Before Nigeria ratifies African Continental Free Trade Agreement (AfCFTA)

For several years in the past, African Heads of Government have been desirous of having a single and unified African market  devoid of any form of trade barriers for goods and services.

They wanted a single market patterned along that of unified European market created by European Union(EU).

After several failed attempts due to divergent economic and political interests, the African leaders , at 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,finally  adopted a decision to establish a Continental Free Trade Area (CFTA), setting a tentative date of 2017 for take-off.

However this dream only  crystallised in 2018 when 44 African countries became initial signatories to the African Continental Free Trade Agreement (AfCFTA) in Kigali, Rwanda in March,  2018.

As the year wore on, more countries, including South Africa, signed the Continental Trade Agreement.

All this while, Nigeria, with the biggest economy and largest market in Africa, held back, raising anxiety among other African countries which understandably felt agitated and uneasy at Nigeria’s delay in joining the fray.

The country eventually ended the wild speculations that trailed its refusal to endorse  the agreement when in July 7th, 2019 in Niamey, Niger Republic, President Muhammadu Buhari signed the agreement.

Thus,  Nigeria was the last  country to sign the agreement out of the 54 countries of Africa Union, safe for Eritrea which is yet to join.

Expectedly, the decision of Nigeria to sign the agreement, despite opposition from organised private sector, marshaled by Manufacturers Association of Nigeria(MAN), has sparked off divergent views and opinions among players in the economy.

While some experts felt  there was no need to fret over Nigeria’s decision to sign the agreement,  others like the members of the Organised Private Sector, said the economy of the country is too fragile to be exposed to unrestricted competition.

Nigeriamaritime360.com shares the points of views of the two schools of thought on this matter.

Before we however justify our position on this issue, it would be instructive to put the agreement in proper perspective to aid comprehension.

The dream of the proponents of this ambitious concept is to pull the enormous human and material resources in all the 55 African countries into one huge, unified market of about 1.2billion people of the continent with a combined GDP of $2.5 trillion.

The concept is to create a single continental market for goods and services as well as Customs union with free movement of capital and business travellers.

Countries joining AfCFTA must commit to removing tariffs on at least 90 percent of the goods they produce.

According  to the United Nations’ Economic Commission for Africa( ECA), AfCFTA, when  fully subscribed by all the 55 African countries, will be the world’s largest trade union by countries and resources.

We are convinced of the potential huge benefits of this continental trade union for Nigeria.

It would afford all the African countries, including Nigeria, to source cheap raw materials within the continent and equally find ready make market within the continent.

It is a trade union that is expected to wean African countries from their hopeless dependence on European goods and services.

The huge trade volume of over 40 percent within the continent and which is expected to grow astronomical to about 52.2 percent by 2020, is expected to be retained among the trading African countries.

The huge benefits inherent in the continental market lies its pitfalls for Nigeria.

As it stands now, it would be suicidal for Nigeria to ratify the agreement given the huge infrastructural gaps in the country.

We agree with some informed experts who caution Nigerian government to tarry a while before the country ratifies  the trade agreement.

Though the country has signed the agreement but will not start the implementation till it deposits the instrument of ratification with the AU Secretariat.

We urge the Nigerian government, before it ratifies the agreement, to fix the problems in the  power sector  to put the manufacturers on a good footing.

Equally, the issues pertaining to standardisation and measurement of products for export should be sorted out to make our goods acceptable in other African countries.

In ratifying the agreement, Nigeria should be guided by the failed experience of ECOWAS Trade Liberalisation Scheme (ETLS) .

The scheme , meant to liberalise trade among West African countries, was badly implemented

as some  countries, especially the Francophone countries, exploited the loopholes in the trade agreement to flood Nigerian market with goods produced in France which is their former colonial master.

The ETLS, which was meant to encourage and facilitate trade of goods produced within the sub-region, was used to bring in goods produced by the former colonial masters of some of these African countries who are acting as surrogates and satellite countries of their former colonial masters.

Nigeria should ensure the same experience of ETLS is avoided in the AfCFTA which is much bigger in scope and size.

Another issue we want Nigeria to take a critical look at is the fact that a subscribing country to AfCFTA should be ready to remove tarrif on at least 90 percent of the goods it produces.

This condition means huge loss of revenue on those goods .

It would be dangerous and suicidal for the country to rectify the agreement yet if its power sector is not revived and boosted to give made in Nigeria goods  that competitive edge over the goods that will flood Nigerian market.

With huge population of about 200million and having the biggest economy in Africa, Nigeria will be the preferred destination for exports from other African countries under the  Continental Trade Agreement.

If necessary infrastructures such as roads, rails power supply and friendly tax regime that will made the business environment conducive are not in place before ratification, this will expose the Nigerian made goods to unfair competition which may stifle their growth.

Also, to make our goods acceptable and competitive in other African countries, relevant agencies of government should ensure strict adherence of made in Nigeria goods with required standards and measurement.

This is where the Nigerian Shippers Council as a leading agency on the presidential committee on the implementation of the agreement should interface with government with the aim of ensuring that  necessary infrastructures are put in place while  any other steps that will not expose Nigerian goods to unfair competition are taken by government.

In addition, the Shippers’Council should, as a matter of urgency, engage massive sensitisation and enlightenment  programme that will clear the fog of misunderstanding of the concept.

We are optimistic that  Nigeria stands to gain enormous benefits from this continental trade union.

It is also our opinion that the country will have a sizable share of the continental market which is expected to be growing exponentially in the coming years only if Nigeria put its house in other.

Even though the agreement has come into force in May, 2019, having recorded 22 countries which have submitted the instrument of ratification, Nigeria is not yet bound to implement the agreement until it ratifies it.

Anything short of doing the needful, ratifying the continental trade agreement will spell a doom for the country.