This is the third in the series of Articles on
AfCFTA implementation strategies and it will continue from where I stopped in
part two. This edition will be focused on challenges and factors that have
hindered many countries from enjoying the benefits of other FTAs around the
world despite the great benefits that such agreement has to offer the member
countries. All the challenges to be highlighted in this article are to empower
the AfCTA’s Implementation committee with the necessary information and insights
that will guide the formulation of the implementation strategies by the
committee members.
The inability to maximally utilize the FTAs
especially among various countries has been attributed to different factors
based on different surveys done by several researchers across the world. It is
also interesting to note that, there seems to be a convergence on the major
challenges hindering the utilization of FTAs by some of the reports. The most
prominent of these factors, in several research works done across the world is
the issue of information. This has emerged as a major limiting factor that hinders
utilization of FTAs and this include access to information about the FTA,
understanding the information contained in the FTA and cost of acquiring the
knowledge to understand the information about the FTA.
According to the 2018 report of Ecorys, 11% of the
respondent said that one of the barriers to utilising the FTA is the fact that
the information contained in the FTA is hard to understand while 21% stated
that limited information is available about the FTAs. Other researchers stated
that the compliance process constitutes a major reason why many companies do
not utilise the FTAs and they went further to state that compliance process
starts with acquisition of information which comes at a cost and this is
regularly incurred either when an existing FTA is reviewed or when a new one
has just entered into operation.
In another report titled Maximizing the Utilisation
of ASEAN-Led Free Trade Agreements, It was reported that lack of technical
expertise on how to use the FTA and inadequate information on the opportunities
in the foreign market were major limitations to the full utilisation of the
FTAs. The lack of technical expertise has been manifested through understanding
the issue relating to the Rule of Origin (RoO). The rule of origin guides the
procedure for determining that a product originated from a designated free
trade area. It is designed to ensure that product from countries outside the
free trade area do not find their way into the trading bloc.
This RoO has been described as another factor that
militates against the utilisation of FTAs in different parts of the world. This
can be seen in inadequate understanding of product requirements, difficulty in
complying with RoO with respect to the administrative requirement, and existing
products which are already being exported but do not comply with the RoO. All
these factors relating to RoO were pointed out by 32% of the respondent in the
survey done by Ecorys in 2018 and this was corroborated by another report done
by the PricewaterhouseCoopers also in 2018 among Australian exporters. It was
stated in this report that delay in processing and the cost relating to
obtaining the Certificate of Origin (CoO) to validate the compliance of a
product with the RoO was a major factor that hindered trading partners from
utilising FTAs.
Coming home to the West African region, the ECOWAS
Trade Liberalization Scheme (ETLS) was a free trade agreement launched in 1990.
The objective was to remove both tariff and non-tariff barriers to the trade
transactions in the region. Despite the huge opportunities that this FTA
presents to the member states in ECOWAS, the rate of utilisation has been very
low with no appreciable improvement in the last 5years. The fourth quarter
report of the National Bureau of Statistics (NBS) in 2018 showed that the total
Nigerian export to the ECOWAS countries have remained plateaued and under 10%
in the last four years. Despite this low export from Nigeria, the report of
UNCTAD in 2018 showed that Nigeria has the largest share of the export into the
region with a contribution of 44.6% in the year 2015.
The fact that Nigeria is the largest exporter into
the region despite its low export volume to ECOWAS countries when compared to
its shipments to the rest of Africa and the world showed the abysmally low the
total intra-regional exports of all ECOWAS members states. This has been
underscored in the 2018 report of Africa Export-Import Bank which stated that
the total shipment of all the ECOWAS member states into the region in 2017 was
10.6%.
As I conclude this third article, I will like to
state that the reason for taking a lot of time to highlight these challenges is
to enable the implementation committee to be able to have a holistic view of
the challenges that have plagued many FTAs around the world in the past in
order to be able to design a well thought out strategies to make the AfCFTA
work for Nigeria.
While the current edition of these series of
articles on AfCFTA implementation strategies dwelled more on the challenges of
FTAs outside Africa, the next edition which will be the fourth edition in the
series will dwell more on the challenges that have bedeviled the FTA of ECOWAS.
From the fifth edition, I will commence the proposed solution to tackling these
challenges and I am hoping that the government will adopt some of the
recommendations that will be prescribed in order to make the implementation of the
AfCFTA create the necessary jobs that will lift out of penury, the tens of
millions of Nigeria that are currently living below the poverty line.
Bamidele Ayemibo
bayemibo@3timpex.com
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