Nigeria, WTO and seizing opportunity in a storm
With a cloudy outlook for the global economy, countries are looking for ways to strengthen their economic resilience and support growth and development in the years to come. This is a major focus of the current debate in Nigeria. The steep decline in the price of oil and other commodities is clearly having a particular […]
With a cloudy outlook for the global economy, countries are looking for ways to strengthen their economic resilience and support growth and development in the years to come. This is a major focus of the current debate in Nigeria. The steep decline in the price of oil and other commodities is clearly having a particular impact here, acting as a brake on economic growth. There are few signs that this situation will reverse itself in the immediate future.
So these are big challenges, but they remind me of a well-known saying about adversity – an African proverb: smooth seas do not make skilful sailors. The current situation presents Nigeria with an opportunity to diversify the economy and allow the country’s budding “skilful sailors” – the thousands of entrepreneurs, both large and small, from Lagos to Kano – to take advantage of the global trading system and boost the country’s exports of goods and services, which can in turn help fuel economic recovery and job creation.
Indeed, under its new leadership, Africa’s biggest economy can face these challenges with a renewed sense of optimism. Nigeria has well-developed financial, legal, and communications sectors and the second largest stock market in Africa. Good governance and sound macroeconomic policies can create the conditions to attract investments, helping to drive economic diversification and compete more effectively in global markets. Trade can play a very important role – and the World Trade Organization (WTO) can help.
Reducing the time and cost of moving goods across the border can make a big difference, and the WTO’s new Trade Facilitation Agreement (TFA) is designed to help with exactly this problem. In Nigeria today the average time it takes to export goods is around 20 days, while imports take around 30 days. This pushes costs up so that many can’t afford to do business internationally. The TFA aims to help standardize, streamline and speed-up customs processes around the world, helping to expedite the movement of goods. In doing so, it will significantly cut the costs of trade. A report issued by the WTO last year found that, if fully implemented, the TFA could reduce trade costs of members by an average of 14.5%. For developing economies alone, it could boost their exports by almost $730 billion per year.
By making trade flows easier, this agreement can also support Nigeria’s economic diversification. The TFA could help developing countries to increase the number of new products exported by as much as 20% and it could help them to enter 30% more foreign markets. However, in order to benefit from the Agreement, first it must be ratified. This is one immediate and very positive step that Nigeria could take. Many African countries have already taken this step. It is also worth noting that the TFA is a very flexible agreement – it provides developing countries such as Nigeria a lot of leeway to adopt reforms at a pace which suits you, and it provides practical support to help in doing so. In an increasingly globalized economy, countries where trade flows more easily also tend to integrate better into global production chains – and benefit from the boost in economic growth that this can bring.
The WTO has grown to be a very development-focused organization. Just two months ago we held our first ever Ministerial Conference in Africa – in Nairobi. This event put the spotlight on the importance of trade to Africa’s continued growth and development – and, crucially, it delivered some really important trade reforms. I commend Nigeria for its role in delivering this successful outcome. The agreements reached in Nairobi included the biggest agriculture reform in the WTO’s history – eliminating export subsidies – which will increase export opportunities for farmers in Nigeria. Eliminating these subsidies was actually one of the UN’s new Sustainable Development Goals – delivered just three months after the goals were agreed! In Nairobi members also took steps on other very important issues such as food security, cotton, and measures for Least-developed countries. I have no doubt that the WTO can build on this success in the near future for the benefit of all our members – especially developing countries like Nigeria.
I am visiting Abuja this week to discuss these issues with the government, and to look at the contribution that trade, and the WTO, can make in delivering on Nigeria’s development priorities. We stand ready to support Nigeria to unleash those “skilful sailors”.
Roberto Azevêdo is the Director-General, World Trade Organization (WTO)
@WTODGAzevedo