AfCFTA: A long shot In the dark for Nigeria

David Oladimeji |

Experts from Nigeria’s business community have preached cautious optimism in adopting the provisions of the African Continental Free Trade Agreement (AfCFTA) in view of a deficit of vital prerequisites among member states.

Majority of their concerns revolve around fragmented trade patterns, infrastructure deficit, poor history of intra-African trade and low exploitation of raw materials through manufacturing.

Ventilating their views recently at the Lagos Chamber of Commerce International Arbitration Centre (LACIAC) roundtable with the theme “Maritime Business and Disputes”, the experts advocated increased efficiency, upgrade of infrastructure and automation of processes in order to deepen regional integration and create a single continental market for goods and services.

Speaking on “The African Continental Free Trade Area – growing export market and the potentials for the maritime industry”, Executive Director of the Africa International Trade & Commerce Research Limited, Mr Sand Mba, queried Africa’s wisdom in embracing trade liberalisation at a point in time when protectionism was gaining ground among influential global markets.

While he agreed that integration was crucial to increase trade on the continent, Mba also highlighted the fragmented nature of transnational trade in African and Nigeria’s failure to make the ECOWAS Trade Liberalization Scheme (ELTS) work in its favour.

The policy advisor therefore, encouraged business operators to put measures in place to harness the potential of Africa’s one-billion-market through business-friendly regulatory policies, deployment of technology and expanding operational scope on the continent.

Managing Director of the Nigerian Ports Authority (NPA), Ms. Hadiza Bala-Usman in her contribution listed efforts to improve maritime and port connectivity in Africa and also assessed the readiness of African seaports for the aggressive competitiveness that accompanies continental market access.

“In Nigeria, we are preparing for AfCFTA with development of deep seaports to serve as transhipment hubs, digitization of port processes and improved security surveillance of Nigerian waters”, Hadiza, who was represented by the General Manager, Managing Director’s Office, Dr Chinwe Abama, said.

She noted that other interventions include the development of a Single Window framework, introduction of electronic systems of payment and upgrade of port infrastructure with emphasis in multimodalism.

However, the Manufacturers’ Association of Nigeria (MAN) did not share the same optimistic sentiments.

Delivering a scathing analysis of Nigeria’s readiness for AfCFTA, representative of the President, Manufacturers’ Association of Nigeria (MAN), Chief Reginald Odia, said that the country’s prolonged trade in primary commodities was a severe threat to benefitting from the AfCFTA regime.

“Failure to build manufacturing capacity, coupled with the poor attitude to made in Nigeria goods, has stagnated the sector’s contribution to the nation’s Gross Domestic Product (GDP) at less than 6% since pre-independence”, Odia said, “and this puts us on unequal footing with the rest of Africa who have robust manufacturing sectors.”

To reiterate his position about Nigeria’s lack of preparedness for the AfCFTA regime, Odia noted that the percentage of intra-continental trade stood at less than 15%, while Africa’s trade with the rest of the world measured at less than 10%.

On that note, he advised government to encourage the establishment of manufacturing clusters aimed at gaining competitive advantage, provide interventions and subsidies to galvanize production, as well as adopt technology to boost innovation.

He also highlighted the significance of adding value to raw materials and the development of Research and Development centres to enable Nigeria domicile wealth and build capacity.

Executive Secretary of the Nigerian Shippers’ Council, Hassan Bello, in explaining the Council’s role in the AfCFTA regime noted that its emphasis on stakeholders’ consultation and granular analysis of the agreement to Nigeria’s economic fortunes was responsible for the federal government’s delay in ratifying the deal. This he said, caused other member-states to subject the agreement to further scrutiny.

“We had concerns about the impact of the AfCFTA deal on the Nigerian economy especially with regard to manufacturers and shippers. Our concerns encompass the readiness of Nigerian ports in terms of infrastructure, port connectivity indices and the lack of competition among terminal operators in Nigerian ports”, he said.

Bello noted further concerns bordering on multiple regulatory levies and singled out the tacit silence regarding which agency would be responsible for coordinating Nigeria’s readiness to implement the AfCFTA.

In this regard, Bello revealed that as part of its preparations for the ACFTA era, the Council was in the process of establishing a Maritime Bank to cater to the peculiar challenges of the shipping community in Nigeria and provide financial incentives to enable stakeholders benefit from the unfolding developments.

Addressing prospects for indigenous shipping in the AfCFTA era, a representative of the African Ship Owners Association, Mrs Olufunmilayo Folorunso said that this was the time for fleet development in Africa.

She however substantiated Chief Odia’s position about Nigeria’s low manufacturing capacity with a caveat stating that “If you do not have trade, you cannot acquire vessels. It is a known fact in the shipping industry that trade, driven by manufacturing, attracts finance for vessel acquisition.”

Folorunso further clarified that under AfCFTA there would be a lot of changes to shipping stakeholders, trade patterns and sources of cargo. She therefore reiterated the need to develop trade, address political will to increase ship ownership as well as subsidize the shipping industry which is arguably the second highest grossing sector of the economy after oil.

In his submission on integrating the “African continent for the development of maritime trade – eliminating trade barriers and dispute management”, Professor of International Business and Economics Laws, OAU Ile-Ife, Professor Ademola Popoola, advised proponents of the AfCFTA in Nigeria to revisit defunct bilateral agreements, complete transnational highways and rail connections and develop a legal framework and disputes resolution mechanism to address issues that may arise from the operations.

In the same vein, a Maritime & Logistics Consultant, Mrs Obiageli Duru, proposed further strategies to the seamless implementation of the AfCFTA.

According to her, “We need to simplify processes especially at the borders and harmonize trade documents in the cargo clearing process, while tariff schedules and a system for addressing non-tariff barriers should also be put in place.”

The experts therefore advised the federal government to adopt an integrated approach to optimize the potential of trade deal and solicited the cooperation of the private sector to ensure its positive impact on the Nigerian economy.