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Nigeria’s signing of AfCFTA must be meaningful, not perfunctory

Two weeks ago, on 7 July, President Muhammadu Buhari signed the agreement establishing the African Continental Free Trade Area (AfCFTA) at the 12th Extraordinary Summit of the African Union in Niamey, Niger Republic. This was, of course, well over one year after the AfCFTA was launched in Kigali, Rwanda, in March 2018. Notwithstanding, as someone who wrote several times in this column urging Nigeria to sign the AfCFTA agreement, I congratulate President Buhari for eventually, if belatedly, doing so.

Yet, Nigeria’s aberrant behaviour would make a good case study in African economic diplomacy and political economy. Here is a country that has always played a critical role in developing a vision of Africa’s economic integration and that has been at the centre of the economic diplomacy and summitry aimed at actualising the vision, yet whose own domestic political economy has always led it to act at home in ways contradictory to the fulfilment of that vision. Truth is, when it comes to African economic integration, Nigeria always talks the talk, but rarely walks the walk!

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Right from the establishment of the Organisation of African Unity in 1963, Nigeria was at the forefront of the advocacy for the economic integration of the continent and contributed significantly to the process of institutionally achieving that vision. For instance, Nigeria hosted, in 1980, the African Union’s summit that produced the Lagos Action Plan for African Economic Community and, crucially, the AU’s summit, in 1991, that led to the adoption of the treaty establishing the African Economic Community, known as the Abuja Treaty, which laid the foundation for formation of a continental free trade area, namely the AfCFTA. And, of course, it was a Nigerian, Ambassador Chiedu Osakwe, who chaired the Negotiating Forum for AfCFTA and it was Nigeria’s trade minister, Dr Okechukwu Enelamah, who was responsible for the negotiations at the ministerial level.

Given Nigeria’s contributions to the successful launch and conclusion of the AfCFTA negotiations, it was not only deeply embarrassing but inexcusable that President Buhari refused to attend the launch of the AfCFTA in Kigali, let alone sign the agreement. But why?
Well, the answer lies in Nigeria’s political economy. Trade policy decisions in Nigeria is highly politicised and opaque, with successive presidents often ignoring the recommendations of formal institutions, such as the trade ministry, but listening instead to the views of politically well-connected individuals and interest groups. Recently, during the 2019 Mo Ibrahim Governance Weekend in Abidjan, Cote d’Ivoire, Alhaji Aliko Dangote openly opposed the AfCFTA, saying the priority should be on regional economic communities, such as ECOWAS. Truth is, the views of influential manufacturers like him, often expressed through informal channels, heavily influenced Buhari’s decision not to sign the AfCFTA agreement in March 2018 and his government’s subsequent dithering or vacillation on the issue.

President Buhari said Nigeria delayed signing the AfCFTA agreement because “We need the full support and buy-in of our private sector and civil society stakeholders and the public in general”. Few would disagree with the need to secure stakeholder buy-in for an agreement that has distributional consequences. However, the truth is that there was nothing that emerged from the extensive year-long stakeholder engagement, which included several months of nationwide consultation and sensitisation exercise, an independent economic analysis and an impact and readiness study, that shouldn’t have been known or, indeed, that wasn’t known, a year ago!
For instance, the chairman of the impact and readiness committee, Desmond Guobadia, said when presenting his committee’s report to the president that, “The AfCFTA provides immense opportunities for Nigeria’s manufacturing and services companies to expand to Africa”. Buhari echoed that view at his signing of the agreement, saying: “Our consultations and assessments reaffirmed that AfCFTA can be a platform for African manufacturers of goods and providers of services to construct a regional value chains for made-in-African goods and services”. But these are arguments that several analysts and commentators, including this column, have adduced since March 2018, and it shouldn’t have taken Nigeria well over a year, with possibly huge resources expended, to come to that simple conclusion.

 

AfCFTA is not compatible with Nigeria’s protectionist practices, such as import prohibitions. However, free trade agreements often serve as external constraints on domestic protectionist pressures and as a trigger for far-reaching domestic reforms

That said, it is right, from a political economy point of view, that all critical interest groups, both refuseniks and demandeurs, must feel that their views have been heard. What’s more, President Buhari, himself a mercantilist, needed something like a comfort letter, which came in the form of the recommendations of the impact and readiness committee, to give him the necessary cover to be able to sign the agreement. Given all that, you might say that the long delay, if it produced a good outcome, was justified.

But it’s important to understand the political economy situation, because unless the signing of the AfCFTA agreement was a product of a genuine domestic consensus in favour of AfCFTA, it would be a meaningless exercise. The truth is that ex ante position can determine ex post behaviour. In other words, if Nigeria had to be dragged kicking and screaming, against strong resistance from powerful domestic interests, before signing AfCFTA, well over one year after the agreement was concluded, how would it behave with respect to the implementation of the agreement?

Let’s face it, Nigeria has always failed to implement agreements it reluctantly signed. For instance, Nigeria was one of the unenthusiastic or reluctant participants at the Uruguay Round negotiations that led to the WTO agreement, and, to date, it has failed woefully to implement its WTO commitments, as Nigeria’s successive WTO Trade Policy Reviews have shown. Similarly, Nigeria was the last country to sign up to the ECOWAS Common External Tariff agreement in 2006, and, even today, it has not fully implemented the agreement. Truth is, Nigeria has not been faithful in the implementation of the ECOWAS Trade Liberalisation Scheme (ETSL). As one analyst put it, “Nigeria has displayed an absence of leadership in relation to the ETSL and ECOWAS CET and has in the past behaved in an obstructionist fashion”. So, Nigeria’s signing of the AfCFTA agreement is Niamey was the easy part; the challenge is now implementation!
But what should Nigeria do now that it has signed the AfCFTA agreement? Well, I would suggest four things. First, it must ratify the agreement speedily; second, it must identify the institutions it would need to participate fully and beneficially in AfCFTA and work towards creating those institutions; third, it needs a new trade policy mindset and culture change that move away from protectionist thinking to economic liberalism and must reform its trade policy accordingly; and, fourth, it must challenge its manufacturing and service companies to begin to produce for the African market, to become export-oriented, and must support, not protect, those companies by removing the supply-chain constraints that can limit their ability to produce quality goods and services for export across Africa.

However, the immediate action must be to ratify the AfCFTA agreement, because treaties are not self-enforcing in Nigeria. In its 2017 trade policy review, Nigerian officials cited “the difficulties in the domestication” of its WTO commitments for its failure to meet the commitments. Therefore, the 9th National Assembly must speedily domesticate Nigeria’s AfCFTA commitments. What’s more, Nigeria must also create other relevant institutions and laws, including a robust trade remedies regime to deal with injurious trade practices, a key concern. Nigeria must seek international support, such as within the aid for trade framework, to build those institutions.

But the biggest challenge is the policy mindset. AfCFTA is not compatible with Nigeria’s protectionist practices, such as import prohibitions. However, free trade agreements often serve as external constraints on domestic protectionist pressures and as a trigger for far-reaching domestic reforms. Thus, Nigeria must use AfCFTA to transform its domestic policies and institutions. That way, its signing of the agreement won’t be perfunctory, but meaningful!

 

Olu Fasan

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