The report of the Presidential Steering Committee on African Continental Free Trade Area (AfCFTA) Impact and Readiness Assessment will be submitted to President Muhammadu Buhari next month. The report, which comes on the heels of pressure by local and international development experts on Nigeria to endorse the free trade deal, is seen as an indication that the proposed deal may eventually get the Federal Government’s nod, despite the sustained opposition by manufacturers and other members of the Organised Private Sector (OPS). Assistant Editor CHIKODI OKEREOCHA reports.
The picture is getting clearer. And it took the inauguration of the Presidential Steering Committee on African Continental Free Trade Area (AfCFTA) Impact and Readiness Assessment to prepare the ground for Nigeria’s possible endorsement of the hotly-debated free trade deal, which seeks to create a continental trade bloc of 1.2 billion people, with a combined Gross Domestic Product (GDP) of about $3 trillion.
The committee, which was inaugurated on October 12, 2018 by President Muhammadu Buhari, was charged with assessing the extent to which Nigeria is ready to join the agreement and what the impact of joining would be.
The committee’s report on AfCFTA, which seeks to remove all forms of restrictions to trade and investment flows within the African continent, will be submitted to the president in January 2019.
Senior Special Assistant to the President on Media and Publicity, Mr. Garba Shehu, said the committee consulted widely with industry groups and collaborated with the Manufacturers Association of Nigeria (MAN) in gathering information on the implications of Nigeria signing or not signing the agreement.
The Presidency said, for instance, a recent MAN report dwelt largely on the import implications of the AfCFTA, which was not sufficient to enable Nigeria make any final conclusions. It added that to arrive at a definitive conclusion, another study was commissioned to cover the export aspects of AfCFTA and how they would affect Nigeria should it join.
Shehu said upon receiving the report of the second study, the presidential committee would be in a better position to make appropriate recommendations to President Buhari on the way forward for Nigeria in January.
The Nation learnt that the report by MAN, which forced the Federal Government to hold back, among others, noted that if Nigeria ratifies the agreement, imports surge will range from 27.6 per cent for textile, apparel and footwear sub-sector to 180.7 per cent for chemical and pharmaceutical products during the three phases of liberalising tariff lines with five per cent tariff rates.
According to MAN, in contrast, the imports surge will be as high as over 2,000 per cent in motor vehicle assembly sub-sector over 15years when 10 per cent tariff rates are liberalised. This, MAN argued, will instantly spell doom for the automotive aspect of Nigeria’s National Industrial Revolution Plan (NIRP).
“The key message from the MAN’s study is that despite challenges, Nigeria should go ahead and sign the AfCFTA agreement with an informed mindset, committing itself to engage in negotiations of the AfCFTA, embed itself in the process and ensure that the AfCFTA delivers good results for its manufacturers, especially as it relates to taking benefits of the market access opportunities on the rest of the continent,” Shehu said.
Recall that 44 of the 55 African countries had on March 21, 2018, signed the AfCFTA agreement in Kigali, Rwanda. As at this month December, 49 countries have already signed the AfCFTA agreement and 13 countries have already ratified it. The agreement will become binding and implementation can begin once 22 states have ratified it.
Buhari refused to sign the AfCFTA agreement, citing the need to allow for more consultations with stakeholders in Nigeria over the trade agreement, and the need for his administration to be circumspect in entering into any agreement that would make the country a dumping ground and jeopardise its security.
However, in boycotting the trade liberalisation deal, the president buckled under intense pressure by MAN, Nigeria Labour Congress (NLC), the academia and stakeholders, who vehemently kicked against the deal.
While MAN hinged its opposition on issues of market access and enforcement of rules of origin, among other concerns, the NLC President Comrade Ayuba Wabba expressed fears that the trade liberalisation will lead to the collapse of the manufacturing sector and loss of jobs.
However, with the report of the Presidential Steering Committee expected to be submitted to the president in January next year, the hope is that the coast may have become clear for Nigeria to sign the free trade deal.
This followed the argument by not a few development experts that never in the history of Nigeria’s Afro-centric foreign policy had a Nigerian government, out of self-doubt and narrow self-protection, abdicated its responsibility to the continent by pandering to vested domestic interests.
Such vested interests, according to those pushing for AfCFTA, often try to minimise Nigeria’s strategic interests to fit their narrow group and individual interests. Those in favour of the deal argued that the supposed benefits of the trade pact are too good for Nigeria to ignore.
Apart from its inherent capacity to promote economic growth and development, reduce poverty in the partnering countries (Nigeria inclusive), the promoters believe it would expand and diversify trade and increase domestic and foreign investment.
Africa, according to experts, is not trading within itself, despite its potential in terms of population and rich agricultural and mineral endowments. Trade among African countries accounts for a meagre 10 per cent of their total external trade, the lowest of any world region, according to United Nations (UN) Economic Commission for Africa (ECA).
