AFCTA: Local Manufacturers fear Nigeria may be dumping ground

Abiola Seun

The Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI) have urged the Federal Government to speedily address issues that could make the AfCTA agreement a risk for local industries in Nigeria, so that Nigeria can fully tap the benefits of the signing of the agreement.
Speaking to journalists, the Director General of MAN, Mr. Segun Ajayi Kadiri warned that like all agreements, the AfCTA has opportunities and risks.
According to Mr. Kadiri, “The agreement gives a lot of opportunities to access the 1.2bn African population market, $2.5trillion African economy, and more than 50 other countries to trade with under a liberalised tariff.
“So it should normally offer manufacturers in Nigeria enormous opportunities. However, there are also downsides.
“The agreement will also expose us to influx of goods from other African countries, which will be competing with goods produced by our local industries. It will also have impact on the revenue of government that would have been otherwise derived from Duty.
“It also imposes a requirement for us to redress our supply side constrain inorder for us to be able to compete with products from other parts of Africa.
“This means that we need to be mindful of the infrastructure challenge which we need to redress inother for our products to be competitive.
“It also means that Nigeria needs to put in place structures that will facilitate increased capacity utilisation that will bring down drastically the cost of manufacturing. It also means that Nigeria needs to work more on the State of her borders so that the country is not subjected to influx of products through maybe smuggling.
“Nigeria also have to ensure that the Rules of Origin are obeyed in such that there is no trans-shipment and there is no under-declaration of value addition and local content.
“There are quite a number of things that our govenrnent has to do to ensure that the nation enjoys the benefit of the AfCTA agreement and mitigate the risks associated with it.
“There is no way that we will take away the fact that our environment is a high-cost one due inadequate power supply. Apart from the fact that power supply is not adequate, it is also expensive. In a manufacturing process, cost of power supply is anywhere between 25percent to 40percent. However, this is not peculiar to Nigeria alone.
“So it’s important that government speedilly redress the constraints that makes the AfCTA agreement a risk to us so that the country can benefit wholly from it’s domestication.
In the words of the President, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, “We welcome the decision of the federal government to sign the African Continental Free Trade Agreement  [AfCTA] following the recommendation of the presidential committee on impact and readiness assessment of the agreement.
“This offers tremendous opportunities for economies of scale for our firms.  Not signing before now has denied us opportunity to put our views on the table to shape the structure of the agreement.  But the reality is that the agreement is work in progress and we can always revisit the gaps in the agreement that may not be favourable to us.
“We maintain that while this would improve trade among African countries and provide opportunity for Nigeria to export to other African countries, appropriate safeguard measures should be put in place to protect vulnerable sectors of the economy.
“It is also critical to ensure that there is effective enforcement of the Rules of Origin. Meanwhile, we are of the opinion that, in the long run, we should focus more on building an economy that is competitive rather than having a disproportionate focus on protectionist approach to industrialisation.
“We need to fix infrastructures to bring down operating and production costs in the economy.  Our policies and institutions must also be in consonance with the quest for a competitive economy.”

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