“Tell my daughter and my son that their father was there on the day our continent signed the African Free Trade Area in Kigali”.
With these words, Cyril Ramaphosa, South Africa’s new president, rallied 43 other African leaders to ratify the African Continental Free Trade Area (AfCFTA) that will open up the continent to business and a potential $3.4 trillion opportunity.
But the lead negotiator—Nigeria— was absent at Kigali, Rwanda, when 44 out of 55 African leaders ratified the AfCFTA, which is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994.
Nigeria’s President Muhammadu Buhari was earlier scheduled to travel to Kigali to ratify the trade deal but backtracked on the opposition of the Organised Private Sector (OPS) who said they were not consulted.
Negotiations on the free trade agreement started in 2012 with an ambitious long-term goal of deepening trade among African Union countries, creating bigger and integrated regional markets for African products and achieving economies of scale among African manufacturers.
The agreement removed tariffs on 90 percent of goods and liberalised trade in services to allow African consumers to have access to cheaper products from other African countries.
Apart from allowing domestic firms to access bigger markers, the trade deal aims to remove tariffs and quotas to lower import and consumer prices and increase intra-African trade, which is scratching 15 percent.
The Nigerian federal cabinet recently approved the deal, saying that it would boost the country’s export, spur growth, boost job creation and eliminate barriers against Nigeria’s products and provide a Dispute Settlement Mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries.
“A market of more than 1.2 billion people with a combined GDP of $2.2 trillion is a far stronger bulwark against limiting external trade forces than the tiny ones that inevitably get overwhelmed in negotiations with humongous countries like America, Britain and China,” Rafiq Raji, chief economist at Macroafricaintel, said.
“When compared with intra-regional trade in other continents – 67 percent in Europe, 58 percent in Asia and 48 percent in North America – intra-African trade is quite low,” Raji said.
Matthew Ibeabuchi, CEO of MD Services Limited, a firm in the manufacturing and services sectors, said the trade deal would expand the Nigerian economy but pointed out that the local manufacturing sector is not ready due to local constraints in the economy, especially the business environment/
“We cannot compete. But what I suggest is that we renegotiate grey areas and go on with the trade deal,” Ibeabuchi said.
The Cairo-based African Export-Import Bank (Afreximbank) said intra-African trade grew by eight percent in the first nine months of 2017; with Guinea, Ethiopia, Burkina Faso, Equatorial Guinea, and Sierra Leone in the lead. This is definitely better than the marginal 0.6 percent growth to $156.94 billion recorded in 2016,.
In 2015, intra-African trade growth was almost nine percent. Afreximbank attributes the latest recovery to rising commodity prices, improved regional trade across regional economic communities and some countries’ increased focus on promoting intra-African trade, said Raji.
The Manufacturers Association of Nigeria (MAN) said on Wednesday that it is opposed to the African Continental Free Trade Area (AfCFTA) because the Federal Government did not duly consult with critical stakeholders on the trade policy.
Frank Jacobs, president of MAN, said it needed to understand the strategy that government intended to adopt to enhance the capacity of the manufacturing sector to compete effectively.
Jacobs said the association understood the benefits of the agreement but wanted the government to examine its impact on the nation’s tax structure, government revenue and the welfare of over 180million Nigerians.
Morocco is a North African country but has signed the Economic Partnership Agreement (EPA) with the European Union, which MAN and other private sector players have rejected. Morocco has applied to join the ECOWAS but Nigeria is totally opposed to it.
Jacobs fears that absence of clarity in rules of origin in AfCFTA will allow Europe to export to Morocco, which will now ship their products to Nigeria without paying duties.
He said Nigeria needed to renegotiate the free trade agreement to understand the justifications for agreeing to the proposed movement of 90 percent of tariff lines to zero duty.
Jacobs further said the free trade agreement allowed only 10 percent of tariff lines to be protected, which was a far cry from what was even obtainable in Common External Tariff, another free trade agreement in West Africa.
“Consider tariff lines rates along the line of efficiency, sectoral and sub-sectoral preferences that would be most beneficial to Nigerian businesses under the AfCFTA dispensation,” he stated.
He further asked the government to reconsider the National position on EPA vis-a-vis the AfCFTA especially on tariff lines of products on the sensitive/exclusion list, with a view to ensuring that the EU-EPA was not reintroduced through the AfCFTA’s back door.
ODINAKA ANUDU
