Speakers at the opening session of the ongoing 12th Annual Business Law Conference of the Nigerian Bar Association Section on Business Law (NBA-SBL) on Thursday said it was needful for Nigeria to sign the African Continental Free Trade Agreement (AfCFTA) owing to the huge benefits the country and the continent at large stand to derive from a one-Africa market. They also examined the implications for Nigeria in the event that the country does not sign.
The session, with the topic ‘Bringing Down the Barriers: The Law as a Vehicle for Intra-Africa Trade’, spoke to the general theme of the conference and set the tone for the discussions in the other key areas such as financing intra-Africa trade and development, movement of goods, services and persons, transport connectivity, e-commerce, competition and consumer protection, ease of doing business and dispute resolution.
Chiedu Osakwe, Nigerian chief trade negotiator/director-general, Nigeria Office for Trade Negotiations, who was the lead speaker, said the AfCFTA establishes a legal order previously not had in intra-African trade relations and that the agreement establishing Continental Free Trade Area goes beyond just trade.
“It’s about regional cooperation; it’s about continental cooperation; it’s about the geopolitical standing of the continent. Remember also that the AfCFTA is the number one litmus test of Agenda 2063 which is the flagship programme of the African Union for its evolution in the global economy,” he said.
Giving an overview of the extent of consultations across Nigeria, Osakwe said following directive from President Muhammadu Buhari, he and his team went round the country from 15th of March to 14th of June to engage with stakeholders, MDAs, and private sector to explain the agreement to them and ask for their views.
According to him, he and his team went to all the six geopolitical zones, had 27 dedicated consultations with particular groups, spent approximately 190 hours talking across the country and he personally spoke to about 900 natural persons.
“What did we get? There is significant support that Nigeria goes ahead with this for much of the reasons they gave – our leadership, our geo-political standing, market access, an opportunity for growth, among others,” he said.
He added, however, that stakeholders also raised long-standing competitiveness issues in Nigeria, such as power, transport infrastructure, difficulty in the domestic market arising from undue obstruction by security forces, transshipment and branding, how to integrate women and the informal market, etc.
The panellists pretty much toed the same line.
Stephen Karingi, director, Regional Integration and Trade Division, United Nations Economic Commission for Africa (UNECA), gave a global context for the AfCFTA, saying it was a response to the mega-regional trade arrangements, such as the Trans-Pacific Partnership, the Trans-Atlantic Partnership, and the Regional Comprehensive Economic Partnership that includes major Asian economies.
He said at UNECA, they had done some work where they simulated what these mega-regional trading arrangements would mean for the world, and they found out that if those mega-regional trading arrangements came into force and Africa did nothing, Africa would actually be a net loser.
“Then we ran another economic simulation whereby we said, let these mega-regional arrangements be in force and at the same time let the African continent also have its own mega-regional arrangement in the form of the AfCFTA, and the findings were that Africa would actually gain significantly. To give a conservative figure, we found that when you have all these mega-regional trading arrangements including the AfCFTA, there would be an additional $27.5bn in terms of intra-Africa export,” Karingi said.
He said while Brexit would definitely have implications for Africa because both the EU and now the UK are major markets for Africa, the AfCFTA is a good response to what is likely to happen and represents a demonstration of Africa’s ownership of its development agenda.
“The African market today comprises 1.2 billion people. Conservatively, the continental GDP is about $2.5 trillion. Now, by 2050, this market is projected to reach a population of 2.5 billion people and it is estimated that the African economy will actually be growing faster than the global average as we go to 2050. The African businesses today face higher tariffs within the continent than they face with the rest of the world.
“So, if you have a growing market and economies that are growing faster and you are facing barriers within this market, then the AfCFTA is actually meant to address these barriers so that they can optimize the one-Africa market. So, in terms of the business case for the AfCFTA, it actually provides opportunities for enterprise and all of us Africans know how enterprising Nigeria is and how enterprising African businesses are,” he said.
Pat Utomi, political economist and faculty at Pan Atlantic University, argued that while there was something to say for everybody’s position on the conversation around the AfCFTA, what was even more important was to ask where Nigeria and Africa wanted to be in a given number of years from now.
