Business, Featured
Nigeria has been struggling for decades to boost its export trade and reduce its reliance on crude oil sales for over 80 percent of its foreign exchange earnings. Fortunately, the African Continental Free Trade Agreement is offering this unique opportunity, which the nation has no choice than to embrace with commitment.
By Goddy Ikeh
THE African Continental Free Trade Agreement, AfCFTA, has officially taken off on January 1, 2021 with fanfare and optimism for African countries, which were ready to reap the benefits of the largest single global market worth over $3.4 trillion. Unfortunately, not much has been heard locally on the anticipated participation of Nigerian manufacturers in the regional market.
Although Nigeria signed the trade declaration at the African Union Summit in Niamey, Niger on July 7, 2019, about one year and six months before the take-off of the AfCFTA on January 1, 2021, but the fears and challenges could be easily seen in the poor infrastructure and weak institutions in Nigeria, which will render goods uncompetitive in the region.
Speaking on this development recently in Lagos, Muda Yusuf, director-general of the Lagos Chamber of Commerce and Industry, LCCI, believed that Nigeria is not fully prepared yet for the regional trade bloc. Apart from Nigeria’s sluggish approach to the regional trade bloc, Yusuf said that it would take a long time for the AfCFTA, which has its secretariat in Accra, Ghana to take shape due to the challenges which Nigeria and some other African countries were contending. He attributed some of these challenges to inadequate production capacities and ability to produce competitively.
Yusuf said in an interview with ThisDay newspaper that some Nigerian industries had been surviving largely on the back of protectionist policies from the government. Apart from the issue of poor infrastructure like power, there is also the regulatory institutions like the customs, the Standards Organisation of Nigeria and the roles of the numerous security agencies hindering export trade.
But despite the views expressed by Yusuf, the minister of industry, trade and investment, Adeniyi Adebayo, is optimistic that Nigeria can play in the new market and has called on Nigerian industrialists to take advantage of the inherent opportunities to promote Made-in-Nigeria goods.
According to the statement by the Minister’s Special Assistant on Media, Ifedayo Sayo, in December 2020, Nigeria could not afford to be left out of the emerging African economic bloc, stressing that AfCFTA would form a $3.4 trillion economic bloc, which Nigeria must play a leading role.
Speaking on the measures taken by the Federal Government towards the effective implementation of AfCFTA in 2020, the Secretary, National Action Committee on AfCFTA, Francis Anatogu said, “We are effectively coordinating with all critical stakeholders to ensure a smooth playing field for Nigerian traders and businessmen to explore the vast markets.
“We are set to commence a major communication campaign and have tagged January 2021 as AfCFTA Awareness and Sensitization month, which would take place across the six geopolitical zones, and would involve various stakeholder groups in public, private and civil society sectors, as well as other critical traditional institutions.”
But the measures announced by Anatogu for such a huge market that is expected to expand Nigeria’s inter-trade portfolio, boost competitiveness, and increase its Gross Domestic Product (GDP) are already late and not good enough.
However, the Central Bank of Nigeria (CBN) has announced a N50 billion credit support programme to revive hundreds of textile factories in Kaduna and other northern states so that these industries can export goods to the new market. In addition, the private sector, which is the main beneficiary of the single continental market, is not relenting in embarking on some awareness programmes. For instance, the Nigerian-British Chamber of Commerce organized an interactive zoom webinar in January with theme “2021 Economic Outlook’’.
Speaking at the event, Mr Bismarck Rewane, Managing Director of the Financial Derivatives Co Ltd., said that the Nigerian economy had some pre-existing conditions before COVID-19 and that “the year 2021 is going to be different because we are going from disruption to eruption”.
According to Rewane, apart from Nigeria being about 60 to 65 percent of the ECOWAS region, the AfCFTA and the European partnership agreement between ECOWAS and European Union are trade opportunities for the country.
He noted that with the AfCFTA, intra-African trade will increase from 20 percent to 50 percent over time and that it is expected that the GDP of the country, which is about $2.6 trillion now, will grow to $29 trillion by 2050.
Rewane said that AfCFTA would also provide huge opportunity to boost non-oil export earnings in Nigeria and create an open path to resuscitate idle refineries to meet the domestic and regional demands for refined petroleum products.
“It will increase market access for locally-made goods as well as expand trade, agriculture and manufacturing sectors. The AfCFTA could lead to a significant change in Nigeria’s trading partners to include more African countries,’’ he said.
In the same vein, some Nigerian banks are set to support local firms to operate in the new continental market. Ade Ayeyemi, the Group Chief Executive Officer of Ecobank Transnational Incorporated, ETI, has assured that the pan-African banking group is facilitating smooth and instant payments across Africa as countries start the implementation of the AfCFTA.
