The signing of the African Continental Free Trade Area (AfCFTA) Agreement on July 7th has continued to generate fears among Nigerians. It could be detrimental to the Nigerian economy which lacks critical infrastructure.
President Muhammadu Buhari had put the agreement on hold but eventually signed it after 16 months of intense pressure and lobbying from within and outside Nigeria. It was signed at the opening of the 12th Extraordinary Summit of the African Union (AU) in Niamey, Niger Republic, but it has not been ratified by lawmakers.
On the advice of the Manufacturers Association of Nigeria (MAN) and captains of industry, Buhari failed to attend the Kigali (Rwanda) Summit in March 2018 where he was to pen the agreement. His explanation was that the nation was still studying the initiative.
The Organised Private Sector (OPS) reversed its stand, reasoning that Nigeria had more to gain, because the nation would have access to the larger market of the member countries of the African Union (AU).
AfCFTA holds the key to uplifting Nigeria’s economic potential because it seeks to create a continental trade bloc of 1.2 billion people with a combined Gross Domestic Product (GDP) of about $3.3 trillion, the OPS stated.
Muda Yusuf, Director-General of the Lagos Chamber of Commerce and Industry (LCCI), said that Nigeria’s access to African countries offers tremendous opportunities for “our firms”.
Mansur Ahmed, President of MAN, said: “Initially, we (manufacturers) were not fully prepared, but right now, we are more than ready to benefit and exploit the framework of the agreement.”
Ayoola Olukanni, Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), likened the AfCFTA to the European Union (EU), the North American Free Trade Agreement (NAFTA), and the Association of Southeast Asian Nations (ASEAN).
“AfCFTA is finally here. It is a clear indication that we are on the margins of history on the emergence of Africa as a single and unified market. However, only those who prepare for it will harness the full potential,” he said.
Olukanni added that before the agreement, most Nigerian companies, including banks, operated in 18 African countries, while Nigeria practically dominated the entertainment and creative sector of the continent.
“Nigerian airline operators, in spite of the tough terrain of the domestic aviation sector, provide services across the west and other parts of Africa. Now is the time for other sectors to harness the potential of the agreement,” he said.
The President of the African Export-Import Bank (Afreximbank), Professor Benedict Oramah, said that Nigeria has been handed a unique window of opportunity to maximize economic potential, being Africa’s largest population and biggest economy.
He said that Nigeria is standing on the brink of the possibility of taking over from China as the world’s manufacturing hub.
The African Union Development Agency-New Partnership for Africa’s Development (AUDA-NEPAD) also argued that the agreement was capable of eliminating illegal migration, a major problem in Nigeria.
The CEO of AUDA-NEPAD, Gloria Akobundua, noted that the gains included infrastructural development, job creation and economic growth because Nigeria’s small, medium and large scale industries were well positioned for benefits.
In spite of the many apparent advantages, many others believe that Nigerians are still underperforming industrially and that free trade and movement among the 55 African nations can hamper its industrial growth. They have continued to highlight issues that can inhibit the ratification of the agreement.
Nigeria’s poor industrial and productive capacity, seen as one reason for the delay in joining the free trade area, has not changed. Local industry experts fear that Nigeria is going to be a dumping ground.
On July 22nd, the Senate expressed worries over the nation’s decayed industry and infrastructure. Good infrastructure and industries, it says, are essential for the smooth operation of AfCFTA. The Senate identified areas such as electricity, good roads and sources of raw materials as critical areas.
The Nigerian Labour Congress (NLC), an umbrella body of 52 trade unions, said that the deal would lead to the collapse of the manufacturing sector and loss of jobs. It also raised the alarm that AfCFTA will turn Nigeria into a dumping ground for repackaged and re-bagged foreign goods from Europe and other developed countries.
President Buhari had also warned that “Nigeria wishes to emphasise that free trade must also be fair trade.
“As African leaders, our attention should now focus on implementing the AfCFTA in a way that develops our economies and creates jobs for our young, dynamic and hardworking population.’’
The manufacturers had earlier objected strongly to issues of market access and the enforcement of Rules of Origin (RoO) under AfCFTA. They argued, for instance, that the RoO cannot be adequately enforced to guard against the influx of goods into the Nigerian market.
The AfCFTA commits countries to liberalising services and trade and to removing tariffs on 90% of goods, but many ask which services and trade Nigeria will offer at a time when it is seeking to diversify its monolithic economy and set an end to its dependence on oil and gas.
The Nigerian Institute of Management (NIM) is not comfortable with the proposals. Professor Olukunle Iyanda, President of NIM, is worried that the agreement will not be beneficial to the country due to the nation’s infrastructure deficit.
“The agreement will not be too beneficial since the parameters to produce enough are not in place.
“My advice is that we should specialise in the production of higher value exports like cars, equipment and machinery rather than exchanging small value goods among member nations,” he said.
Stakeholders in the agricultural sector recommended in a communique issued on July 22nd that boosting domestic consumption, rural infrastructural development and export promotion was the way forward.
The Central Bank of Nigeria (CBN) joined the debate on July 23rd, at the meeting of the Monetary Policy Committee (MPC) in Abuja. Godwin Emefiele, Governor of CBN, urged the government to put measures in place to aid the economy in reaping the benefits and full potential of AfCFTA.
He noted the need to resuscitate moribund industries in Nigeria and improve key infrastructure in order to strengthen the productive base of the economy, create job opportunities and boost exports.
The National Assembly will throw open the debate once more in order to determine whether the agreement will be ratified.