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In 2012, the African Union (AU) decided to establish the African Continental Free Trade Agreement (AfCFTA). African Heads of State and Government have set a deadline for 2017 for the implementation of the treaty. But there is still no consensus on the agreement as some member countries have asked for more time to expand consultations on the likely impact of the treaty on their economies. OKWY IROEGBU-CHIKEZIE and CHARLES OKONJI write about the implications of AfCFTA for local manufacturers, the economy and Africa.
The African Continental Free Trade Agreement (AfCFTA) plans to benefit 1.2 billion people and more than $ 2 trillion. However, those who oppose the treaty see it as an indirect colonization of Europe, arguing that the move will give unhindered access to goods manufactured outside the continent under the Treaty of Europe. Lisbon. The AfCFTA treaty covers goods, services, investment rules and dispute settlement procedures, including a series of provisions to facilitate trade, reduce transaction costs, provide for exceptions, flexibilities and safeguards for vulnerable groups.
Forty-five of the 55 African countries have so far signed the treaty. Surprisingly, South Africa, which led countries that suspected the treaty not to be too good, turned around two weeks ago to sign the agreement. He has joined Rwanda, Niger, Angola, Central African Republic, Chad, Comoros, Congo, Djibouti, Gambia, Gabon, Ghana, Kenya, Mauritania, Mozambique, Coast Ivory Coast, Seychelles, Algeria and Equatorial Guinea. : Morocco, Swaziland, Benin, Burkina Faso, Cameroon, Cape Verde, Democratic Republic of the Congo, Guinea, Liberia, Libya, Madagascar, Malawi, Mali, Mauritius, South Sudan, Uganda, Egypt, Ethiopia, Sao Tome and Principe, Togo and Tunisia, among others
The other eight countries that have not yet approved the FTA are: Nigeria, Zambia, Tanzania, Burundi, Eritrea, Botswana , Lesotho and Namibia
. The implementation of the agreement could consolidate intra-African trade by 52 percent by 2022.
The agreement should liberalize services and target "non-tariff barriers" that hinder trade between African countries, such as border delays.
Free The federal government has stated that it is delaying its signature to broaden and deepen national consultations. He promised not to sign any agreement that would not equitably and fairly represent his interests and those of other countries on the continent.
Arguments for and against the Treaty
Some argue that the treaty will have an impact on government revenues and welfare. The elimination of all tariffs between African countries, according to them, will erode the cash of the trading states up to $ 4.1 billion a year and worsen poverty, with millions of dollars. Africans exposed to famine and death.
are concerned that the benefits in the free trade area may not be equitably distributed.
At the International Monetary Fund (IMF), Nigeria is Africa's largest economy with a GDP of $ 405 billion and a population of about 180 million. It is also the largest market in Africa, followed by Egypt ($ 332 billion) and South Africa ($ 295 billion). But, critics go to the positive body language of the federal government to join other countries in signing it.
Chief Trade Negotiator of Nigeria / Director-General Nigerian Trade Negotiations Office (NOTN), FTA Stage 1, Ambassador Chiedu Osakwe, said the treaty would create a single market, gradually reducing trade restrictions goods and services, on the basis of agreed terms of a 90% ambition level, an exclusion and sensitivity list of 10% and identified priority sectors. Osakwe pointed out that the implementation of AfCFTA is expected to boost intra-African trade from 16% to 52% by 2022, adding that stage 2 of AfCFTA negotiations cover investments, competition and intellectual property. Osakwe said: "The potential of AfCFTA is considerable with an estimated population increase in Africa of 4 billion and a GDP increase of $ 25 trillion, by 2050 any cost / benefit analysis of membership in the CCFTA should estimate the cost of non-membership. "
The Nigeria Labor Congress (NLC) is at the forefront of the opposition to the treaty. Congress described the treaty signing as "extremely dangerous" as it would open the country's ports, airports and other businesses to interference and unbridled foreign domination.
NLC President, Ayuba Wabba, said that AfCFTA He blamed the Minister of Industry, Trade and Investment, Okechukwu Enelamah, for being the spearhead of the agreement, which was downright dismissed when it was dubbed the Economic Partnership Agreement (EPA).
In Wabba's argument, AfCFTA seeks to open seaports, airports, and other African businesses to unbridled foreign interference. According to him, the local Nigerian business community and the trade union movement were not consulted even when the government ordered the promoters of the agreement to do so.
