By ADEBAYO OBAJEMU
By eventually plugging into the African Continental Free Trade Agreement ( AfCFTA ) on July 7, 2019 at the African Union Summit held in Niamey, Niger, Nigeria joined the rest of Africa in this trade bloc and apparently positioned for the benefits.
The AfCFTA has as its cardinal objective the creation of a single continental market for goods and services as well as allow for free movement of business persons and investments.
But experts have continued to question the rationale for signing up at this point in time given the exigent challenges in the economy, stressing that having joined Nigeria should promptly address the loose ends in the treaty to avoid long term adverse effects. Nigeria’s President Muhammadu Buhari had approached the treaty with caution and delayed signing the pact for over a year as a result of objections from the labour unions and the manufacturers who were not as optimistic as the treaty’s proponents who claimed it is a win-win for every African economy.
Mr. Henry Boyo, an economist and manufacturer takes a pessimistic view of the treaty in terms of the inherent gains for Nigeria.
“Why do you want to conquer a space that you don’t need to conquer when you have not yet conquered your own internal space?,” Boyo asked in an interview consequent upon Nigeria’s entry into the treaty. His position is premised upon Nigeria’s advantage in terms of population that makes it Africa’s largest market.
According to him, Nigerian companies presently supply only about 10 to 15 percent of what is internally required with most of the rest coming from abroad. He pointed out that China closed her borders at a crucial moment in the past and maintained the status quo until it was ready for global competition.
This view was reechoed by Professor Hassan Saliu, former Dean Social Science at the University of Ilorin. He told this newspaper that “there is no way you can reap the full benefits of a continental free trade if your infrastructure is deficit, Nigeria is a big market, in fact the biggest in Africa. What we need is good infrastructure.”
“We ought to have recognised some issues before walking into this so as not to do ourselves a lot of disservices,” he notes.
While Boyo bleakly views Nigeria’s prospects in the treaty that will require extensive trade liberalisation across the continent as it becomes activated, Alhaji Abdul Rabiu, Chairman and Chief Executive Officer of BUA Group express mixed feelings. Although he is convinced the treaty offers immense benefits for the agricultural, manufacturing, IT, financial services and other sectors, he is also aware that the present structure on ground is unfavourable for Nigeria to be competitive at the Continental stage.
Rabiu’s main fear is that Nigeria may easily become Africa’s dumping ground if some details of the pact are not transparently addressed to keep the country immune in this respect.
“It doesn’t favour us now because of our huge population and our heavy dependence on imports. We don’t want a situation of having a borderless continent with smaller countries importing almost everything consumed in Nigeria from China, for instance, and then dumping it here in the name of AfCFTA,” says Rabiu.
According to Rabiu, who belongs to the team of the private sector representatives consulted by the government concerning the development, the agreement terms would have to be tweaked to favour Nigeria to avoid the grave economic danger of dumping.
” Dumping is the number one issue which, if allowed, we would not have any control over. Benin Republic, for instance, could import three or four tonnes of rice, dump it into their country and then bring it into Nigeria, backed by a free trade agreement, which will ruin the entire agricultural sector in Nigeria,” Rabiu said.
Rabiu also pointed out that earlier trade pact even at African regional level had yielded no positive results. He referred to an earlier Economic Community of West African States Trade Liberalisation Scheme, ETLS signed many years ago that is not working.
” It is not being respected by the 15 countries that are part of it,” he said. In his view, countries that have failed to respect smaller agreements are unlikely to be faithful to a treaty the size of the AfCFTA.
Mr. Ariyo Oshe, founder and CEO of Ariosh Limited, in Victoria Island, Lagos, whose turf is the oil and gas sector, volunteered an insight to BusinessHallmark concerning another implication of the continental trade pact yet taken for granted.
” The issue of Nigeria’s weak Naira exchange rate to the dollar and even the currencies of some African countries will be a finer point of contention, how will this be handled to turn out advantageous for Nigerian players?” he asked.
In a chat with BusinessHallmark, Dr. Olufemi Omoyele who teaches Management at Redeemer University said ” Nigeria is a big market for any business, what we need now is not membership of a continental free trade area, but solid infrastructure, like power and good road network. Nigeria is enough for itself for now, that’s not to say there are no advantages in AfCTA, but we are not poised for the competition for now because of infrastructural deficit. ”
At an earlier Civil Society Forum, just before Nigeria’s entry into the agreement, Mr. Ruzvidzo Thokozile, a United Nations top official noted that the trade treaty would lead to far easier access to every African market by all Africans. And such fluidity may translate to even more heightened immigration issues surpassing what Nigeria currently faces. In some quarters, It is perceived as throwing a big door open to allow an influx of more hands to further aggravate Nigeria’s existing and frustrating unemployment levels.
In a recent interview with Renewable In Africa, RIA, a website on renewable energy Industry, Christophe Bundy, an International Trade counsel hinted that the AfCFTA, though set to roll into motion needs not yet be cast in stone. The legal expert, formerly a senior counsel in Canada’s Trade Law Bureau and an adviser to United Kingdom’s House of Commons’ Brexit Committee on trade pact prospects touched on elements in the current trade agreement that are yet to be discussed to fully unlock the potentials.
According to him, several crucial elements are missing in the treaty and need to be discussed towards the possibility of supplementing the current agreement.
“There is usually a full chapter on environmental standards and I think that remains to be done in the context of future iterations of this agreement, and also a chapter on energy, those are things that can be hardwired into an agreement,” he says.