the export potential Nigeria has.
“Nigeria has an arable land area of 34 million hectares: 6.5 million hectares for permanent crops, and 28.6 million hectares on meadows and pastures. Agriculture accounts for about 24 percent of Nigeria’s GDP and is key in driving Nigeria’s development,” Seun said.
“From the National Bureau of Statistics (NBS) data, apart from aluminum alloy and urea, market results have shown that most Nigerian exports to China and other parts of the world in 2021 remained raw, unprocessed products like crude oil, cocoa, and sesame seeds.”
“Lack of value addition to the nation’s agricultural products has resulted to significant losses in earnings accountable to the country over the years. Agriculture is a worthwhile investment that could generate higher returns, allow penetration of a new, potentially high-value market, and create employment.”
According to Seun, “Stanbic IBTC offers the Africa China Trade Solutions (ACTS). We connect individuals to a Chinese trade agent to negotiate the best prices and trade conditions for our clients. Dedicated translators are available to facilitate trade discussions where required. Our Chinese trade agent connects businesses to the right suppliers, and we make exports seamless.”
During the masterclass, the Central Bank of Nigeria’s (CBN) RT200 FX policy was addressed. Seun remarked that the road to the $200 billion policy promises to be a great strategy to shore up the nation’s exchange rate and boost the foreign exchange reserves.
Associated with Nigeria’s international trade relations is access to finance and credit. Leveraging on its global network, the Stanbic IBTC Africa China Expo 2022 showcased the financial services structured payment system as well as providing access to an array of credit system to African importers.
He said: “The RT200 is a non-oil exports proceeds repatriation scheme that is part of the apex bank’s effort to reduce exposure to volatile sources of FX and to earn more stable and sustainable inflows of FX into the country. With the increasing call for alternative source of government’s revenue from oil, we are at the forefront of advocating Nigeria’s diversification from crude oil to the non-oil sectors.”
As Nigeria continues to seek increased synergy with its international trade partners, such as China, for economic growth and development, the Stanbic IBTC Africa China Expo 2022 remains a verifiable avenue for enhancing trade synergy.
