This presents steps to transitioning Nigeria from commodity to manufacturing Global Value Chains participation

1. Steps to Transitioning Nigeria from
Commodity to Manufacturing GVC

2. Outline
• Nigeria – A brief background
• Nigeria’s Current role in Global Value Chains
• Country’s Potential for Increased GVC Participation
• Impediments and Road map to Improved GVC Participation
Infrastructure, Power, Ease of Doing Business Policy, Others

3. Nigeria – A Brief Background
• Country in Sub-Saharan Africa
• Largest producer of crude oil in Africa
• Largest economy in Africa with 500 billion dollars GDP
• Land Size of 923,768 km square
• 7th largest youthful population in the world
• Largest black population in the world
• Inflation – 14%
• Currency – Naira (Exchange Rate – 382 naira to a dollar)

4. Nigeria’s current role in Global Value Chains
• Limited Participation
• Commodity Export (Crude oil) over 90% of foreign exchange and 70% of Government
Revenue. State Owned Petroleum Product Refineries in poor state…to be
rehabilitated
• Limited Agriculture and Agro-Processing exports
• Assembly plants and Manufacturing industries of 30 years ago died or exited…due to
Over dependence on Oil earnings
• HUGE POTENTIAL - Limited Output

5. Potentials for increased GVC participation
• Huge Population (200 million) and Large Youthful Population (Over
half of population below 40)
• Large Arable land for agriculture
• Factor Endowments (Availability of raw materials, labour)
• Presence of Sea Ports and Inland Water Ways

6. Impediments and Roadmap to improved GVC
Participation – Infrastructure
• Growth/Investments in Infrastructure required
Transport (Ports, Road) infrastructure.
Currently only one major port (Lagos) used in receipt of goods
overburdening the port and putting strain on the road
infrastructure from there to other parts of the country.
Internet Connectivity – Speeds of up to 100 Mbps not yet attainable.
Right of way for telecommunications masts and other
telecommunications infrastructure exhorbitant and needs to be
reduced

7. Impediments and Roadmap to improved GVC
Participation – Power
• Lack of Power a huge factor in discouraging investments. Average
Power generation less than 5GW. Huge cost of industries
generating power for themselves. Large parts of the country not
connected to the National Grid.
• Need to strengthen and make “Power” a National Emergency.
Migrate to Cost reflective tariffs to ensure that investors get value
and make returns on their investment. Withdraw licenses of non-
capable operators in the Power generation, distribution sector

8. Impediments and Roadmap to improved GVC
Participation - Ease of Doing Business Policy
• Enable easier access to Finance for investors; Lower benchmark
interest rate
• Remove Capital Controls and ensure ease of capital repatriation
• Engage in Port Reforms – For example implement one stop shop for
customs clearance of goods
• Ratify Bilateral Trade Agreements – Eg. African Continental Free
Trade Area Agreement and implement them
• Ease of business registration – Modify relevant company
registration laws

9. Impediments and Roadmap to improved GVC
Participation - Others
• Commitment to Rule of Law – Enforce the Laws created, Strengthen
Judiciary and Arbitration commission, Contract Enforcement, Strong and
independent law enforcement institutions,
• International and Regional Cooperation on taxes, regulation and
infrastructure. Encourage citizens to leverage digital platforms enabling
sale of goods and services to the world. Enable Export Processing Zones
• Political Stability and Policy Continuity – New Governments should not
arbitrarily cancel previous Government projects or partnerships. GVCs
abhor uncertainty

10. Roadmap to improved GVC Participation -
Others (Continued)
• Coordinate SME’s inform and link domestic SMEs to GVC lead firms.
• Invest in her people - Universities, Technical Training Centres, Up Skill
them – Digital Skills, Train and empower the youthful population
• Agro Processing – A low hanging fruit,
• Limit Local Content Policies to where comparative advantages exists

11. Conclusion
• Nigeria must look away from oil (commodity), diversify, take
advantage of her potential and create a favorable business
climate for increased GVC participation.
• This will ensure she transits from a commodity GVC
participation to higher sophistication (manufacturing and
innovative) participation.