AfCFTA: What is in it for Nigeria?

“Leadership from behind does not exist. If it exists, it does not last.”- Amb George Obiozor, former DG, NIIA.

The above quote was extracted from the opening remarks of George Obiozor, chairperson of the one-day conference on Nigeria and the African Union’s Continental Free Trade Area, organized by the Nigerian Institute of International Affairs (NIIA), Lagos, on October 31, 2018. It was a gathering of eminent scholars, academics, labour, captains of industry, members of the diplomatic corps (retired and serving) and media organizations among others.

Historically, the idea of a continental free trade is not new to Africa. In fact, the whole essence of international relations is trade. Perhaps, that was the reason why the NIIA assembled participants from diverse sectors of the economy to participate in the conference. The lead paper titled “Nigeria in a changing global economy: Challenge and opportunity of the agreement establishing the African Continental Free Trade Area (AfCFTA) was delivered by Nigeria’s chief trade negotiator, Ambassador Chiedu Osakwe. Osakwe in his homily spoke extempore to convince the distinguished audience about the need for Nigeria to be part of the continental free trade area in Africa.  Osakwe was not a lone voice in the wilderness, there were others who shared same sentiments with the diplomat that Nigeria should go ahead with the agreements initiated by the AfCFTA. This category of participants strongly feel that irrespective of the barrier that could hinder free flow of trade within the continent, Nigeria as the largest economy should be a signatory to the AfCFTA without wasting any time further. To support their position, they say, Nigeria as an economic giant must display leadership in all matters relating to trade, bearing in mind the country’s population of 200 million. It is believed that Nigeria didn’t sign the free trade agreement because of her commitment to ensuring that only what would benefit the nation’s economic interest is implemented as policy. But, if Nigeria was to diversify her economy and strengthen her industrial base, AfCFTA is the way forward, they further argued.]

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There is no doubting the fact that the delay exhibited by Nigeria in joining this trade arrangement would greatly affect the credibility of AfCFTA. So, one could only hope that Nigeria would make up her mind soon having weighed all factors that may affect the country’s national interest. Nevertheless, Nigeria must first put her house in order by attending promptly to numerous infrastructure challenges before signing any trade treaty. It is because there is a direct relationship between quality of infrastructure and volume of trade.

Although, majority of the participants are of the understanding that Nigeria should sign the treaty and be part of the AfCFTA. But the question, this writer is asking is: Is Nigeria prepared for AfCFTA? If the answer is affirmative, what is in it for Nigeria? These questions are asked because little success was achieved in past initiatives even at sub-regional levels to promote intra-trade within members of the Economic Community of West African States (ECOWAS). Several reasons can be adduced for poor result in intra-trade within ECOWAS. Among them is poor infrastructural barriers and national interest. For instance, if one wants to travel by road from Nigeria to Ghana, it takes about six hours ideally. But the reality is that the route from Nigeria to Ghana takes about 18 hours because of numerous security checkpoints. This writer is aware that a Nigerian firm in the chemical and paint industry exported goods to Ghana about two years ago, but when foreign exchange was to be remitted back to Nigeria for goods sold, the importing nation declined. Smuggling of goods through neighboring countries into Nigeria is a challenge that has affected the economy negatively for several years.

Representatives of the Manufacturers Association of Nigeria (MAN) have been very consistent on all occasions whenever the debate on AfCFTA takes place. In specific terms, MAN is of the view that Nigeria should not sign the AfCFTA based on bandwagon effect or on the grounds of diplomatic niceties.  MAN wants the country to pay more attention to some big issues as the conversation on AfCFTA is deepened. Thus, the federal government was requested to promote negotiations predicated on specific country commitment, while efforts are made to craft a continental master plan for infrastructure development and provide comprehensive support system for industries, especially manufacturing. Africa, according to MAN, lacks the requisite infrastructure and support system for that level of trade facilitation. Indeed, Africa is currently challenged by unfriendly business environment which is the bane of poor competitiveness.

The AfCFTA will involve trade in goods and services. The proponents of the idea of intra-African trade know that adequate infrastructure is key to Africa’s long-term growth. But Nigeria is one of the countries with decadent infrastructure. Services sector in Nigeria is underdeveloped, and this is the same with other African countries. So, if the objective of AfCFTA is to liberalize access to African countries’ goods and services, Nigeria and other African countries are challenged to develop their airlines, shipping, banking, tourism and entertainment sectors to benefit from the intra-trade project.

The ease of doing business ranking of nations shows how easy or difficult it is for small or medium-sized businesses to start and operate in line with relevant regulations. World Bank Ease of Doing Business 2019 is out. Nigeria ranks 146 out of 190 countries assessed. The country is down from her 145th position in 2018 to 146th in 2019. Since firms within the country face barriers when it comes to ease of doing business, investors come to Nigeria but end up investing in neighboring countries.

Nigeria must develop roads, water supply, rail lines, power supply, ports, hospitals, among others. A lot needs to be done in terms of reforms to embrace the full implementation of the AfCFTA. Without prejudice to the fact that Nigeria is the most populous country in the African continent, she should always show leadership in all matters concerning the development in the region as reflected in the above quote. The only way Nigeria can display leadership in all matters affecting Africa is to put her house in order by having a viable industrial sector, articulate programs that are not elitist, but people-oriented. As the federal government deepens the conversation with stakeholders, Nigeria’s economic and trade policies should be tailored towards regional integration. This is possible if policy decision makers have the political will to make the country benefit from AfCFTA. Then signing the AfCFTA will be a game changer.

 MA JOHNSON