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AfCFTA: Why Nigeria Lagged Behind

Ahead of the planned takeoff of the much hyped African Continental Free Trade Agreement (AfCFTA) in January 2021, for the rest of the continent, one way to succeed with the scheme is to court the cooperation and support of Nigeria.

INDICATIONS are that the proposed date for the commencement of the long awaited African Continental Free Trade Agreement (AfCFTA) in July 2020 which suffered an upset and now confirmed for January 2021, according to analysts was as a result of ravaging Covid-19 pandemic, while others claimed that it was a technical delayed to enable Nigeria’s participation as the largest market in the economy.

The reason for this is not farfetched: Nigeria is one of the three of 55 African Union member countries holding out on tendering signature to the trade arrangement, along with Benin and Eritrea. Pressure from local unions such as the Manufacturers Association of Nigeria (MAN) and businesses had delayed the continent’s largest country from signing the agreement since it was launched two years ago.

Why Nigeria lagged behind

Nigeria’s fear was that removal of trade barriers would hurt infant and uncompetitive industries in the country, and could turn Nigeria into a “dumping ground” for foreign goods.

However, the Secretary General, AfCFTA, Mene Wamkele on a recent visit said he was glad to hear that Nigeria is ready to deposit the instrument of ratification of the AfCFTA, while assuring that he is looking forward to Nigeria’s leadership in AfCFTA.

Wamkele stated that for a long time the African continent has focused on security and political issues, adding that focus is now being shifted towards trade and investment related matters.

“Whatever decision we take at the secretariat would be informed by what Africa wants, we will not put up any design that will not support what Africa wants. We would implore digitisation, and fintech will drive financial inclusion. We would drive trade inclusion through fintech that would be affordable, accessible and available.

“Border closure and xenophobic issues have to be addressed according to the rules of the trade agreement, foreigners have to be protected by the agreement and we have to ratify. All the foreign entities must be treated like the domestic players. There is no discrimination that will be tolerated.

“AfCFTA has improved on the WTO requirements on trade facilitation, and we would ensure that countries meet up with their obligation to ensure smooth trade,” Wamkele pointed out.

Lobbying Nigeria

It has been established that for greater volume of business to be experienced as expected, Nigeria is constantly being lobbied for the continental trade due to its potentials, such as large population and others.

According to the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA), Ambassador Ayoola Olukanmi , one of the reasons why the AfCFTA Secretary General visited Nigeria and spent one week is because of the country’s importance in the continental trade.

Olukanmi said, “You can recall that Nigeria is one the countries he stayed extensively, he spent time with the National Trade Negotiator, he also visited the Legislative Arm of the Government, and engaged them in terms of trade policy with regards to AfCFTA. He also visited the OPS for engagement regarding the trade.

“This multiple visit is a reflection of the importance of Nigeria as far as the trade treaty is concerned. You can see that some Nigerian companies like BUA and some others have said they are ready for the trade. Also, there are some Nigerian financial institutions that are in other African countries, and I know that some are in over 22 countries in Africa. So, the AfCFTA is being implemented by some Nigerian companies, so the extensive visit of Mene Wamkele is an indication of the importance Nigeria to the AfCFTA. We should not also forget that he met with the Minister of Industry Trade and Investment and also with the Speaker of National House of Representatives who are the key players in decision making as it will affect the AfCFTA. They are the key stakeholders as far as the AfCFTA is concerned.

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“This is why we on our part fast-tracking the ratification process, because whether we ratify or not, players are already out there, and operating. So this will give access to the Nigerian companies to the continental market. So as far as NACCIMA is concerned, the earlier we participate the better for the country.”

The reality of Africa is that Nigeria is the biggest and largest economy, which means that it comes with some obligations. Secondly, if you look at West Africa, it is also a reality that Nigeria is the largest market in the region, so it is the question of the importance of Nigeria as far as AfCTA is concerned. For instance, Dangote industry is in almost all the African countries and has been exporting to other African countries also.

Looking at the AfCFTA, trade facilitations and the financial sector, as you can see, we have most of the Nigerian Banks all over the continent, and these banks are playing very important role in the implementation of AfCFTA.

In the view of analysts, though Nigeria must straighten its policy and be up and doing to ensure that it does not become a dumping ground, it should ensure that individual companies benefits from the trade. For instance, more companies are joining NACCIMA because they have seen the benefits that will come from AfCFTA.

