This presentation is made as a reflection of Nigeria's opportunities in taking its place in GVCs

1. Final Project
Structural Reforms is critical to
Nigeria’s presence in GVCs
INNOCENT AZIH

2. Country Context
• Nigerian economy is heavily
dependent on natural resources
exploitation rather than value
addition. Crude oil exports
constitute over 90% of the foreign
exchange earnings. Agriculture is
another major structural chain that
could enable her involvement in
GVC, but is still very rudimentary.
With over 200million population,
Nigeria is a major resource base for
cheap labour in the GVC.

3. Problem Statement
• The challenge of Nigeria’s
presence in global value chains
is rooted in the structure of its
economy, particularly the real
sector. The problem is how
could Nigeria upscale its
benefits from GVCs?

4. Obstacles to Innovative Solutions
• The key factors militating against implementation of innovative
strategies to Nigeria’s role in GVCs include
a. Poorly diversified economic structure with low absorptive capacity
for investment.
(b) Mono-market commodity-based economy, which experience
regular price and market volatility
© Poor research and development focus
(d) High unemployment
(e) Weak currency
(f) Poor regulatory enforcement
(g) Lack of governance transparency
(h) Poor financial capital base

5. Solution Framework
• According to the AFDB, the rationale to Nigeria’s participation in GVCs
include
 GVC viability as a lever for guiding her economic transformation, the
potency for adjusing it to address the structural issues such as growth
inclusiveness;
leveraging its effectiveness in pushing sustained growth that delinks the
economy from volatile commodity markets and weather conditions.
• The solution to Nigeria’s enlightened roles in the GVC will require a focused
and robust preparedness and leadership in regional trade blocs in
manufactured products.
• This will only happen by building capacity for sectoral value chains to build
capacity for participating in global cooperation trade. Building this capacity
will require deep policy reforms to ensure investments attraction.

6. Solutions Framework 2
• The economic benefit from procurement revenues, technology
deployment and deepening, infrastructure and human resource
development and utilization.
• The economic reforms required to empower Nigeria’s sustainable
involvement in the GVC at elevated scale include
Human capital development
 Real sector development
 Improved regulatory environment
 Increased technology deployment especially internet penetration
 Infrastructure development.

7. The GV Chain
The Chain is driven from research and
development, capacity and financial strength
from the developed countries
It supports the developing countries
as geographies for production
(manufacturing), raw materials and
unskilled labour provision, and

8. THE SUPPORT TO GVCs The niches of chain participation
in developing countries are in the
logistics, operations, marketing
(export) and services. The
economies benefit from
procurement revenues,
technology deployment and
deepening, infrastructure and
human resource development
and utilization.
These support activities provide
opportunities for jobs, tax
incomes and export revenues

9. Nigeria Case Study: Favorable Conditions
• Huge natural resources: Agriculture,
crude oil, solid minerals
• Huge population (over 200 million)
• High unemployment rates @ 30%
• Low skilled labour
• Poor infrastructure
• Low currency value
• Poor manufacturing capacity and
growth
• Huge export and logistics facility
Nigeria’s manufacturing trend
Nigeria is a huge ground for increased GVC investments.

10. FDIs: Financial leg of GVCs
• High return on capital investment
opportunities: Nigeria has highest in
the world @ 35%
• High consumption population: 200 m
• Diversified market value

11. GVC Opportunities in Nigeria
FMGC
Vehicle parts
GVC opportunities exist in Nigeria in sectors such as
manufacturing, agriculture, infrastructure

12. Challenges to Implementation
• The key challenge to
implementation of the economic
reforms is funding. Given the
reduced revenues from main
trading commodity,
implementing the reforms will be
debt-driven -in a situation where
the country is already debt-
ridden

13. Factors Driving Nigeria GVC Participation
• The key drivers for participation is factor endowments, geographical location,
political stability, tariffs and FDI inflows, and domestic industrial capacity.
Government and other stakeholders, consider GVC as of great importance to
achieving structural economic transformation in Nigeria.
This will be based on economic diversification, new wave industrialization, technology upgrade
particularly hardware and internet penetration. This will support other economic activities like
infrastructure development, export diversification, and inclusive growth promotion.
• Government, private sector and other stakeholders will support consolidating
Nigeria’s presence in GVCs in the light of the coming Africa Continental Free Trade
(ACFT) era because it will help to remove the structural rigidities that has limited the
benefit from GVC.
This will include improved domestic growth, increased employment and export of finished and
intermediate products.
• A well-articulated economic reforms policy on value chain development, will create
the right business and regulatory environment, particularly harnessing Nigeria’s
comparative and competitive advantages, and ginger increased government
spending support and promotion for public and private R&D investment.

14. CONCLUSION
• GVCs was, and still remains a great window for global cooperation
and trade.
• It has provided an outlet for developed countries to export capacity
and developing countries to scale up economic development and
trade.
• The spiral downwards of GVCs due to 2007/2008 financial meltdown
required a new wave of economic thought and activism for its
resuscitation.
• In the post COVID-19, developing economies will need new wave of
reforms to sustain their capacity to innovate, buld and trade, since all
economies are affected.

15. References
• 1. World Development Report (2020). Trading for Development: In
the age of global value chains. The World Bank. © 2020 International
Bank for Reconstruction and Development / The World Bank
• 2. Ogunleye, E. K. (2014). Global Value Chain Development and
Structural Transformation in Nigeria. AFDB Africa Economic Brief. AEB
Volume 5, Issue 2, 2014.
https://www.afdb.org/fileadmin/uploads/afdb/Documents/Publicatio
ns/AEB_Vol5_Issue_2__2014
• 3. IMF (2016). Trade Integration and Global Value Chains in Sub-
Saharan Africa: African Deparment In Pursuit of the Missing Link.
https://www.imf.org/external/pubs/ft/dp/2016/afr1602.pdf