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Nigeria’s self-exclusion from African trade agreement may compound economic woes — Analysts



As the African Continental Free Trade Agreement comes into formal effect this week, Nigeria’s non-signing of the continental free trade deal may compound its economic woes, analysts are saying.

The coming into effect of the agreement on Thursday May 30 is following in the wake of the end of the stipulated 30 days lag period after the depositing of the required documents of ratification by 22 participating African states to the Secretariat of the African Union at Addis Ababa, Ethiopia. This portion was completed on April 30 and marked the end to that phase of the process which had begun at Kigali, Rwanda, almost exactly one year before then.

There would however be a session at the Extraordinary Summit of the AU in Niamey on July 7th to formally launch the initiative and bring it into full effect.

Upon its full coming into effect, the prognosis is that AfCFTA would be the single largest free trade area on earth and encompassing a primary market of 1.4billion people. It would also boost the tenor of neighbourhood trade among participating African countries from its present base of 15-17 per cent to 25 per cent in less than a decade.

Continental trade and economy watchers are perplexed over Nigeria’s current sluggishness in keying on to the AfCFTA train. This is more so when at the moment, the Nigerian economy, at 2.01 per cent, is the indisputable laggard in terms of GDP growth rate in the West African sub-region and also one of the least performing on the continent overall. Analysts say that with all its myriad of social and developmental problems, it just makes sense for the nation to explore as many trade and economic growth opportunities as it can find.

Another point of concern for continental watchers is the political dimension of the Nigerian position given that AfCFTA is the logical end-result of decades of agitation for greater intra-African trade that Nigeria had consistently been in the vanguard of. Indeed, it was on account of Nigeria’s status as ‘giant of Africa’ and vociferous leadership of the continental trade integration drive that the late Professor Adebayo Adedeji was singled out to be one of the leading lights of the then fledgling United Nations Economic Commission for Africa, UN-ECA. The Lagos Plan of Action in 1980 and the 1991 Abuja African Economic Commission, AEC, treaty was a further outgrowth of this process.

And even when the Council of Heads of States of the African Union, AU looked around for an anchor for the AfCFTA process earlier in this decade, it was another Nigeria, Ambassador Chiedu Osakwe that was to be chosen for the role. So where then does the talk about Nigeria not having been carried along in the whole process coming from, analysts and commentators are asking?

On their part, the Manufacturers Association of Nigeria, MAN and the Nigeria Labour Congress, NLC have come out to be in the vanguard of the interest groups that are openly advocating that the nation should not sign the treaty which 52 of the 55 nations in the continent have already endorsed.

While the NLC is pleading the old bogey of possible job losses, for the Manufacturers Association of Nigeria, the principal concern is that Nigeria signing up to the treaty may open the floodgate for third party dumping of manufactured goods on the country which would therefore make the sustenance of local production and the marketing of the resultant finished products more difficult, if not tortuous.

They point to the extant infrastructure, power and high interest rates challenges that presently tend to make goods produced within Nigeria to be relatively more expensive than those produced elsewhere and argue that with the associated 90 per cent tariff-free regime that would come into effect with the entry into force of AfCFTA, goods from Asia, Europe and other more competitive African nations could be ‘passed in’ through other less industrialised African nations and consequently have a competitive edge over locally produced Nigerian goods. In addition also, they argue that the tariff free regime would lead to a loss of revenue for the nation.

But then analysts are saying that we may indeed be shooting ourselves in the foot if we continue to stand in the way of the treaty. For them, while it is true that Nigeria has several uncompetitive trade challenges, a better response would be to address them frontally rather than just closing up the space because we cannot compete!

Speaking on the subject, former President Olusegun Obasanjo simply described the nation’s refusal to sign up for the treaty as most regrettable. The former President who is the chairman of the Intra-African Trade Fair (IATF 2018) Advisory Council and who also was one of the leading lights of the process that led to the founding of the African Union and the companion New Partnership for African Development, NEPAD, and the African Peer Review Mechanism, APRM would want the situation redressed so that the country can take the best advantage of the treaty.

However, in his recent attempt at communicating the government’s position on the subject, the Minister of Industry, Trade and Investment, Okechukwu Enelamah, affirmed that the nation would however not lose anything by not signing the Africa Continental Free Trade Area (AfCFTA) agreement.

