AfCFTA; Better late than never

At long last, after some dithering and procrastination that was in tune with the well-known policy of government to look thoroughly well before leaping, President Muhammadu Buhari last Sunday in Niamey signed the African Continental Free Trade Area, AfCFTA, agreement. With that, Nigeria became the 53rd country out of the 55 countries in Africa to […]

At long last, after some dithering and procrastination that was in tune with the well-known policy of government to look thoroughly well before leaping, President Muhammadu Buhari last Sunday in Niamey signed the African Continental Free Trade Area, AfCFTA, agreement.

With that, Nigeria became the 53rd country out of the 55 countries in Africa to enter the free trade area.   The Republic of Benin was the 54th to join, leaving only Eritrea out.

It took Nigeria this long to come not because it was not enthusiastic about continental integration to promote free trade and encourage free movement of persons and goods within the continent. Nigeria was a major promoter of this integration process when the idea was mooted in 1981 during the President Shehu Shagari administration. Nigeria hosted the economic summit that gave birth to Lagos Plan of Action on African economic development.

The process continued through the 90s taking on board issues of integration, continental peace, security and economic development. The ultimate goal was to create a single market to be followed by free movement and an African common currency like the Euro.

This grand vision eventually gave rise to the formation of African Continental Free Trade Agreement which is now in force among 54 African Union member states. Somehow, it would seem that majority of Nigerians were not aware of this fundamental development until last year when, after an elaborate protocol and diplomatic arrangement for Nigeria to take this giant leap, our president demurred.

The flak he got in the media for his last minute change of travel plan drew people’s attention to the agreement. This is how it happened. Preparation for the 2018 Kigali Summit was under way. At least 44 African countries, including Nigeria, were due to arrive in Rwanda to put pen to paper and sign the agreement that would bring to fruition the following: African Continental Free Trade Agreement, the Kigali Declaration and the Protocol on Free Movement of Persons. Establishment of visa-free zone within the free trade countries would be accompanied by the creation of an African Passport.

In Abuja, plan was on for the trip. Something big was about to happen on the continent and Nigeria was a major promoter of the big event. A few days to the summit, the Federal Executive Council received the AfCTA framework for consideration and endorsement. Thereafter, the Minister of Trade and Investment addressed the press and enthusiastically announced the country’s commitment to the agreement.

Delegation from the country including the president’s advance team had arrived in Kigali for the summit starting on March 21. But on March 18, presidency abruptly announced the cancellation of the President’s trip apparently to allow for more time for consultation with critical stakeholders namely the Organised Private Sector, the Manufacturers Association of Nigeria, and even the Nigeria Labour Congress, NLC. Reactions came fast and thick and they were far from being pleasant and flattering.

Speaking in Addis Ababa, former President Olusegun Obasanjo, apparently disappointed, said that Africa Free Trade Agreement would not be hindered by Nigeria’s reluctance to sign the agreement. Some discussants, at the Stakeholders’ Dialogue on Continental Trade and Strengthening the Implementation of AfCTA, had not only expressed concern but they had expressed the need for the participants to look into the implication of Nigeria, the continent’s biggest economy, not signing the agreement. They found the about-turn of Nigeria’s president disturbing considering the fact that the country had played a major role in its conception.

But now that the agreement has been signed, it’s perhaps safe to say that all is well that ends well. The question to ask though is: have all the concerns that led to the diplomatic rukus over the Kigali Summit been properly addressed?  Are all the stakeholders now on board and flying with the agreement?

Between last year and now, not much was heard again about the trade agreement until last Sunday when the president took off for Niamey to sign the agreement. Whatever is the case, there is need for more sensitisation because of the importance of this agreement. Though it is a matter that ought to be left severely for development economists to worry about, but the impact of this on the generality of the people is so horrendous that it will require a public enlightenment campaign.

One of the objectives of the agreement, from my reading of the available literature on the subject, is the establishment of a single continental market for goods and services with a free movement of business professionals and investments. Another is the expansion of intra-African trade.

In a layman’s language, those traders who cross into Nigeria from Togo, or the Republic of Benin to Oke-Arin market in Lagos, for example, would be free under this agreement, to come and go without let or hindrance at the Customs and immigration check-points.

Trade within the continent which is about 12 per cent of the total exports of Africa to Europe, USA and China for example is expected to increase to about 55 per cent in 2022 all things being equal. And that should include increased manufacturing out-put, conducive environment for business so that foreign investors can set up factories to utilise local raw materials and sell the finished products within the country.

Erratic power supply is not a prerequisite for competitive production output. And shoddy products that do not meet international standards cannot hope to do well in the market. The free trade policy will, no doubt, put pressure on policy makers and policy implementation mechanism to strive for excellence – excellence in ideas and excellence in product development, if we must survive in the competitive environment that this agreement is designed to engender.

The president said, while signing the agreement on Sunday, that the free trade must not only be free but fair. One way to ensure that is to improve the standard control mechanism to enhance the quality of goods in the continental market as well as the ones meant for export outside the African continent.

The president acknowledged that “we fully understand the potential of the AfCFTA to transform trade in Africa and contribute towards solving some of the continents challenges whether economic, security or corruption.”  He has indeed put his finger on two serious factors that are guaranteed to ruin the best laid plans in this agreement; corruption and security.

At the national level, it seems that most of the efforts to fight corruption have been concentrated on graft – stealing of public resources to the neglect of other features of corruption. Passing sub-standard goods and services to customers is corruption though this may not attract serious government attention even though there are agents dealing with such matters.

But with the free trade agreement in place, it has become essential that standards must be enhanced and sustained. Consumer protection agencies and similar institutions must be revamped for better service.

Another factor mentioned by the president is security.  The civil society must not only be security conscious but must be exposed to basic security training to enhance overall security apparatus of the country. Free movement of persons will lead, inevitably to influx of people across the border with serious security and even health implications.

Of more serious concern is the current insecurity problem which has assumed epidemic proportions throughout the country. And it has remained a major threat to economic development. With farmers being driven from their farms and petty traders confined to their homes, unable to buy and sell for the fear of kidnappers, food security is being threatened. And famine is not a distant possibility.

All these, for sure, will put a severe strain on the success of AfCFTA and an added pressure on government.