The African Continental Free Trade Area (AfCFTA), billed to start on July 1, may have to wait for one year as the continent battles to contain the spread of coronavirus.
Mansur Ahmed, president of the Manufacturers Association of Nigeria (MAN), said implementation of the treaty in 2020 was looking more unlikely as some of the negotiations that should be going on had been suspended owing to the virus.
“We are not sure it will go on. How can you talk about AfCFTA when borders are closed, everybody is on a lockdown and coronavirus is spreading?” he asked.
“This is obviously not possible because the protocols have not been finalised. My expectation is that it will be delayed by one year,” he said.
The AfCFTA seeks to liberalise trade among African countries. It is targeted at a ‘borderless’ Africa, with an eye on a single market for goods and services on the continent.
It is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.
Negotiations on protocols have been stalled as each country struggles to contain Covid-19. Many African countries from Nigeria to South Africa are on lockdown to contain the deadly virus. The coronavirus cases in Africa’s biggest economy have surpassed 1,000 while South Africa’s have exceeded 4,000 with several deaths in both countries.
Many African countries would be economically broken after the pandemic, making it difficult to negotiate a trade treaty, said a Nigerian trade expert, who was part of the AfCFTA negotiation process.
“It is not official, and no one has discussed that, but it is looking likely to start next year,” the source said.
The sub-Saharan Africa region will plunge into its first recession for 25 years, compared with 2.4 percent growth last year, according to the World Bank’s Africa’s Pulse.
The AfCFTA is expected to favour Nigerian companies, especially export-oriented firms and multinationals, according to analysts.
Nigerian export companies such as De-United Foods, British American Tobacco, Indorama Eleme Fertilizer & Chemicals and Dangote Group, among many others, have the opportunity to grow their margins, expand operations and earn bigger foreign exchange as the African Continental Free Trade Area (AfCFTA) offers them an opportunity to consolidate foothold on the continent.
The benefits are even extended to government-owned Nigerian National Petroleum Corporation (NNPC)/ Petroleum Investment Management company (PPMC), which has the chance to expand export of Naphthalene, a chemical product obtained from petroleum distillation. This product was Nigeria’s biggest export product in the second half of 2017, according to the Nigerian Export Promotion Council (NEPC).
On how manufacturers are coping with lockdown, Ahmed said factories producing food, beverage, medicines, sanitary and hygienic products were open, though distribution was not smooth-sailing.
He said manufacturers’ vehicles were being interrupted in some states by security agencies who had little or no awareness about sectors classified as essential by the Federal Government.
He further said that production among food, beverage, sanitary and drug firms had gone uninterrupted but many manufacturers were unable to reach consumers owing to the closure of retail markets in some states.
“In many areas, the problem has to do with the retail market because some states have closed down such markets,” Ahmed said.
“Producers cannot get their products to the market when the retail markets are closed.”
He said the decision to lock down the entire country, though necessary, could cripple production, distribution and sales made by firms.
ODINAKA ANUDU
