How Nigeria can maximise benefits of AfCFTA

“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 hard-working population”

– President Muhammadu Buhari in his speech after signing AfCFTA in Niamey, Niger Republic on July 7, 2019

Nigeria became the 53rd country to sign the African Continental Free Trade Area Agreement when President Muhammadu Buhari signed on Sunday, July 7, 2019. Eretria is the only country out of the 55 African countries yet to approve the deal.  The signing took place at the 12th Extraordinary Session of the Assembly of the Union on AfCFTA and the First Mid-Year Coordination Meeting of the African Union and the Regional Economic Communities in Niamey.

According to Buhari, AfCFTA can be a platform for African manufacturers of goods and providers of service to construct regional value chains for Made-in-Africa goods and services. He also highlighted some of the likely challenges the agreement could face  to include “tackling injurious trade practices by third parties and attracting the investment we need to grow local manufacturing and service capacities.” The President had been reluctant to sign the agreement until he was convinced to do so after wide consultations with critical stakeholders such as the Nigerian business community and Civil Society Organisations.

Background information gleaned from the website of AU reveals that “The 18th Ordinary Session of the Assembly of Heads of State and Government of the African Union, held in Addis Ababa, Ethiopia in January 2012, adopted a decision to establish a Continental Free Trade Area by an indicative date of 2017. The Summit also endorsed the Action Plan on Boosting Intra-Africa Trade which identifies seven clusters: trade policy; trade facilitation; productive capacity; trade related infrastructure; trade finance; trade information; and factor market integration. The AfCFTA will bring together 54 African countries with a combined population of more than one billion people and a combined Gross Domestic Product of more than $3.4tn.

I have been involved in a couple of media engagements since Nigeria signed on to this trade agreement. For instance, I spoke with a reporter from the Premium Times as well as analysed it on “The Podium”, the current affairs programme on Love 104.5 FM (Crowder Radio) in Abuja on Monday, July 15, 2019. There is no gainsaying that the potential and prospects of AfCFTA is good for Nigeria, nay Africa.

However, how can we maximise the gains of this new trade agreement? What structures has Nigeria put in place to spearhead the implementation of this agreement? How will AfCFTA impact on the extant ECOWAS Trade Liberalisation Scheme?  How will the new trade deal impact on Nigeria’s industrial revolution plan? Have we done a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis of this trade agreement? Will this not go the way of African Growth and Opportunity Act initiated by the United States for improved trade relations with Africa?

Recall that the African Growth and Opportunity Act better known as AGOA is a US Trade Act, enacted on May 18, 2000 aimed at significantly enhancing market access to the US for qualifying sub-Saharan African countries. In order to qualify and remain eligible for AGOA, each country must be working to improve its rule of law, human rights, and respect for core labour standards. Little wonder many African countries could not benefit from the trade deal.

No doubt, there are two sides to every coin, As such, there are the good and bad sides of AfCFTA. President Buhari raised one of them, namely, injurious trade practices by third parties. It is a fact that some countries may connive with some non-African countries to be used as a conduit to dump their products in Africa. The modality is to simply re-label those products as being manufactured by an African country in order to take advantage of low tariffs and other benefits of free trade.

It is in order for the President to call for fair trade but that will not happen unless we are vigilant and sharpen our negotiation skills. Traders are in business to make profit, super profit if you allow them. It is for the buyer to negotiate a fair deal.  Furthermore, we need to tighten security at our borders both for national security as well as to prevent smuggling which may lead to dumping of foreign goods into our market. Dumping has the capacity to ‘kill’ our local industries as they will not be able to favourably compete with the foreign products which despite being based overseas are still cheaper. This is what has negatively affected our textile industry as well as some of our agricultural products like frozen foods and rice.

For Nigeria to gain maximally from AfCFTA, government at all levels must work together to promote the ease of doing business. This goes beyond making affordable land available to investors, quick clearance of goods from the ports and easy visa requirements. To significantly reduce the cost of doing business, we must fix our decadent social infrastructure such as roads, rail, air and water transport, provide affordable and constant electricity supply, make available interest free or low interest rate on loans, longer moratorium for debt repayment, reasonable taxation and adequate security. These are things that can help improve micro, small, medium and even large enterprises. It will boost production and make the MSME produce at competitive prices.

If Nigeria will gain optimally from AfCFTA, then there must be value addition to our unprocessed products. Exporting raw materials, be they agricultural products or solid minerals, will attract little profit margin for our producers. However, if we are able to process them into finished or semi-finished products, our profit margin will soar. I have always asked myself why we cannot extract industrial starch out of cassava for export; produce fruit juice from our numerous local fruits for export or set up petrochemical industries in Nigerians to process our crude oil into several other products such as petroleum jelly, lubricants, plastic products, polythene bags, synthetics, pharmaceutical products, etc.

There must be zero tolerance for corruption in the implementation of AfCFTA. Besides, shady deals and sharp practices must be shunned. National interest, not pecuniary gains, must be the watchword. Foreign products to be imported into Nigeria under this trade agreement must be safe and secure for human consumption. The same way for Nigerian products to be exported to other African countries. Government regulatory agencies like the National Agency for Food and Drug Administration and Control, Standards Organisation of Nigeria, Nigerian Investment Promotion Commission as well as the Federal Ministry of Trade and Investment must all be alive to their responsibilities. The customs and immigration authorities must all ensure that their officials fully obey the country’s position on AfCFTA. Also, adequate public enlightenment is imperative on this new trade deal.