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AfCFTA Update: PMB Inaugurates The National Action Committee

ADDRESS BY HIS EXCELLENCY MUHAMMADU BUHARI, PRESIDENT OF THE FEDERAL REPUBLIC OF NIGERIA, AT THE INAUGURATION OF THE NATIONAL ACTION COMMITTEE FOR THE IMPLEMENTATION OF  MTHE AFRICA CONTINENTAL FREE TRADE AREA AGREEMENT (AfCFTA) , FRIDAY 20 DECEMBER 2019

 PROTOCOLS:

 It is my pleasure to welcome and address you the Members of the National Action Committee for the Implementation of the African Continental Free Trade Area Agreement on the occasion of your Inauguration.

 2. As you also know, Trade is pivotal to job creation, growth and health of the economy. It is also a key enabler for regional and global integration.

3. The African Continental Free Trade Area Agreement is an important part of the African Union- 2063 Agenda to promote economic and social integration on the continent.

4. We are very hopeful of creating a single African market for “Made -in- Africa” goods and services. This trade, together with free movement of people and capital will result in faster integration of African economies.

5. As a government, we must ensure that Nigeria’s position remains that, such integration must be rules-based with built-in safeguards, against injurious practices.

6. Nigeria’s approach to the African Continental Free Trade Area Agreement has been very measured and consistent. Our logic was simple, as Africa’s largest economy and most populous nation, we cannot afford to get it wrong.

7. We consulted all key stakeholders. We also conducted a rigorous impact and readiness evaluation. It was after these consultations and studies, and satisfactory reports that I signed the African Continental Free Trade Area Agreement on behalf of Nigeria in July this year.

8. We know the benefits and understand the challenges. It is clear that for us to fully benefit from this agreement, we must have an implementation programme that reflects our national trade objectives and development plans.

9. This therefore requires aligning, restructuring existing development projects, programme and initiatives. Where there are gaps, we must address them.  Accordingly we have established the National Action Committee on AfCFTA.

10. As a Committee, your mandate is to support the efforts of Ministries, Departments and Agencies of government, stakeholder associations and businesses to realize the benefits of the AfCFTA, while putting measures to address any threats that may arise. All parties must work together and not allow any loopholes that might prove injurious to the Nigerian economy.

11. I have directed all key Ministers and Senior Government officials to provide maximum support to your Committee.

12. For us as a government, our expectation from this agreement is job creation for our youth, increased production of our local raw materials and ultimately, exporting quality Made in Africa goods.

13. You are to submit quarterly reports on your progress, and I look forward to receiving your first report in March 2020.

14. It is now my pleasure to inaugurate the National Action Committee on the African Continental Free Trade Agreement.

15. Congratulations and best of luck on your national assignment.

16. Thank you and God bless the Federal Republic of Nigeria.

Maximizing AfCFTA-Part-46-Exploring The Export Markets In Ethiopia

Border Closure: About $1Billion Loss Of Exporters Should Be Compensated

The decision of the federal government to close the land borders will be 3months old in a few days from now and the loss resulting from this exercise on the exporters that ship goods by roads to buyers in Western and Central African regions has been estimated to be about $1billion. This humongous loss is a compelling reason why the federal government must modify the way this exercise is currently being executed. In as much as the decision of the government is highly imperative to curb the excesses and nonchalant attitudes of our neighbours, it must also be done with discretion and wisdom so as to minimize the collateral damages that could result from the border closure.

This has been a very challenging moment for all those that will usually export to various countries within the ECOWAS region. This is because, a good number of them have inventories sitting in their warehouses while their bank loans and interests are running in various financial institutions. At the end of each month they will need to pay salaries and their obligations to their various banks. This is definitely an unsustainable business model and the further extension of the border closure will mean that the exporters will have to lay off some members of staff to avoid the payment of salaries and this will further aggravate the already bad unemployment situation in the country.

In as much as the government meant well in his decision to close the border because of our neighbour's inability to abide by  the ECOWAS treaty (which they signed), it is also important for the government to take a wholistic approach in addressing the issues. This is because, it will be very unwise to create another problem while trying to solve a particular one. It is like going three steps forward and five steps backward. This is because as the government is gaining from the border closure one hand (through increased revenue and increased demand for locally consumed goods), it is on the other hand, causing unemployment and foreign exchanges losses from the inability of the Nigerian exporters to ship their goods to their buyers in Western and Central African regions..

In order to ensure that government efforts to grow local industries and increase income through border closure does not create another problem among manufacturers that ship to buyers in Western and Central African regions, I will like to recommend that the federal government of Nigeria consider the compensation of the affected non-oil exporters. This should be done in a systematic manner that is devoid of corruption through the payment of extra charges incurred via the use of alternative forms of logistics and the extra cost of unfulfilled orders and keeping inventory for an unnecessarily long time. 

According the foreign trade data released by the National Bureau of Statistics (NBS) for the 4th quarter of 2018, the total export of Nigeria stood at about $62billion (calculated based on about N19trillion export divided by N305). According to the NBS, total export of Nigeria to ECOWAS region in 2018 is about 6% and this comes to about $3.72billion in monetary terms. Since the closure of the borders is mainly affecting the shipment to West Africa (due to the fact that shipment to West Africa is majorly via land) and this has been for about 3months this means that the shipment that would have been done via these land borders to the ECOWAS would be about $930million. This means that Nigeria, a country that is in desperate need of foreign exchange has lost about $1billion in the last three months due to the closure of the land borders.

This seemingly good decision might become a very bad decision for the Nigerian economy in the long run if the government does not quickly put in place a compensation programme that will cover the extra logistics of exporters in order to encourage exporters to still ship via alternative routes at a higher cost and thereby enabling them to pay their staff, service their loans and bring in the much needed export proceeds required to pay the growing import bills of the country. Individual companies with verifiable orders that could not be fulfilled due to this border closure should also be compensated. This I think is the logical thing to do considering the fact that there has been some increase in the revenue generated by the federal government via the collection of import duties and tariffs by the Nigerian Customs Service. 

Finally, It will be very great for the federal government of Nigeria not only to compensate the affected Nigerian exporters but to also reach out to other affected neighbours in West Africa like Ghana and Cote D’Ivore and workout a modality that will enable them ship their goods to Nigeria (since they are not the ones being targeted with the closure) while the border closure persist. 

For the love of Nigeria, Africa and Mankind.

Bamidele Ayemibo (bayemibo@3timpex.com)

Lead Consultant at 3T Impex Trade Academy