The President of Nigeria finally signed the
African Continental Free Trade Agreement (AfCFTA) at the last summit of the
African Union in Niger. This was an historic event for Nigeria because of the
much-awaited desire for Nigeria to sign the AfCFTA. President Buhari
initially planned to sign this free trade agreement during the launching at
Kigali, Rwanda in March 21, 2018 but he later changed his mind because of some
concerns raised by Manufacturers Association of Nigeria (MAN) and other organised
private sector on the likely negative impact of this agreement on Nigeria.
For a long time, the countries in Africa has not been
able to leverage on its population to get generate wealth for its people. This
has largely been enjoyed by the other countries in Asia, Europe and America. Also,
the European Union (EU) with a population of about 500million people is
controlling about 33% of world trade with about 70% of this being traded among
the EU countries. Africa on the other hand with a population of about 1.2
billion people is only contributing just 2.5% to the world trade with just
about 18% of this being traded among the African countries. The African
Continental Free Trade Agreement (AfCFTA) affords the African countries the
opportunity to increase the trading activities among themselves and thereby
increasing the African contribution to world trade and consequently creating
more jobs and wealth as a result of the demand on the companies to grow their
capacity to meet the new market demands.
AfCFTA and the Strength of Nigerian Economy
The strength of Nigeria
under AfCFTA is not in doubt. The performance of manufactured products export
as a percentage of non-oil in Nigeria has been growing. The data from the
National Bureau of Statistics (NBS) showed a continuous upward trend in the
volume manufactured goods exported out of Nigeria from 2016 to 2018. According
to the NBS, the trade report of the first quarter of 2019 revealed that the
manufacturing sector contributed 10.19% to the total export done during this
period and this 76.6% of the total non-oil export done during the same period. From
2018 till date, there has been a continuous upward trend in the exportation of
Nigerian goods to both the ECOWAS countries and also other African countries. The
NBS data also showed that the non-export items of Nigeria to African countries
is mainly manufactured goods while Agricultural products are mainly shipped to
Europe and Asia. If there has been an upward trend in the non-export of
Nigeria to ECOWAS and other African countries and the major export of Nigerians
to Africa is manufactured goods, then we can safely conclude that there has
been consistent growth in the export of manufactured goods from Nigeria to
ECOWAS and other African countries
AfCFTA and the Weakness of Nigerian Economy
According to the global
competitiveness report of world economic forum for the year 2018 which ranked
140 countries in the world, Nigeria scored 47.5% and ranked 115. The ranking
has 12 pillars which include: Institutions, ICT, Skills, Infrastructure,
Macroeconomic stability, Health, Product market, Labour market, Financial
ecosystem, Market size, Business dynamism and Innovation capability. Nigeria
ranked the least out of the top five economies (Nigeria, Algeria, South Africa,
Morocco and Egypt). Some other African Nations that scored above Nigeria
besides the top economies include- Tunisia, Botswana, Kenya, Senegal, Cote
D’Ivoire, Namibia, Ghana, Rwanda and Cape Verde.
AfCFTA and the Opportunities for the Nigerian
Economy
There is a huge
potential for Nigerian manufactured products on the African continents. This is
because quite several the items being procured by other African countries from
around the world are either already being manufactured in Nigeria or can be
produced in Nigeria. A recent research showed that about 90 different products most of which are
manufactured, processed Agro and commodities (Agro & Minerals) are in this
category. The challenge that Nigerian companies might have had in the past
(which might have prevented entry into these markets) is likely going to
include pricing and this will most likely be reduced by the implementation of
AfCFTA. The fact that African countries currently import these products is a
sign that they will most likely leave them on the 90% non-sensitive list when
submitting their tariff schedule to the AU secretariat. These
products are strategically positioned low hanging fruits that MAN should consider
first in its implementation of the AfCFTA.
AfCFTA and the Threat to the Nigerian Economy
The fact that Nigeria is not very competitive when compared to other top economies in Africa is a cause for concern. The implication of this low competitiveness of Nigerian businesses is that most top economies in Africa will most likely be manufacturing their products at a cheaper rate than Nigeria. That means that they might be flooding the Nigerian markets and thereby killing the local competitors. However, the major item of export of these top economies in Africa are not the items that can kill the local manufacturers at least in the short run because the major items of export of these countries in the last few years are Crude oil, solid minerals and machineries.
The fact that Nigeria is not very competitive when compared to other top economies in Africa is a cause for concern. The implication of this low competitiveness of Nigerian businesses is that most top economies in Africa will most likely be manufacturing their products at a cheaper rate than Nigeria. That means that they might be flooding the Nigerian markets and thereby killing the local competitors. However, the major item of export of these top economies in Africa are not the items that can kill the local manufacturers at least in the short run because the major items of export of these countries in the last few years are Crude oil, solid minerals and machineries.
The Committee
Now that Nigeria has signed, the question we
need to ask is how does Nigeria enjoy the benefit of this agreement? What does
the country need to do to ensure that it is well implemented for the benefit of
Nigerian populace? How do we ensure that it does not become one of those
agreements that Nigeria has signed in the past which are of no value to the
citizen?
In other to ensure that the Nigerian businesses enjoy in full the benefits of the AfCFTA and also that the prediction of those that are against the signing AfCFTA does not come to pass, there is a need to begin to actively and intentionally put in place programs and policies that will ensure proper implementation of the agreement.
In other to ensure that the Nigerian businesses enjoy in full the benefits of the AfCFTA and also that the prediction of those that are against the signing AfCFTA does not come to pass, there is a need to begin to actively and intentionally put in place programs and policies that will ensure proper implementation of the agreement.
I will like to recommend that the proposed implementation committee should
include people from both public and private sector. Public sector should
include but not limited to the likes of Nigeria Export promotion Council
(NEPC), Nigeria Custom Service (NCS), Standards Organization of Nigeria (SON),
National Agency for Food and Drug Administration and Control (NAFDAC), Ministry
of Foreign Affairs, Ministry of Trade and Investment, Presidential Enabling
Business Environment Council (PEBEC), Small and Medium Scale Enterprise
Development Agency of Nigeria (SMEDAN) and the Nigeria Office of Trade
Negotiation (NOTN). On the other hand, the private sector should include but
not limited to the representatives from National Association of Chamber of
Commerce Industry Mines and Agriculture (NACCIMA), Bankers Committee, National
Association of Small and Medium Scale Enterprise (NASME), Nigerian Association
of Small Scale Industrialist (NASSI) and Manufacturer Association of Nigeria
(MAN).
Recommendations
Recommendations
We will like to recommend that this committee
should execute either directly or indirectly the task of communicating the
details of the AfCFTA to the business community, Capacity building to empower
businesses with skill to benefit from the agreement, getting the Commitment of
the government to support the manufacturers with necessary incentive that will
reduce their cost of production and make them more competitive, cooperation
with various government agencies to enable them support all the initiatives of
the committee to drive the AfCFTA implementation and finally Collaboration with
the private sector in order to understand what they need from the government especially
with respect to monitoring shipments into the country to prevent free entrance
of goods from third countries and marketing their goods at exhibitions in
various African countries.
In conclusion, I am very optimistic that the
AfCFTA is well implemented in Nigeria, it has a very high tendency to 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
