Economy, Featured
By Anayo Ezugwu
KENNETH Erikume, partner financial services/tax reporting and strategy, PricewaterhouseCoopers, PwC Nigeria, has warned that Africa Continental Free Trade Area, AfCFTA, could worsen the effect of contagion risk on the Nigerian economy. He said AfCFTA may lead to dumping, transhipment and trade deflection in the country.
Speaking at the PwC’s Capacity Enhancement Workshop for Journalists in Lagos, Erikume said AfCFTA might stifle the domestic sectors that are not regionally competitive and increase risk of intellectual property theft. He said it might lead to household skill mismatch that could result in job loss to expatriate as companies seek to optimise labour productivity.
“May weaken the effectiveness of regulators to promptly change or modify policies in response to non-predetermined drags to economy. And losses of regulatory autonomy like border management. It will have impact on current company rules regarding minimum capital, directorship and shareholding in many African countries.
“It will also have effect on capital control exchange regulation and local content rules. There is the need to harmonise existing rules such as the rules of origin, which differ between various RECs on the continent. Plastics are not allowed in some African countries so this has to be considered in the packaging of goods destined for export to other countries. Some stakeholders have raised concerns about the risk of transhipment and dumping of goods, which may hurt domestic businesses, especially infant industries. However, the AfCFTA Treaty already has provisions to address these concerns,” he said.
According to Erikume, AfCFTA has implications for consumers and households in Nigeria. He said the trade policy would lead to faster than expected growth in manufacturing output to the larger market. He noted that it will also boost employment and wages and in turn, purchasing power of Nigerian consumers.
“Interregional competition among firms for market share will lead to improvement in the quality of products and services. Regional trade across Africa will also lead to price-competitiveness for goods and services which could benefit the final consumer in terms of cheaper products.”
For implications on Nigeria’s businesses and economy, Erikume said they will have access to over 1.2 billion people and opportunity to enhance earnings and market value. He said AfCFTA would enhance economies of scale for Nigeria’s manufacturing and services sectors. According to him, AfCFTA presents a market opportunity of $493.6 billion comprising $461.6 billion market expansion and $31.7 billion import substitution opportunity.
On key provisions of AfCFTA trade in goods, Erikume said: “The treaty provides that a state party (a member state that has ratified or acceded to the AfCFTA) shall accord to products imported from other State Parties treatment no less favourable than that accorded to like domestic products of national origin, after the imported products have been cleared by customs.
“With respect to trade in services, Article 20 requires each State Party to accord to services and service suppliers of any other State Party treatment no less favourable than that accorded to its own like services and service suppliers. Also a State Party shall not maintain or adopt limitations on the total value of service transactions, or quotas on the total number of natural persons that may be employed or measures which restrict or require specific types of legal entity.
“The Treaty recognises the significant contribution of air transport services and, in particular, the Single African Air Transport Market. On review and withdrawal, a State Party may withdraw from the Agreement after five years from the date of entry into force and the withdrawal shall be effective two years after receipt of notification or such later date as may be specified in the notification.
“The Agreement is subject to review every 5 years. With respect to trade in services, a State Party may modify or withdraw at any time after 3 years have elapsed from the date on which that commitment entered into force,” he said.
– Oct 11, 2019 @ 16:25 GMT |
Tags: Expert warns on dangers of AfCFTA on Nigeria economy
