The Centre for the Study of Economies of Africa (CSEA) says developing a context-specific awareness dissemination strategy will make Micro, Small and Medium Enterprises (MSMEs) be familiar with the workings of the Africa Continental Free Trade Area (AfCFTA).
Dr Adedeji Adediran, Director, Education and Governance Research, CSEA, spoke virtually at an AfCFTA Media Launch for Micro, Small and Medium Enterprises (MSME) on Friday.
The News Agency of Nigeria (NAN) reports that the webinar was organised by the Nigerian Association of Chamber of Commerce, Industry, Mines, and Agriculture (NACCIMA) and the Center for International Private Enterprise (CIPE).
Adediran said that developing the strategy was pertinent following its findings that most MSMEs were unaware of the existence of AfCFTA.
According to him, key findings of a survey reveal that 67 per cent of respondents showed a low level of awareness regarding the existence of the AfCFTA.
Adediran said that a significantly more substantial portion of 67 per cent of the medium-sized enterprises declared their awareness of the agreement.
He said that special attention should be given to non-digital dissemination strategies to ensure full reach of Nigerian businesses irrespective of their technological participation levels.
“Many MSMEs are often disenfranchised from international trade as a result of the complications associated with compliance to Free Trade Areas ( FTAs).
“Ensuring localised training programmes through partnerships with the private sector and international donors can help fill the technical skills gap that will hamper MSME’s uptake of AfCFTA.
“Businesses need to partner with specific agencies such as the Standard Organisation of Nigeria (SON) and National Agency for Food, Drug, Administration, and Control (NAFDAC) to ensure adherence to standards.
“This will boost the capacity of Nigeria businesses to compete in AfCFTA,” he said.
Adediran said that disaggregation by enterprise sectors showed that 97 per cent of agricultural MSMEs were not aware of the agreement, while 50 per cent of manufacturing sector enterprises were also not aware of the agreement.
He added that results showed modest positive welfare gains to Nigeria with machinery, other transport, textile and metal products as well as textile industries accounting for most of the positive effects on real wage.
He said that Nigeria also recorded modest positive welfare effects compared to other African countries.
“Our simulation results indicate that agriculture, mining, food, and machinery dilute the overall gains from terms of trade as the price of export for these commodities declines relative to the price of their imports.
“Although there is growth in the export of agricultural products, the terms of trade deterioration in this sector dilutes the overall gains from trade and changes in real wage from the agricultural sector.
“Based on predictions, Nigeria’s imports from several African countries including Botswana, Burundi, Ghana, and Namibia declined by more than 10 per cent as well as imports from China and Canada by 29.5 and 11.3 per cent respectively.
“On export, Nigeria records growth in exports of agricultural products, food, electrical, and machinery products while exports decline significantly in wood and paper industry,” he said.
The CSEA director stated that respondents expressed concern over some potential adverse effects of the AfCFTA to MSMEs in Nigeria.
According to him, a predominant concern is the deficient human and technological capacity of MSMEs in Nigeria which predisposes them to the negative spillovers potentially associated with free trade and investment exchanges within the continent.
“Most prominent among the threats is the fact that cheaper goods from other African countries will be competing against local goods in Nigeria.
“Other threats to MSMEs in Nigeria that could be associated with the AfCFTA include an increase in foreign competition, reduction in the demand for local goods, and dumping of sub-standard products,” he said.