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AfCFTA: LCCI warns on rising logistics costs, prices of goods

The Lagos Chamber of Commerce and Industry (LCCI) has said that for the African Continental Free Trade Area (AfCFTA) agreement to be effective, Nigeria and other African countries must limit cheaper goods from Asia coming into the African continent. According to the chamber, if this move is not adopted, intra-African trade may remain at less than 10 per cent and defeat the main objective of AfCFTA. Director-General of the LCCI, Dr. Chinyere Almona, in a chat with New Telegraph, explained that that logistics in terms of transport of goods and persons across Africa was quite challenging.

She noted that this iwas pushing transport costs up and also translating to higher prices of goods produced in Nigeria than other climes where these logistics challenges are not present. According to her, with cheaper products from Asia, with a comparative advantage with cheap labor and government funding, products made in Nigeria for export under the Af- CFTA may not compete favorably if the aspects of transport and logistics are not addressed holistically in AfCFTA. Almona said: “Logistics in terms of the transport of goods and persons across Africa is quite challenging. This pushes transport costs up and translates to higher prices of goods produced in Nigeria than other climes where these logistics challenges are not present. “So we are at a comparative disadvantage, making our products less competitive at the international markets.

“In connection with taking advantage of the African Continental Free Trade Agreement (AfCFTA), the cost of logistics pushes prices up. It makes the overall cost of exported goods higher than other products manufactured in countries like China, India, Turkey, etc., that find their way into African economies. “Our border crossing experience is also challenging and makes export logistics expensive. “With a higher cost of logistics, products made in Nigeria cannot compete favorably on price levels due to the cost of production from costly logistics.” The economic analyst pointed out that Nigeria had logistics challenges to resolve in order to produce and export goods that are competitive across Africa. To her, these challenges range from bad roads, insecurity on our roads, and extortions by security agencies along the roads. “We must deal with insecurity crises at the points of production and dangers on our roads. “This lends credence to our call for the use of rail to move goods across cities and even across borders within Africa.

“A recent idea is to move from exported products to exported patents. More companies seek partners in countries that need their products to sell patents for in-country production. This model cuts away some logistics challenges and makes for competitive products,” Almona added. According to her, another way out is to ensure that governments across Africa are committed to establishing rail lines to connect the major cities. Survey shows that Nigeria is estimated to be losing N3.7 trillion annually due to wastage arising from improper storage of foods and logistics challenges.

 

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