Nigeria finally signed the African Continental Free Trade Area (AfCFTA) agreement, on July 7th, 2019, and ratified it on December 3rd, 2020. By doing so, it joined the 54 other African countries out of 55, that have agreed to lower trade barriers and make the continent one big market. The market that has arisen from this agreement is estimated to be one of the largest in the world, with 1.2billion consumers (60 percent middle class), extending to 1.7billion by 2030, and having a GDP of over $3 trillion. This is a big deal.
Nigeria’s initial hesitation to sign the agreement was informed by certain genuine concerns, which included the huge income disparities among the integrating nations, the probable uneven distribution of the costs and benefits of AfCFTA among participants, and perhaps, fears of becoming a dumping ground for the exports of other countries while having little to export. Those concerns are still valid, considering that Nigeria is not in the list of top-10 most competitive African economies, has a history of import dependence, even for the most basic of manufactures, and little export orientation.
However, having put pen to paper in support of the agreement, and ratified it, Nigeria and her economic entities agree to participate in the open combat for trade, which has kicked off with the commencement in January 2021, of free trading under the agreement. This is a big opportunity for Nigerian enterprises to access more consumers, financial flows, and raw materials, from other African countries, free of tariff barriers. Clearly, AfCFTA will add greater impetus to the pressure of globalization, which has already made significant changes to the way we live. What used to be the local environment and ecosystem become global, and part of the information superhighway, leaving no hiding place for any business entity. Indeed, there is no local business anymore. Everyone is now in a common pool and subject to the harsh discipline of the market and its ever-ready Invisible Hand.
For the 37 million micro, small and medium enterprises (MSMEs) in Nigeria, which operate under some of the most hostile conditions in the world, a wake-up call has just been made. There is now a greater burden of accountability to market forces, even as the operating environment shows no sign of improvement. It is no longer news that over fifty percent of Nigerians have no access to electricity. Meanwhile, millions of those connected to the national grid have less than 12 hours of electricity every day. The inability of the country to protect its citizens from internal and external attacks has heightened. According to a 2019 study on Nigeria’s energy poverty, “Nigeria has one of the largest fleets of generators globally – about three million generators – or one for every 60 people”. Nigeria’s energy condition is a challenge in many respects. Electricity generators are polluting the environment and damaging the health of millions. This is aside from the fact that both petrol and diesel are among the major sources of conflict between labour unions and the government of price instability. One of the legacies of Nigeria’s leadership problems, over the years, appears to be a high rate of energy poverty.
The energy situation in Nigeria provides both a challenge and an opportunity, especially for social entrepreneurs interested in renewable energy. It is a waste of human resources that such a large number of people (over 100 million) are forced to bottle up their creative energies because of lack of electricity. It is a calamity that such a vibrant nation, whose creativity is world famous, is literally tied up by energy poverty. Social enterprises should look for the niche they can fill in the new market place. As the AfCFTA opens, our MSMEs should focus on value addition in the manufacturing space. Importation is good but should not define their main trajectory. Buying and selling should not signpost their participation in the agreement. Granted that competition has always been there, the tempo will be much higher, even for social enterprises.
Information on the programmes of AfCFTA is available. MSMEs must learn how to make new friends across borders and find out the products, services and opportunities that exist abroad. They must use domestic resources to penetrate foreign markets. That may require SMEs to think local even while acting global