“Trade leads to increased prosperity for all, but there is a short-term interest always to protect the gains that come. And this is how we need to understand the plight of manufacturers in Nigeria because many of the things they are dealing with are compounded by factors somewhat beyond their control.
“But the question is, what track would we be travelling as a people if we were to give increased prosperity to this incredible population that is growing out of which we can reap a huge demographic dividend or from which we can create a time bomb that can threaten the whole region in a way that Robert D. Kaplan has predicted in his book, ‘The Coming Anarchy’?
“There will be winners, there will be losers. The challenge is to make sure that we encourage those who see themselves as immediate losers to rethink and have a win-win abundance kind of mentality,” Utomi said.
He emphasized that lawyers stand to reap enormous prosperity as players in the economy if Africa has a truly liberal continental marketplace.
Also speaking, Bola Akinterinwa, former director general, Nigerian Institute of International Affairs, said a critical look at the provisions of the agreement shows that Ambassador Osakwe, who negotiated on behalf of Nigeria, had accomplished his mandate to a very great extent, which includes to ensure that the national interest is well protected and that Nigeria’s leadership in the conceivable future is guaranteed.
He said whether or not Nigeria signs, the agreement would enter into force, but added that not signing has implications for Nigeria, especially in terms of its relationship with its francophone neighbours.
“If the agreement enters into force without Nigeria, what is the likely relationship between Nigeria and particularly Benin Republic? Why Benin Republic? Benin Republic has a policy according to which the budget will never be passed, monetary policy will never be adopted until Nigeria has come out with its own policy. So if the tariff in Nigeria is $10 on a given product, then Benin Republic will reduce its own $4 or $5.
“And in terms of business, you know quite well that you can travel by road to Benin Republic and get it cheaper; it is even possible to settle, find your way out without paying any tariff or anything. So for the businessman, there is no way they will not be going to Benin Republic. So by not signing already, the first implication is that smuggling that government is trying to prevent will find a very fertile land to grow,” he said.
He put the blame for Nigeria’s non-preparedness to sign the agreement partly at the foot of lawyers, saying lawyers in those countries that had signed had been actively present engaging with the issues.
Babajide Sodipo, Regional Trade Adviser at the African Union Commission, said there was every need to balance the ongoing debate on the AfCFTA. He said that rather than focus attention on what manufacturers in Nigeria may stand to lose, it was better to take a more holistic view and consider the opportunities that stare service providers like lawyers, bankers, designers, programmers, entertainers and others in the face in the event that AfCFTA comes into force.
Sodipo said the AfCFTA was one trade agreement that African countries, and at some point led by Nigeria, agreed and created for themselves, adding that the process of the agreement was such that 55 African countries sat together in a room over the course of three years to negotiate, agree, determine every single line, every single word, every single comma, and even the paragraph length.
Likening the scenario to a football match where you cannot shy away for fear that your opponent would foul you, especially since there are rules to deal with such contraventions, he said every single fear related to the implementation of the agreement has a built-in safeguard written into the agreement to address it.
“So we must understand, and we must realize that every single fear, whether it is related to transshipment, whether it is related to anti-dumping, whether it is related to smuggling, trade facilitation, every single thing, every single concern that have been raised in the debate about AfCFTA has something within the agreement that attempts to address it, that attempts to mitigate it,” he said.
“What will happen if Nigeria does not sign the agreement? First of all, the world will not end. The agreement will come into force. The agreement will be ratified by 22 other countries apart from Nigeria, and it will come into force and it will work. So instead of having a market of 1.2 billion people, you have a market of a billion people, which is still a very large market; still a very fairly strong chunk of the African economy.
“What that means is that the fact that Nigeria does not sign does not mean that anybody will wait for Nigeria; it will simply mean that life will go on without Nigeria, and then it becomes progressively much more difficult for you to catch up because eventually, to the extent that you do not want to cap your growth, to the extent that you do not want to lose the market opportunities that you have, you still have to sign.”
Apart from this, he said, Nigeria’s competitive advantage as the largest market in Africa would be completely eroded in the sense that investors would have two options to either invest in Nigeria’s market of 200 million people or in an AfCFTA-compliant country with access to a billion people, adding, “It is an easy choice.”
