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The African Growth And Opportunity (AGOA)
Perspectives of the Nigerian Private Sector  
by Olufemi Boyede MD/CEO Koinonia Ventures Ltd. 
paper presented at the TIFA Council Abuja, November 11, 2004

PRESENTATION OUTLINE

Opening Shots
Introduction – Some thoughts on Non-Oil Export
Visible Effects of these Orientations
Export in the Life of The Nigerian Nation 
Benefits to The National Economy
Benefits to Nigerians Working in Export Related Activities
Challenges facing the Nigerian Exporter
Nigerian Government’s Response to These Challenges.
AGOA to The Rescue?
Criteria For Participation in AGOA
Private Sector Understanding of Opportunities and Strategies For Nigerian Exporters
What the Nigerian Exporter Really Needs, to Benefit From AGOA
Acquiring Awareness
National Support
AGOA (U.S.) Authorities Support
Conclusion


Opening Shots

In 2001, Nigeria earned US$16.2 billion from exports of oil and other petroleum products.
That’s equivalent to about $1.35bn per month
Or about $45m per day (enough to build and equip two standard 100-bed hospitals
Or about $1.8m per hour (can build and equip ten secondary schools)
The price of oil has more than tripled since these assumptions


SOME THOUGHTS ON NON-OIL EXPORT

CURRENT GLOBAL REALITIES
Economic and Commercial warfare for product market share
Geographical market conquest and presentation
Steady product innovation, development and production 
Organized show-casing of national creative capabilities and opportunities
Creation and deployment of competitive advantages.
Global diffusion of satisfaction and comforts
Operational simplification of product flows.
Horizontal partnerships for wealth creation
People-prosperity as a source of world peace and democratic stability (AGOA).
Increased information and knowledge flows leading to increased production worldwide.
Global contact & proximity of nations, peoples, markets, products, services.


VISIBLE EFFECTS OF THESE ORIENTATIONS

Increased productions
Increased global competitions
Increased global needs and tastes of people
Increased drive by nations to send their production to centres of needs.
Beneficial and desirable mission of exports worldwide


EXPORT IN THE LIFE OF THE NIGERIAN NATION

A. Benefits to private companies doing export business.
Earning of foreign exchange income
Positive corporate reputation, visibility and image of export companies.
Attraction of public sector incentives, support and attention
Increase in scope of business activities
Improved international management practices (Product quality, organization, operation, negotiation etc
Creation of new export companies
Powerful reference for other companies


B. Benefits to the National Economy
Creation of export-oriented companies 
Creation of more jobs
Creation of export-related activities
International Visibility of Nigeria's Economy and products.
Integration of Nigeria’s Economy with global economy.
Earning of foreign Exchange Income.
Improvement in the balance of Payment
Creation of an export sector
Increase in aggregate national production.
Vector of economic growth (export-led economic growth)


C. Benefits to Nigerians Working in Export Related Activities
Intelligence and speed needed in international market
Courage to face international markets
Pride to win new markets and retain existing ones
Confidence in operational capability
Solid experience in operations and logistics management, spirit of adventure, of taking on calculated risks or ability to experience the unique.
International exposure, culture and learning.
Conquering spirit for international market
International friendliness


CHALLENGES FACING THE NIGERIAN EXPORTER

Three Broad Problems
Market Access
Competitiveness
        - Infrastructure
        - Information
        - Institutional support - Incentives
        - Packaging and standards
Capacity to cope with the strenuous demands of the International Market
        - Economic Rivalry


NIGERIAN GOVERNMENT’S RESPONSE TO THESE CHALLENGES

Restructuring and Strengthening of Trade Support Institutions
Institution of Export and Other Industrial Incentives
Focus on Economic Blocks as Trade Opportunities
        – AGOA as a case in point
Creation of the Office of a Presidential Special Adviser on AGOA
Regular review of economic policies and recent economic reforms


AGOA TO THE RESCUE?

With preferential market access to over 6,500 products, AGOA seems to offer the perfect solution to market access problems;
Alas, market, and access to it, appear to be the least of the problems confronting the Nigerian exporter today.
However, since the focus of this presentation is AGOA, we shall proceed to examine the vast opportunities available, as an acknowledgement of America’s conscious efforts to help grow Africa’s (in our case Nigeria’s) economies, and the various reasons why the Nigeria private sector has not been able to take advantage of them
Under the AGOA program Sub-Saharan African countries that qualify by meeting certain “qualifying criteria” (see below) are granted duty free status on their exports of products in numerous industrial sectors to the United States. At the present time thirty-six Sub Saharan African countries (out of the total of forty eight countries in sub-Saharan Africa: see table noted below) have qualified for AGOA preferential access to the United States. 

