POSITIONING NIGERIA FOR BROADER GVC PARTICIPATION
Introduction:
GVCs are changing the way countries of the world interact with eachother, lessons from the World Bank MOOC on GVCs have revealed useful insights showing that there are tremendous benefits associated with GVC participation, especially for developing countries like Nigeria.
Global value chains have become a dominant feature of world trade and investment, encompassing developing, emerging, and developed economies. The process of producing goods, from raw materials to finished products, is increasingly fragmented and carried out wherever the necessary skills and materials are available at competitive cost and quality.
Desirous as it may seem, GVC participation in Nigeria is daunted with numerous issues mostly hinging on policy being inadequate and ineffective. The Nigerian economy faces the challenge of limited economic transformation and diversification. This is evident from the country’s specialization in less dynamic and low value added domestic activities and trading in the global system.
Nigeria is highly endowed with basic inputs and commoditiesthat would normally form the foundation for GVC. The country is rich in several agricultural products (cocoa, groundnut,palm produce, cotton, tomatoes, cassava, rice, maize, etc.),fisheries, livestock, precious stones (gold, gemstones, etc.), crude oil and natural gas. Most of these commodities hold high potential for significant value chain processes and GVC that remain largely untapped.
There have been some attempts to analyze the developmentpotentials of value chain in Nigeria. UNIDO, CBN and BOI (2010) focused on agriculture value chain development withemphasis on finance. The study found the highest potentials in cassava, rice, meat/leather, soybeans and fisheries and promising potentials for cotton, maize, palm, poultry and tomatoes. Beyond agriculture, the large endowment of the country in oil, gas and other natural resources that include solid minerals provide additional opportunities for value chain development and global integration of the country.
Challenges to GVC participation in Nigeria.
The observed weak value chain development and global integration in Nigeria despite the high potentials hinges on several identifiable challenges. There is weak local technological and skill capacity in key areas that could strengthenvalue chain development and global integration. For example, the country’s industrial and manufacturing base is yet weak with limited capacities in important areas like fabrication and metallurgy.
Weak regulatory and institutional framework:
for domestic production of quality goods that would meet the minimum acceptable specifications in global developed markets. Existing regulatory and institutional frameworks areweak, duplicative, and with overlapping mandates that evoke confusion among market players. These tend to limit the extent to which local products developed through value chain activities can enter the highly competitive global market.
Weak state of national infrastructure:
Over the years, thestate of infrastructure in Nigeria has ranked below average. In 2010, for instance, Nigeria ranked 100 out of 155 countries inthe Global Logistics Performance Index. The good news isthat the situation has gradually improved over the years with a peak ranking of 75 out of 160 countries in 2014. Despite thisimprovement, challenges remain high in logistics and infrastructure.
Poor coordination mechanisms: In agriculture commodities, for instance, there is no effective coordination among farmers, farm gate buyers, processors, and sellers. Buyers and suppliers do not have code of standards that would compel farmers to comply with given quality standards.
Recommendations
Articulate a clear National Policy on Value Chain Development that is effectively integrated with the national trade, industrial development and competitiveness strategies. This should provide streamlined approach to, not just domestic value addition, but also GVC integration. The policy should be effectively aligned with the country’s Industrial Development Policy and the newly signed Vision 2050.
Deepen policy to further improve the business and regulatory environment as well as strengthen the institutional framework to make investment in GVC attractive to domestic firms and globally successful transnational corporations. The provision of basic infrastructure such as electricity, water, transport, ports and logistics should be given more attention.
Conclusion:
Evidence from The World Bank shows that GVC participation is a proven way of lifting nations out of poverty by creating jobs and adding real value to the economy. It therefore becomes imperative for developing countries, particularly Nigeria to strengthen efforts geared towards effective participation. This would better the fortune of citizens and contribute in no small way in stripping the country of its highly undesirable title of poverty capital of the world.