They reasoned that one of the reasons that they want Nigeria to participate is not just that it’s a big market, but also Nigeria has the capacity to sustain consumption, which is the most important factor for any manufacturer. That is the strategic importance of Nigeria because we have over 200 million people in the country. Again under the ETLS, you make sure that you comply with the rules of origin.

Echoing the same sentiment, the Acting DG of Manufacturers Association of Nigeria (MAN), Mr. Ambrose Oruche, stated that AfCFTA could have started without Nigeria, because of its importance, negotiation continued even when Nigeria has not joined.

He said, “Though, Nigeria joined late while negotiation was already on with other players in the continental market. It would have happened without Nigeria, but because Nigeria is perceived to be a major player as it has the population, which is a destination market for most products, that is why Nigeria is being persuaded, because you can’t compare Nigeria to countries like Gambia, Senegal, Uganda, Ruanda and others. This is because the population of Africa is about 1.2 billion and Nigeria is over 200 million people which is a substantial market for AfCFTA.

“Nigeria not joining would definitely affect the expected trade volume in Africa because Nigeria is the largest market in the continent. This is why Nigeria is key. Nigeria not joining would not stop AfCFTA from taking place. If Nigeria doesn’t join, the loser would be Nigeria. This is because the other countries would be trading freely and most of the products would find their way into Nigeria, be we are the target of the market.

“So instead of staying outside and be kicking, why not stay inside and be negotiating so that we would understand what is going on in the system, so that we can be able to control their views. We may also have to look at the policies of the Nigerian government as it relates to trade. We shut down our borders and we are talking about trade agreements, we cannot take a unilateral decision in such a situation, by shutting down our borders when we trade agreements with Africa and also ECOWAS. What happens is that Nigeria did not take into consideration the ECOWAS ETLS, we have no choice, and we have to participate.

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According to an international trade expert, Dr. John Isemede, “There is no pressure on Nigeria to append its signature. First and foremost I want to tell you that Nigeria became a member of the United Nation on the 7th of October 1960. How many Nigerians are aware of that, was there any celebration around Nigeria that we are 60 in the United Nation. There is nothing you talk about the ratification of AfCFTA without involving people like us.

“I was in United Bank for Africa so I know what trade across border is all about. I was Export Manager for Unilever for 10 years and I worked in 17 locations for them. I was Export Manager and Head of International business for Cowbell Milk and I worked in Cameroun, Chad, Niger and Benin Republic, so there is nothing you talk about continental free trade that I will not have practical example and books that I have written to share. I was Head of International Business and Export for Dangote and before I joined almost all of the things are being imported but now they have started producing.

When they were opening the secretariat, I made it clear to the world that Ghana should not be carried away that they have the secretariat. Having a secretariat is like being a prefect in a school and whether you are a prefect or not you the student that the principal has given the power to control will eventually sit for the same exam, so at the end of the day, Ghana will bring their score card while Nigeria and other countries to see that having a secretariat is a benefit or just a fun of having it. After all, Egypt has the AFREXIM, Cote D’Ivoire has ADB, Nigeria has ECOWAS secretariat, so if you look at the ECOWAS secretariat, the ADB and the African Continental in the West African coast or the West African countries are more known than the other 54 countries after that, in 1958 United Nation Connection for Africa (UNCA) was set up and they waited for Nigeria to get independence in 1960 and in 1961, they approached Nigeria to carry the flag of integration and business and that was on until 1975 and you know that in 1975, there was a change of regime so they could not achieve much under integration and by 1980, President Shehu Shagari, the Lagos action, did a lot here and that time Nigeria had industries, we had everything you can think of, we had the Nigerian Airways, we had the rails and the ports were connected by the sea and rail.”

On his part, the Executive Chairman/CEO, BUA Group, Abdul Samad Rabiu, expressed enthusiasm and readiness to work towards the implementation and success of the AfCFTA agreement for the transformation of Africa’s economy.

Rabiu, noted that the current status of regional agreements such as ECOWAS Trade Liberalisation Scheme, ETLS; East African Community, EAC; Customs Union, dumping, the proliferation of small arms and illicit, smuggling, to the Trans-African Highway and private sector/African Union/government partnerships, noted that these areas were critical to the success of AfCFTA.

He noted that the poor implementation of regional trade agreements has raised a high level of distrust among Africa nations notwithstanding their support for AfCFTA.

Source: The Naion

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