After a prolonged period of indecisiveness, Nigeria has eventually taken the bold step to sign up to the African Continental Free Trade Area agreement (AfCFTA), a step perceived as capable of redefining the economic trajectory of the continent’s most dominant economy. There is no doubt that Nigeria is joining the grouping reluctantly. But, having risen up to the bait by inking the deal more than a year after other African countries gathered in Kigali, Rwanda, to sign the agreement, it is now left for the country to make the best out of it.
AfCFTA has as an objective, the creation of a single market for goods and services among the African Union countries, just as is the case in the European Union. It is a free trade area with the potential to impact positively on the economy of African countries, many of which hardly carry out any form of trade among themselves. Ironically, intra-African trade has been put at a mere 17 per cent in a continent that boasts 55 countries.
Part of the objectives of the AU, the promoter of the free trade area, is to create the largest economic bloc in the world by number of countries. AfCFTA will facilitate the “free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African Customs Union.” Aside from promoting regional and continental integration, it will also enhance competitiveness at the industry and enterprise levels through exploiting the market to scale production, continental market access and better reallocation of resources.
Ordinarily, as the largest economy in Africa with an overwhelmingly large population estimated at 200 million, Nigeria should be the biggest beneficiary of such a market. But poor governance and a weak manufacturing base have raised the fear that the country could become a “dumping ground” for manufactured goods from other parts of the continent, especially those imported from China and Europe, rebranded and shipped in as if produced in Africa. This had been the main reason for the demur by President Muhammadu Buhari when other countries were assenting to the agreement.
Preparing Nigeria to be a major beneficiary of the possible benefits inherent in the membership of the economic bloc of this nature should be the main focus of the government now. For instance, it is virtually impossible for Nigeria to compete fairly with manufacturers from other parts of the continent without fixing the power sector. Power, according to experts, adds almost 40 per cent to cost of production in the country and any plan to boost the manufacturing sector of the Nigerian economy without an efficient power sector is an exercise in futility.
One of the main advantages of belonging to this kind of economic grouping is the prospect of attracting foreign investment. To make this happen, Nigeria has to address the concerns about the ease of doing business. Such concerns include the legal framework for business operation, the length of time for registering a business and the complaints about multiple taxation of businesses.
The deplorable state of road and rail infrastructure is also a matter of serious concern and cannot be glossed over. Besides, the level of insecurity is enough to make even the brave tremble. Nigeria has been held captive by a combination of militants, killer bandits and Islamist terrorists. This has been worsened by activities of armed robbers and kidnappers. As a result, the country is considered the third most terrorised in the world.
Also, the threat of smugglers should be addressed. Nigeria’s borders have always been very porous even when there was no free movement of people and business. While Nigeria’s textile industry, which used to be the largest employer of labour after the government has been in its death throes, the country’s attempt at self-sufficiency in rice production is also facing serious threats due mainly to activities of smugglers. For Nigeria to reap bountifully from AfCFTA, the monster has to be tamed. The finer details of the agreement should be such that the local industry would not need to be exposed to unfair competition with incoming goods.
This, in part, was alluded to by Buhari when he was committing Nigeria to the agreement. He said, “Nigeria wishes to emphasise that free trade must also be fair trade.” But this cannot be achieved through mere preachment or persuasion; only a committed government with a strong resolve and political will can come up with measures to protect the country against smugglers and abuse of trade protocols. Nigeria should invest heavily in technology-based border policing and surveillance.
To stand a chance, Nigeria has to identify areas of competitive advantage over other African countries. Aside from her large population, the country is blessed with large expanse of arable land, which supports agriculture. Before the advent of oil as the dominant player in the economy, Nigeria relied on agricultural products such as cocoa, palm produce, rubber and groundnuts to build a buoyant economy. Under AfCFTA, Nigeria can exploit her advantage in agriculture but the products will have to be processed and should not be exported in their raw forms. AfCFTA should teach Nigeria how to add value to her agro products.
This is where the promotion of small and medium-size business becomes inevitable. SMEs, according to the World Economic Forum, are responsible for more than 80 per cent of Africa’s employment and 50 per cent of the Gross Domestic Product. In India, where they are responsible for 80 million jobs, SMEs help to ramp up production and total exports of the country. If the Buhari government makes Nigeria the best place in which to do business, there are manifest economic benefits that can flow from AfCFTA. This is a task that must start now.