On Wednesday, forty-four African countries signed unto the African Continental Free Trade Area (AfCFTA), a trade agreement that gives the members access to a market of about 1.2 billion people from Cape Town to Cairo and a $3 trillion GDP value through the free movement of goods and persons across borders.
However, while having been part of the negotiation process that began in 2015, Nigeria pulled out in the last minute. Africa’s largest economy and most populous nation is not going to be part of Africa’s and the world’s largest free trade bloc since the World Trade Organisation.
What was behind the decision?
As Africa’s largest economy and most populous country, we are committed to ensuring that all trade agreements we sign are beneficial to the long-term prosperity of the continent.
— Muhammadu Buhari (@MBuhari) March 19, 2018
President Muhammadu Buhari’s response was that there were “economic and security implications of Nigeria signing the #AfCFTA Agreement” which need to be further considered, stating that his government “will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to #Nigeria becoming a dumping ground for finished goods”. According to the government says “certain key stakeholders in Nigeria indicated that they had not been consulted, for which reasons they had some concerns on the provisions of the treaty”.
The reluctance to sign unto the AfCFTA has been hailed by the Manufacturing Association of Nigeria (MAN). The trade union’s president, Frank Udemba Jacobs, said manufacturers would not support federal government’s adoption and ratification of the agreement establishing the African Continental Free Trade Area (AfCFTA) until issues of market access and enforcement of rules of origin are addressed, according to PREMIUM TIMES. Mr Jacobs cited the fear that the principles of another trade deal, the 2016 EU-EPA to which Nigeria has not signed unto, may have been penciled into the AfCFTA, hence making it still unfavorable.
— Presidency Nigeria (@NGRPresident) March 21, 2018
Any free trade agreement, even a bi-lateral one, has implications for the economic and security interests of a nation. For example, cheap Chinese goods which find their way to, say, Ghana, will have easy pass into the Nigerian market at rates that could probably restrict the production of same goods locally (if they are being produced). Also, being in a sensitive period of insecurity and insurgency, there is, theoretically, a case for caution for Nigeria in opening the floodgates to 50 countries in Africa to bring in their goods and persons. This challenge is especially significant with the weaknesses of deficit infrastructure and human capital in Nigeria’s security set-up that should ensure proper vetting and monitoring.
Why is #AfCFTA signing a big deal?
1. It creates a single continental market for goods & services
2. Free movement of business persons & investments
3. Eliminating tariffs & non-tariff barriers to intra-African trade
4. Enhanced competitiveness at the industry & enterprise level pic.twitter.com/DaShIhL99T
— CS Adan Mohamed (@AdanMohamedCS) March 21, 2018
That said, some commentators can only the resistance to join the AfCFTA as the triumph of a minority of persons for whom the present challenges in the country are beneficial as a monopoly. Reuben Abati described the impromptu abandonment as a “diplomatic blunder” and an ambush move by misadvised president. Abati traces the AfCFTA to the 1981 Lagos Plan of Action under the Shagari government, after which other initiatives like New Partnership for African Development (NEPAD), Africa Peer Review Mechanism (APRM), emanated. In a sense, the AfCFTA should have been the culmination of those past initiatives. “The irony that is lost on Abuja is that in fact Nigeria needs the AfCFTA more than any other African country” Abati writes in his weekly column. “Nigeria has the largest market and population. The country and its people stand to benefit more especially at the level of services and SMEs”
Former President Olusegun Obasanjo was very blunt in his assessment of Buhari’s refusal to sign, saying it was “criminal for any African leader to talk of not understanding what we are going to sign (Free Trade Agreement in Africa) and afford not to be here”. He called for political leaders who are not knowledgeable on the issues of trade and the value of the AfCFTA to be educated.
When I read about the guy that singlehandedly shutdown our textile industry for the Chinese, I Knew the decision to back out of the Kigali trade summit by AU is likely to protect the interests of said person running Nigeria ATM and funding the elections of the Messiah
— Khaleesi (@AbangMercy) March 21, 2018
An individual influences national decisions that affects 180 million people. Dear good people, GET YOUR HANDS INTO POLITICS.. We missed out from an important AU event… SHAME
— Khaleesi (@AbangMercy) March 21, 2018
The AfCFTA aims to improve intra-Africa trade, from its current levels of about 16% to a percentage more comparable with other continental trade regions. Intra-Asia trade is 51% and in Europe it is up to 70%.
What options do Nigerian businesses who want access to Africa’s large market have, pending when MAN and other interest groups come around to agreeing to the AfCFTA?
It's quite simple: if we stay out of #AfCFTA, those shoemakers in Aba will go and set up shops in Ghana. Businesses that want to access the African market will follow the same route, too. You can't chain people in 2018! https://t.co/spiFrBxCaN
— Baba (@ChykeBaba) March 22, 2018
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