The continent’s share in world trade is also not impressive, standing at less than three per cent. It was in a bid to stimulate intra-African trade by at least 25-30 per cent and raise the continent’s share in global trade and competitiveness that African leaders came up with the idea of establishing AfCFTA.
Essentially, their hope was that AfCFTA would lead to a significant growth of intra-Africa trade and assist Africa to use trade more effectively as an engine of growth and sustainable development. It was expected to help Africa participate in global trade as an effective and respected partner.
Other expected deliverables by the agreement include enhancing competitiveness at the industry and enterprise level, through exploitation of opportunities for scale production; continental market access and better re-allocation of resources; provision of a comprehensive framework to pursue a developmental regionalism strategy for the continent.
Interestingly, the expected submission of the committee’s report, which appears to have brightened hopes that Nigeria may sign the deal, is coming on the heels of intense pressure and superior arguments by concerned stakeholders and technocrats.
For instance, Former President Olusegun Obasanjo has been quite vociferous in his campaign to get Nigeria sign the trade deal, which, according to him, promises $27 billion investments.
At the recent opening of the Intra-African Conference prior to the unveiling of the first Intra-African Trade Fair (IATF) in Cairo, Egypt, Obasanjo, as Chairman, Advisory Board of the First IATF, advised African leaders to sign the ACFTA.
Obasanjo, who stressed that ACFTA was vital for the continent’s transformation, said:. “It is, therefore, imperative that all African governments, who believe in Africa’s progress, should not only sign the ACFTA, but should ratify it at once, making a way for its implementation.”
The former president and strong critic of Buhari tagged ACFTA as a landmark agreement in the context of its value in economic integration, transformation and progress in Africa’s development. He noted that AfCTA is the economic salvation that Africa needs to redeem the wrong perceptions of it left by colonialism.
Before the conference in Cairo, Obasanjo had also taken a swipe on Buhari for not signing the deal in Rwanda. He said the presidential candidate of the People’s Democratic Party (PDP), Atiku Abubakar, will sign the ACfTA once he emerges as Nigeria’s president.
He made the assertion while speaking at the Babacar N’daiye Lecture by the Africa Export-Import Bank (Afreximbank) bank on the sideline of the International Monetary Fund (IMF/World Bank meeting in Bali, Indonesia.
Condemning Buhari’s failure to sign the AfCFTA, Obasanjo said: “We will have a president who will be able to sign the Africa Continental Free Trade Agreement, not the one whose hands is too weak to sign.”
Afreximbank, Dr. Benedict Oramah, also said AfCFTA will lead to Africa’s economic development and bring about a better future for the continent.
At a panel discussion on “Financing Intra-African Trade” during a recent Business Forum in Kigali to mark the launch of AfCFTA, he said as part of its drive to promote intra-African trade and regional integration, Afreximbank had identified several countries that served as hubs for trade among African countries.
According to him, those hubs were already playing significant roles in their sub-regions in supporting cross-border trading and were critical in AfCFTA implementation. They included South Africa in Southern Africa, Nigeria and Cote d’Ivoire in West Africa, Kenya in East Africa and Egypt in North Africa.
Oramah said Afreximbank was working on the establishment of export trading companies, which would aggregate products from small traders for export across the continent and beyond.
He said the operation of such companies would remove the need for individual small traders, who were not equipped for such trade, to try to export the products by themselves.
Abuja Chamber of Commerce and Industry President, Mr. Adetokunbo Kayode, also said the CFTA represents a major opportunity for Nigerian businesses to gain greater access to the fast-growing African market.
His words: “It is vital that Nigerian businesses continue to diversify their export markets and with this agreement, trade barriers for companies across a number of sectors will be reduced thereby creating access to new markets within Africa.
“Intra African trade as a driver for economic diversification can help to harness the unexploited opportunities that exist in many product categories, particularly food and agricultural products.
“I am optimistic that the Africa CFTA will increase intra-Africa trade by about 52 per cent, resulting in an increase of African manufacturing exports from the current average in which manufacturing only represents about 10 per cent of total GDP in Africa.”
Kayode added that the potential for CFTA is big for both structural transformation and poverty alleviation in Africa. “Nigerian businesses will have access to nearly 1.2 billion consumers through this agreement and Nigeria’s engagement in this region is important as it builds our presence in markets where we should be doing much more business,” he said.
AfCFTA, as adopted by the 18th ordinary session of the Assembly of Heads of State and Government of the African Union (AU) in Addis Ababa, Ethiopia, in January 2012, was designed to create a continental trade bloc of 1.2 billion Africans, with a combined GDP of about $3 trillion.
The agreement is seen as an important milestone in promoting Africa’s regional integration and helping to increase intra-African trade by more than 52 per cent, worth about $35 billion per year.
AfCFTA commits African countries to phasing out tariffs on 90 per cent of goods, with 10 per cent of “sensitive items” to be phased out incrementally. It will also liberalise trade in services, while also signaling a step towards building strong regional value chains.
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