Vice President Yemi Osinbajo on Thursday said that manufacturing firms need to be supported with tariff policies, quota and subsidies in order to benefit from the African Continental Free Trade Area (AfCFTA).
He stated that such policies will ensure adequate protection of local industries and allow them to harness the benefits in the African Continental Free Trade Area (AfCFTA).
Osinbajo stated this in a message delivered at a Roundtable on Industrialization in Africa themed organised by the Manufacturers Association of Nigeria (MAN) to celebrate its Golden Jubilee.
He noted that the African Continental Free Trade Area (AfCFTA) offered limitless opportunities for the industrialization of Africa.
Osinbajo said, “For certain, the AfCFTA is indispensable if industrial development is to take off in Africa because it offers wider markets and economies of scale which are essential for manufacturing to be competitive.
“We must take policy actions to create an environment in which businesses can thrive. To start with, we must adopt the right type of macroeconomic and industrial policies.
“It is important for African governments to provide a stable macroeconomic environment which avoids and smoothens out volatility in prices, sharp deteriorations in the current account and budget deficits and of course, rapid accumulation in debt burdens.”
Speaking on actions that will boost manufacturing, Prof. Osinbajo said “on the industrial side, policies like tariffs, quotas, subsidies and non-tariff barriers, which protect our infant industries so that they can create jobs and enable learning are vital.”
He added, “Well negotiated rules of origin are important in the context of the free trade agreements as they are key to preventing trans-shipment and the deflection of trade. Without them, firms from non-state parties could set up simple labelling operations in one Member State with a view to shipping already finished products to another member State without really adding any value.”
Osinbajo observed that it is important for MAN to involve itself in an advisory capacity to government negotiators “as we go further into the rules of origin negotiations (these rules negotiations have, of course, started), but I think as we go on, we should get more contributions and advise from MAN.”
“Our manufacturers must also strive to become competitive after clearly specified time periods so that they can withstand the ever-present danger of stiff competition from imports. In other words, while our manufacturing industries must be nurtured and supported, they cannot remain infants forever,” the VP added.
Emphasizing the point about enhancing industrial competitiveness, Prof. Osinbajo noted that “one of the ways to increase the competitiveness of African industries is to develop and deepen regional value chains wherein production systems starting from conception and design right through to supply of raw materials, processing, transport, storage, marketing and sales take place within our countries and continent.”
“When we export commodities to the rest of the world, we are also exporting jobs and the positive spillover effects such as learning that come with manufacturing are lost.”