CRITERIA FOR PARTICIPATION IN AGOA

Development of a market oriented economy
Adaptation of the rule of law and political pluralism
Elimination of barriers to U.S. exports and/or foreign investment
Protection of intellectual property
Anti-corruption efforts
Adaptation of poverty reducing policies
Adaptation of policies to promote health care and educational opportunity
Protection of human and workers rights 
Elimination of child labor


Private Sector Understanding of the Opportunities and Strategies for Nigerian Exporters 

What is the meaning of the African Growth and Opportunity Act for Nigerian Manufacturers? 
Now that “full access” has been granted Nigeria’s exports to AGOA with the recent approval of textile visa, how will the Nigerian private sector benefit?
What strategies should manufacturers consider in order to take advantage of competitive manufacturing and import/export opportunities arising out of the AGOA? 
How are other regional free trade agreements affecting the competitiveness of global manufacturers in this emerging region? 
In view of the contradictions and summersaults in export-oriented policies and incentives, does the Nigerian exporter hope to EVER benefit from this, and other trade opportunities Acts and provisions?
Do the various Trade-Related Technical Assistance Agencies have the capacity and understanding to adequately deliver capacity building for Nigeria’s export sector? 


WHAT THE NIGERIAN EXPORTER REALLY NEEEDS TO BENEFIT FROM AGOA

It must be obvious by now that securing the necessary approval and visas for Nigeria’s participation in the vast AGOA market was only a chip of what the Nigerian exporter would need in order to benefit from this large opportunity. We set out the needs in three broad categories
        - AWARENESS AND CAPACITY
        - NATIONAL GOVERNMENT (INSTITUTIONAL) SUPPORT
        - AGOA AUTHORITIES (U.S GOVERNMENT’S) SUPPORT


ACQUIRING AWARENESS

Very few Nigerian Companies are export-ready in the true sense of the word. Provide Export Training
Need for massive awareness campaigns obvious.
Programmes tailored towards meeting the standards of the AGOA market must be packaged now
FMC and Office of the PSA on AGOA must collaborate with the U.S. Trade authorities to prepare “How To…” publications and diffuse these within the targeted economic sectors
Work with product sector associations to deliver specialised AGOA-oriented trainings and workshops
Support the revival of EXPORT DIGEST
Export-fitness checker


NATIONAL SUPPORT

Abrogate all export-hostile laws NOW… i.e.:
        - Revive EEG
        - Withdraw all forms of levies on export (1% NESS charges)
        - Enable all industrial incentives to work, today, they are mere pieces of paper in the hands of the operators
Enable relevant agencies to play the role their counterparts play all over the world: Trade Support Institutions rather than what they are presently – TRADE PREVENTION ORGANIZATIONS 
Address Border-in obstacles to export: Policies must be consistent and given at least a medium term (5 years) life span
        - EEG had just begun to generate a visible impact on NOE in Nigeria when we put it in the cooler close to five months ago. The negative impacts on the Nigerian private (export) sector and astronomical losses to the National Economy, cannot be quantified. Can we legislate it to give at least a ten-year assurance of its perpetuity (while of course continuing the current efforts to improve its administration and reduce fraudulent practices
        - Export Processing Zones (and Export Processing Factories) have helped to revive and sustain the economies of African countries such as Mauritius and Botswana. For the record above 96% of Mauritius exports to AGOA are supported by Free Zones incentives. Can we support NEPZA to do a similar job in Nigeria? Turn the entire country into an Export Processing Zone, like Dubai? 
Reduce the cost of export manufacture (Improve infrastructure, establish Export Price Guarantee/Adjustment schemes, assist in establishing Export Warehouses at least in West Africa)
Provide easy access to export finance. The biggest possibility of Nigeria right now, to export to AGOA is the textile industry. Most of them have closed shop. Could we provide a window of easy and cheap lending to revive that sector? Is it perhaps desirable to establish a specialized bank to cater for AGOA-oriented SMEs or add this function to the T.O.R. of SMEDAN?
NEPC MUST work with MANEG and other Umbrella associations to improve on Nigeria’s export performance, deliveries to the AGOA market, administration of EEG and develop a new package of export incentives


AGOA AUTHORITIES SUPPORT

Financial and Technical Assistance to prepare the Nigerian Export sector for the AGOA market
Funding Capacity building and awareness programmes
Sponsorship of/support for AGOA-based Trade Missions
Sponsorship of selected Nigerian exporters to specialized AGOA events in the U.S.A.
Strong collaboration with Nigerian TSIs


Conclusion

AGOA is designed to be a trade opportunity for Nigeria – It is not a GRANT therefore we must WORK to benefit from it
Unless the right attitude is adopted and the correct strategies designed, by the time AGOA is winding up in 2015, we would still be on the starting block
Governments do not export – Private sector does
Unless the private sector is enabled, benefiting from AGOA will remain a mirage 
Government wants the Manufacturing Sector to be the Engine of Economic Growth and Development and the hub of exports to AGOA
Government Must be prepared put the PS in the driving seat by providing the kick-starter and the engine oil to drive that engine
Through an effective collaboration of the TRICYCLE, the engine will work, move and improve Nigeria’s export to AGOA.

© Copyright Koinonia Ventures Limited, 2006