According to the minister, Nigeria’s priority at the moment is to conclude the series of consultations with various interest groups on the impact the agreement could have on Nigeria’s national interest and the economy.

But this position seems to be flying in the face of reality and is indeed being repudiated by industry groups and business players.

Decrying the tardy way trade agreements are being treated at the moment, the President of the National Association of Yam Farmers, Processors and Marketers and Chairman, Technical Committee on Nigeria Yam Export Programme, Simon Irtwange, requested the government to sign the agreement, along with another with the European Union to help facilitate free duty yam export.


“Nigeria yam exports to the United Kingdom attract a duty (tax) of 9.5 Euros per 100 kilogramme, unlike in Ghana where yam farmers and exporters enjoy free duty due to trade incentives they enjoy through the trade agreement with the EU.

“The government of Ghana has signed the African Continental Free Trade Agreement (AfCFTA) and provisional application of the EU Free Trade Agreement (EUFTA).

“The trade agreement with the EU makes it possible for Ghana yam exporters to export yams to Europe and the UK duty-free. The federal government should sign this agreement,” Irtwange said.

Long road ahead

Analysts say part of the challenge is the thinking that the agreement is a fully formed package that would be imposed on participating nations in a wholesome manner. On the contrary, as a recent conference on the subject that was hosted by the Institute of Advanced Legal Studies of the University of Lagos, agreements of this nature are only essentially framework documents, with the details being negotiated and filled in over the years by participating states. So it is only a take-off that is being consummated now and not a finality.

Genesis of the journey

Whatever its future developments would be however, the fact remains that the treaty is very well on the way to coming into force. And it is to the continent’s credit that so much has indeed been achieved within a record span of one year.

Indeed, the first practical shot at making the dream come true was registered on March 21 last year, when 44 of the 55 member-nations of the African Union had, during the 18th Extraordinary Session of the Assembly of AU Heads of State and Governments that was held in Kigali, Rwanda, signed the draft trade agreement.

Some of the other companion provisions of the treaty are already being worked on and they include the provisions on the free movement of business persons and investments, the African Free Skies Agreement, the Common African Passport and the continental single currency project.

Back to Nigeria, the Federal Government has already indicated that it has completed its consultations with interest groups and gone on to commission impact assessment studies. What it says is left is for its team to finish writing its report for onward presentation to the President. For Enelamah, there is hope on the horizon that Nigeria may yet sign on to AfCFTA but that must not come at the expense of thorough assessment of the situation.

Analysts say that though Nigeria currently has the largest economy in Africa with a Gross Domestic Product (GDP) of $1.121 trillion as well as the largest population in the continent with some 200 million inhabitants, given the realities of globalization, the nation could really not constitute an island in itself, and as such must not communicate that it could really do otherwise.

The Continent marches on

But even with Nigeria continuing to foot drag over the initiative, other African nations are priming their systems to get maximum advantage of the treaty’s entry.

Ghana for example had almost two years ago, opened its air space to all Africans, abolishing the need for pre-visa applications and replacing same with an airport visa on arrival process. Kenya, Rwanda and several other African nations have similarly followed suit.

Only last week also, Egypt indicated that it is determined to fast-track steps for the entry into force of the African Continental Free Trade Agreement (AfCFTA) to achieve economic integration and comprehensive strategic partnership among African countries.

A statement from the Trade and Industry Ministry after Trade and Industry Minister Amr Nassar’s meeting with a delegation of the African Union, headed by AU Technical Adviser on Regional Integration Rosette Katungi, outlined that the ministry’s plan for boosting economic cooperation with the African states is based on sharing trade and industrial expertise between Egypt and African countries and setting up projects between the Egyptian and African private sectors.


AfCFTA will contribute to bolstering intra-African trade and achieving higher economic and industrial growth rates for the continent, the statement underscored.

Egypt is one of about seven nations that have presently submitted their bid to host the headquarters of AfCFTA’s executive secretariat. Ghana, e-Swatini, Rwanda and Cote d’Ivoire are also in the race.

Of course, not having signed up for the treaty in the first place, Nigeria cannot be considered for this prime coordinating role, which very clearly, would confer additional benefits to the nation with the winning bid as it would establish it as the prime hub for trade facilitation on the continent. So much for foot-dragging.

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