Potential Benefits Of Free Trade Agreement For Nigeria
Background
During the scramble for Africa in the late 18th Century, the continent was divided up among the colonialists who imposed artificial boundaries which became the untenable nations which now exist. The impact of colonisation has hitherto, arguably improvised the continent and caused barriers to trade within the African Union. Since the painful decolonization of most countries in Africa about half a century ago, the colonial masters have never lost sight of their interest. France, for instance, has maintained active involvement in the monetary policy of ex-colonies which still adopts the CFA Franc and have their currency reserve with the Central Bank of France. Other internal issues militating against regional trade are bad governance, corruption, poor road network and insecurity are inherent problems in many countries in Africa.
However, the long-touted concept of an African Continental Free Trade Agreement has finally come into force, 52 countries signed the agreement in Kigali, Rwanda on March 21, 2018, and the required ratification by 24 countries for the agreement to take effect was completed on May 30, 2019. Intra-African trade at the moment sits at approximately 10 per cent, whereas intra-European and Intra-North American trade sits at 30 per cent to 40 percent within those continents. A country like Nigeria can easily trade with Europe, Asia and America than with its neighboring countries; this is absurd, and new trade treaty is meant to change the paradigm and allow for a single market for goods and services.
Potential benefits of the trade treaty for Nigeria
However, Nigeria, the largest and most populous country in Africa, has declined assent to the trade agreement on the ground that the country may become a dumping ground for foreign goods. The Reuters quoted the Nigerian president, Muhammadu Buhari, saying that: 'I don't think Nigeria has the capacity to supervise adequately and to ensure that our colleagues in AU don't allow their countries to be used to dump goods s to the detriment of our young industry our capacity to utilise foreign exchange for imported goods”. The government has said it would need to consult widely and seek the interest of the private sector and manufacturers association before considering to sign up to the $3 trillion Africa free-trade Agreement.
The continent is about to be opened up its market for huge commerce, and I believe that it would be the advantage of Nigeria to sign up for the trade agreement - Nevertheless, it behooves the country to fix its internal problems and overreliance on revenue from crude oil export. In the current global economic system the more insulated a country is the more difficult it would be to accomplish its economic goals. Not signing the agreement would mean for Nigeria a higher custom charges, inflation, unemployment, and the possibility of foreign investors’ redirection their fund to countries with a wider market. Nigeria may suffer severe setback if it chooses to be insulated against other African countries, especially now that many country are striving to their market and economy for more collaboration.
Furthermore, the trade treaty, as estimated by the United Nations Economic Commission for Africa, has the potential to expend the size of Africa’s economy to US$29 trillion by 20504, beside the potential annual growth in foreign earnings and local expansion that goes with it. The growth in earnings would be used to develop the African continent and foster the 2063 agenda for a Pan-Africa integration. If Nigeria support and sign up for the trade treaty, this will improve accessibility of Nigerian exporters of goods and services to an expanded market and thereby reducing unemployment in the society. On March 16, 2018, the office of the Special Adviser to the President of Nigeria (Media and Publicity) disclosed that Nigeria will benefit from an estimated 8. 18 percent increase in total export, and some structural shift in the economy towards manufacturing and services4. In addition, it would result to a total an increase in economy by an equivalent of US$2. 9 billion in 2018 terms, and improve Nigeria manufacturing and export capability of the country4. Multinational businesses such as the Dangote group, Africa Petroleum and so on would be able to expand their portfolio of business across Africa.
Another significant benefit Nigeria can obtain form the agreement is the potential to grow local content, increase access to human capital and maximum finance within the Africa continent. The agreement will also improve competitiveness and the ease of doing business in Nigeria while simultaneously provides a platform for the country’s continued leadership role in Africa. The frequent derogatory and discriminatory treatment melted against Nigerians in other African countries would be abated.
Areas for further consideration to the ratified agreements
However, while we loud the success of the AfCFTA and criticise Nigeria for its shameful decline to sign up for it hitherto, we must also consider the concerns expressed acclaimed “giant of Africa”. Nigeria is worried about the possibility of unfair trade practices such as the dumping and transhipment of goods whos origins are concealed occasioned by lowering or removing import tariff; this could cripple local manufacturing and the economy of the country. Instituting trade governance and effectively implementing the rules and regulations will play a key role in curtailing unfair behaviours. Nigeria may want to see an AfCFTA which is better fashioned to work at regional levels first before pushing for continental synchronisation. For example, if a Dangote cement cannot enter into Benin republic which is 30 minutes away from its cement plant in Lagos, and the Benin Republic would rather import cement from China rather than from Nigeria, then it is a proof that some African countries are not ready or may frustrate others while trying to succeed.
There should be a better resolution on the policy concerning continental trade, local content, movements of goods, payments, ports availability, and balance of trade immigration and so on. At the moment, Nigeria bears a huge burden of unregistered and undocumented. West African migrant coming through the porous borders to the country. Therefore, how will some economically favourable countries like Nigeria curtail excessive influx of migrats who might want to take advantage of the AfCFTA. Likewise, issues relating to Visa should be addressed to determing the extent to which individual countries should be opened to receiving citizens of the union. In Africa as of now, it is more difficult for a Nigerian to legally travel to the UK, France or Australia than to travel to SouthAfrica or even Cameroon. Also, Infrastructure, being the majir enemy of industrialisation in Africa needs to be resolved.
Lastly, I believe that it is more reasonable for Nigeria to sign up for the agreement at this stage. It is only a country with a secured that could complain about not signing the agtreement because unauthorised foreign goods will pour into the country. How can a country without a secured border say no to AfCFTA? Because of the present situation of Nigeria’s porous border, there seem to be no way to prevent foreign goods from coming in through the borders. If Nigeria is unable to stop the smuggling of rice from far away Thailand, it definitely cannot stop the beans smuggled in from Chad. It will amount to dual loss for Nigeria if it fails to sign the agreement and in the end smuggled goods still ends up on her soil.
Finally, the trade treaty promises a lot of benefits for the African continent and it is worrisome that 24 countries have ratified the treaty yet, Nigeria is yet to key into this agreement and be a decision maker in it to her own advantage.
