Prospects Of The African Continental Free Trade Agreement #AfCFTA
President Muhammadu Buhari on Sunday signed African Continental Free Trade Agreement (AfCFTA) making Nigeria the 53rd country to join that agreement. He appended his signature at the 12th Extraordinary Summit of the African Union at the launch of the operational phase of the AfCFTA.
Speaking at the event in Niamey, Buhari said that the trade must be fair to all. In his words, he said the following: Nigeria wishes to emphasize that trade must be fair to all. As African leaders, our attention should now focus on implementing the AfCFTA in a way that develops our economies and creates jobs for our young, dynamic and hard-working population.
“I wish to assure you that Nigeria shall sustain its strong leadership role in Africa, in the implementation of the AfCFTA. We shall also continue to engage constructively with all African countries to build the Africa that we want.”
----Quote: President Muhammadu Buhari
Benefits of AfCFTA
It is hoped that the countries coming together in the trading bloc will make up the largest of its kind worldwide. There are several challenges that separate sovereignties have for decades battled with and now it seems easy for these countries to break through these barriers.
When responding to questions on Morning Crossfire, Director General, Manufacturers Association of Nigeria, Segun Ajayi held that “the arrangement is meant for over 1.2 billion people across Africa to trade among themselves in an environment where 90 percent of the duty that would have been paid on export and import are being liberalized to zero. This means that products from joint countries which would normally be more expensive will be cheaper to buy from trade partners.
“We are going to be the largest trading bloc in the world. We are going to have a process that allows us to share the prosperity in our different countries. All barriers between borders will be broken down literally. And we will have rules that encourage us to trade among ourselves and to be able to leverage on the economies of scale among the different countries.
Manufacturers Association of Nigeria (MAN) perspectives
Nigeria is a very large market. This new AfCFTA will no doubt bring about several benefits. President Buhari set up a committee to look into the agreement when he was first introduced to it. MAN was part of that committee. Did they look at the pros and cons of Nigeria joining the agreement?
Ajayi commented further, saying that MAN encouraged government to tarry a while in signing the agreement so that the downside of the trade agreement can be weighed against the positive sides. The agreement should have been signed in March but according to the committee, though it was needed, the team decided to have a wider consultation among stakeholders. There were economic factors to be considered. The team wanted to know the readiness of the country; what the impacts will be for Nigeria’s economy and especially on the manufacturing sector.
Africa has 2.5 trillion economy in terms of trade GDP. So for any country to have a piece of the cake, it needs to be competitive. No one buys a product simply because they like the person selling it. If the quality is good and the producer is able to reach the right market, things will go well.
“The downside to this agreement is Nigeria s border will be open to other African countries but the imports will come in at lower prices into our countries at lower prices because our country is not competitive, thereby rendering the manufacturing sector ineffective. If for instance the cost of manufacturing in Ghana is lower, the products coming into Nigeria will overrun our own products in the market.”
Sheriff asked about what the fate of the local market portends to be. Ajayi said that the report submitted to the president is a comprehensive report on the manufacturing and trade environment in Nigeria. “And we indicated that we are grieved at been overrun in many sectors,” he said. “we also urge the government to improve the platform of operations for the manufacturing sector.”
Other complicit issues include multiplication of taxes, access to credit, poor infrastructure, and other. Ajayi called for necessary policies that will support the growth of the Nigerian manufacturing industry. “We should break down those supply-side constraints that limit our capacity. For instance the price of power is too high. So we need to have an arrangement that lowers the cost for the productive sector such that it will be able to match the imports from other countries in Africa.
Also, products that come from other countries out of the jurisdiction of the trade agreement should be carefully screened off as they can undermine the prosperity of the trade pact. European countries and other countries essentially have lower production costs. However, as Ajayi confirms, the team has encouraged the Nigerian government to provide an enabling environments for the rules to take hold. Government must do all it can to support the Nigerian production processes, and find the proper dispute resolution mechanism.
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'PROSPECTS OF THE AFRICAN CONTINENTAL FREE TRADE AGREEMENT #AfCFTA
Resource Person: Segun Ajayi - Director General, Manufacturers Association of Nigeria.
Written by Jude Chukwuemeka