Ayeyemi told journalists in Lagos in January 2021 that Ecobank has been able to effect international payment across the 33 countries where it operates on the continent through its Rapid Transfer platform. He stated that the bank’s platform can be scaled to accommodate other African countries under the AfCFTA based on their respective regulations.
He explained that the banking group is one of the key supporters of the AfCFTA, which will be of great benefit to both the continent and customers of the bank.
“With this Pan-African exposure, the governments and our customers will re-evaluate their businesses to efficiently take charge of bigger opportunities. So, if you manufacture goods in Aba for the Nigerian market, you can now start thinking of how to expand your manufacturing capacity to be able to export across West Africa and also other African countries, not just looking at Nigeria as a market alone. And as you change your demand forecast, you need to now improve your capacity to produce and that will mean importing new machinery to expand your manufacturing base, develop bigger market and hire more people.”
The Ecobank Transnational Incorporated boss expressed optimism that the introduction of the AfCFTA will curb the regulations and government policies limiting the flow of foreign exchange. “Banks will work with other banks like Afrexim Bank to provide a swift payment platform as Africa will be the first market for most African products. For instance, there is no need for Nigeria to import rubber from Malaysia when rubber is being exported by Côte d’Ivoire. It is better within the African space. So, there is a whole range of businesses that we are having conversations with our customers, the governments and the African Union, because of our pan-African presence,” he said.
Meanwhile, the Secretary-General of the AfCFTA Secretariat, Wamkele Mene, has said that Africa’s journey to market integration has begun in earnest with the commencement of trading under the African Continental Free Trade Area on January 1, 2021. Mene told a virtual press conference that talks that the AfCFTA arrangement was being rushed was not correct and that there was no trade agreement where all members were ready at the same time.
He said that Ghana, Egypt and South Africa were in fact prepared with the required customs infrastructure to ensure commercially meaningful trading started.
According to him, Ghana had on January 4, officially recognised the first consignment of goods to be exported under the AfCFTA, an event other countries would be replicating soon to mark the milestone.
“The most important point that I want to emphasize is that Africa is now trading under new rules, new preferences, because we want to build a single integrated market on the African continent. It may take some time before each of us sees the direct benefit. We are not going to be deterred by our critics who say they don’t see evidence that trading has actually started,” a report by the Economic Commission for Africa quoted Mene as saying.
For Mene, market integration is not an event, but a process that takes time, and that it took the European Union (EU) almost 60 years to achieve its current depth of integration.
“I have never heard of a trade agreement where all countries were ready on Day One; I don’t know it. Africa’s market integration would take some time but you have to start somewhere,” he said.
The continental trade deal was earlier scheduled to start officially on July 1, 2020, but was postponed by six months due to the COVID-19 pandemic.
No doubt, the AfCFTA provides the opportunity for Africa to create the world’s largest free trade area, with the potential to unite more than 1.2 billion people, in a $3.4 trillion economic bloc and usher in a new era of development. It also has the potential to generate a range of benefits through supporting trade creation, structural transformation, productive employment and poverty reduction.
According to some stakeholders, Nigeria should not toy with the AfCFTA which is expected to expand market access for Nigeria’s exporters of goods and services, spur growth and boost job creation. The continental single market will eliminate barriers against Nigeria’s products, provide a Dispute Settlement Mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries.
For now, only Eritrea out of the continent’s 55 countries is yet to sign the agreement, which has already been ratified by 34 member states. For Africa, the benefits are considerable.
On the regional gains, a commercial aviation expert and director of policy think-tank, Centre for Aviation Policy and Development, Africa, CAPD, Africa, Richard Kyereh, has warned that the mission of the AfCFTA, which seeks to accelerate intra-Africa trade and strengthen Africa’s voice in the global market space, will be meaningless unless the Single Africa Air Transport Market, SAATM, framework is fully implemented.
According to him, SAATM is a flagship programme of the African Union Agenda 2063, which seeks to create a liberalised single air market for the movement of persons and goods within the African continent. It provides a framework for the protection of consumer rights, fair competition among participating players and a platform for dispute resolution.
He explained that SAATM, per the policy documents of the African Union, should have been implemented by 2017 after the decisions reached at the 24th Ordinary Session of the AU Assembly in Ethiopia in 2015.
He believes that with this, the turning of the African Continent into a global powerhouse as put forward by the AU’s Agenda 2063 would be realised.
However, as at 2017 only 21 countries, including Ghana, had signed unto SAATM. And in the absence of SAATM, bilateral services agreement is being used by countries to enhance commercial aviation and trade activities in Africa.
– Feb. 5, 2021 @ 18:43 GMT |
A.I
Tags: Adeniyi Adebayo AfCFTA AfCFTA: Nigeria should embrace new regional market to stem trade fall Ifedayo Sayo Muda Yusuf
