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Will AfCFTA maximise Nigeria’s economic potential?

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It took sustained pressure by development experts and industry operators before President Muhammadu Buhari signed the African Continental Free Trade Area (AfCFTA) agreement. But, the jury is still out on whether the deal, which seeks to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3.3 trillion, holds the key to maximising Nigeria’s economic potential.

After a 16-month demur, President Muhammadu Buhari has signed the African Continental Free Trade Area (AfCFTA) treaty.

He did so on Monday at the opening of the 12th Extraordinary Summit of the African Union (AU) and se of the AfCFTA in Niamey, Niger Republic.

The AfCFTA was adopted by the 18th Ordinary Session of the Assembly of Heads of State and Government of the AU in Addis Ababa, Ethiopia in January 2012. It is expected to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3 trillion.

The agreement is seen as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade. It will do this by committing countries to liberalise services and trade and remove tariffs on 90 per cent of goods.

Apart from its inherent capacity to promote economic growth and, reduce poverty in the partnering countries, it is also expected to help expand and diversify trade and increase domestic and foreign investment.

But President Muhammadu Buhari cancelled his earlier scheduled visit to Rwanda to sign the AfCFTA, citing the need to allow for more consultations with stakeholders in Nigeria over the trade agreement.

He also said there was the need for his administration to be more circumspect in entering into any agreement that would make the country a dumping ground and jeopardise its security.

In boycotting the trade liberalisation deal, Buhari buckled under intense pressure by members of the Organised Private Sector (OPS), including Manufacturers Association of Nigeria (MAN), Nigeria Association of Chambers of Commerce, Industries, Mines and Agriculture (NACCIMMA), and the labour movement.

Although, many of them vehemently kicked against the proposed agreement, insisting that it will hurt Nigeria’s economy, the a preponderance of opinion by international development experts was that Nigeria was shooting herself in the foot by refusing to sign the deal.

For instance, President of African Export-Import Bank (Afreximbank), Prof Benedict Oramah, one of the leading lights in the push for Nigeria to sign the deal was particularly livid that Nigeria, which hosted the forum that gave birth to the AfCFTA initiative, was yet to decide on what to do with it.

At a recent public lecture in Lagos, Oramah said given Nigeria’s vantage position as Africa’s largest and most populous economy, AfCFTA actually handed her a window of opportunity to maximise her economic potential almost on a platter.

He regretted Nigeria’s inability to sign the agreement more than a year after 49 out of 55 African countries signed it, even as 20 other African countries had ratified it. He urged the Federal Government to take urgent steps to sign and implement AfCFTA in order to take advantage of its numerous benefits.

According to the Afreximbank chief, one of the benefits of the deal waiting for Nigeria to grab, if it summons the political will to sign it was the possibility of taking over from China as the world’s manufacturing hub.

However, while the call by Oramah and indeed, other experts and critical stakeholders in the economy on Nigeria to endorse the treaty may have hit the right chord in Buhari’s years hence, the signing, the controversy over whether the deal will deliver still lingers.

Buhari hinted at this renewed controversy when at the signing of the the treaty, he said emphasised that free trade must be fair trade.

‘‘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.

‘‘I wish to assure you that Nigeria shall sustain its strong leadership role in Africa, in the implementation of the AfCFTA. We shall also continue to engage, constructively with all African countries to build the Africa that we want,’’ a statement by the president’s Special Adviser on Media and Publicity, Mr Femi Adesina, said.

The President, however, declared that Nigeria’s commitment to trade and African integration had never been in doubt nor was it ever under threat. He told the Summit that Nigeria will build on the event by proceeding expeditiously with the ratification of the AfCFTA.

Indeed, Buhari’s insistence on fair trade was borne out of fears being expressed by opponents of the treaty that signing the deal will be counter-productive. For instance, manufacturers have never stopped screaming blue murder over issues of market access and the enforcement of Rules of Origin (RoO) under AfCFTA.

They argue, for instance, that the RoO in the cannot be adequately enforced to guard against the influx of goods into the Nigerian market.

The RoO are used to determine the country of origin of a product for the purpose of international trade. But, manufacturers fear that the RoO cannot be adequately enforced because of goods from the European Union (EU) can find their way into one of the African countries that have a bilateral agreement with the EU.

They also said the agreement’s market access was a concern to them, as it leaves low protection to locally produced goods. “The agreement says that 90 per cent of the tariff plan would be liberalised, leaving only 10 per cent to protect manufacturers. That 10 per cent is too low,” MAN said.

The Nigerian Labour Congress (NLC) also weighed in on the matter, expressing fears that the deal will lead to the collapse of the  manufacturing sector and loss of jobs. It also raised the alarm that if signed, the CFTA will turn Nigeria into a dumping ground for repackaged and re-bagged foreign goods from Europe and other developed countries.

The alleged lack of inputs of critical stakeholders in the proposed agreement has also not gone down well with the NLC. Its President, Comrade Ayuba Wabba, argued that ordinarily, proponents of the trade document ought to have consulted all relevant stakeholders because of its likely implications on the economy.

Some of these fears forced the president to set up a committee to review the CFTA framework agreement. Before the deal was signed, the committee said it had moved to strengthen its consultations with critical stakeholders.

According to the committee, this was to determine how various sectors of the economy will benefit from the proposed agreement.

But proponents of the treaty have kicked their heels in, insisting that AfCFTA will be a game-changer for Nigeria. Some of them noted that with the trade liberalisation deal, an economy like Nigeria would larger than that of Australia in 32 years.

For instance, an acclaimed international trade policy expert, Ambassador Chiedu Osakwe believes that intra-African trade, which was at 16 to 17 per cent, would be increased to 52 per cent with corresponding GDP growth and increase in employment and job creation on the continent.

The President, Lagos Chamber of Commerce and Industry (LCCI), Mr. Babatunde Ruwase also described the AfCFTA as an economic game-changer, noting that Nigeria stands to benefit from the continental economic integration.

“The reality is that there is a great deal of value in economic integration, but as a country, we need to position ourselves well to take advantage of the opportunities it offers.

“The AfCFTA is an age-long dream of the continent with regards to the promotion of trade and investment among African countries. As a country, our decision on the AfCFTA could be a game-changer for the Nigerian economy if we do the right thing at the right time,” the LCCI boss said.

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