He said: "The drivers of this political initiative, without consulting the relevant stakeholders.A possible impact assessment, advanced plans to lobby President Muhammadu Buhari for that he signs it
"We in the NLC are shocked by sheer impunity or the blatant lack of consultation in the process that led to this. We are more concerned about the likely outcome of this political initiative if it is brought to life because of its paralyzing effect on local businesses and the concomitant effects on jobs.
Wabba added that the NLC finds it confusing that at one point nations, including the United States (US) resort to protectionism for the defense of their local businesses and job protection, Nigeria and Africa have the audacity to want to open its doors, windows and roofs.
He adds: Doubt that this political initiative will sound the death knell of the Nigerian economy.As a result, we urge Sir the President not to sign this agreement either in Kigali or elsewhere.We believe that our national interest is at stake and nothing should be done to compromise that. "
[19659003] Manufacturers also kick
The Manufacturers' Association of Nigeria (MAN) ) also rejected the decision to sign the treaty until Appropriate contributions and contributions from all interest groups will be received. MAN President Frank Udemba Jacob urged the government to continue to refuse to sign the agreement until it is clear that the government is in danger. a credible result of an ongoing study launched by the government on the issue is He said that Nigeria could become the main driver of improving the volume of intra-African trade if the rules of origin, countervailing measures, dispute settlement, among others, were addressed.
Jacob, however, reiterated that the only way to ensure this positive proposal was to ensure that the bargaining team was guided by a credible and strategic study.
He said: "In light of recent developments, we have found it necessary to intimate you (federal government) that an insignificant number of private sector operators in the private sector recommend with tact that Mr. President signs the agreement.
"MAN does not live up to the technical details of a trade agreement of this magnitude. The statement from this group of actors is not representative of the views of the organized private sector (OPS) of Nigeria. "
He further emphasized the need to ensure that" the agreement is synchronized and does not constrain the existing economic policies of the nation, including the Industrial Revolution Plan in Nigeria and the United States. Economic Recovery and Growth Plan (ERGP).
Chief MAN reiterated that concerns about the implications of the signing of the agreement had not been addressed. 19659003] His words: "We are concerned about AfCFTA's impact on the country's tax structure, government revenues, the well-being of more than 180 million Nigerians and its impact on the aspirations of the country. Industrialization and economic development of Nigeria. For the avoidance of doubt, we again request that the President not sign AfCFTA's agreement until the result of a credible study indicates it.
"He should graciously allow the national team to resume its participation in the negotiations to ensure that the country is aware of developments.
" This will not jeopardize or limit the reserve of our assent, if we finally decide that the agreement is certainly not in our favor. "
" It means rather that While keeping our eyes on events, we can continue our way sovereign and necessary to determine whether we should sign or not.
He praised the clear demonstration of the commitment of Buhari and his government. the growth of the manufacturing sector; At a policy roundtable: "Business Environment and Excise Tax: Maximizing Economic Opportunities Through a Fight Against Illegal Trade" held in Lagos by the Initiative for the International Labor Organization. Public Policy Analysis (IPPA), experts have warned that to limit the activities and ills of the illegal trade that ravages the country's economy, the government should not rush into the signing of the ALEFF .
sign the agreement until certain gray areas identified have been taken into account.
John Isemede, Consultant at the United Nations Industrial Development Organization, recommended reviewing the composition of the 20-member committee. center to explore the salient but critical issues as the comparative advantage of the nation to avoid making countr y a dump for goods and services among the issues that need to be addressed.
Dr. Isemede, a former executive director of the Association of Chambers of Commerce, Industry, Mines and Agriculture of Nigeria (NACCIMA) said: "The country is already overburdened with the money. I am not saying that the federal government should not sign at all, but put the necessary infrastructure on the ground, something to sell, something to offer before rushing into agreement [19659003] "For example, the tea you sip comes from Kenya. ; the Titus fish you eat every day comes from Morocco; Shoprite is the property of South Africans; fruits, vegetables, wines and other products sold are imported from South Africa with South African Airline. What is Nigeria bringing to the table and what are we going to sell? "Isemede interviewed
According to the UNIDO consultant, the government should review the composition of the committee where PAHO will take charge, contrary to the current arrangement, to ensure that the transport sector develops Especially that the rail system needs to be on the right track.This is in addition with more local industries looking towards the export and the government possibly considering the reintroduction of the goods board to optimize the benefit. Comparative of the Nation
Isemede said: "You know that the Nigerian market is the target because of its size. For me, signing an AfCFTA without putting things in place and without further involving the OPS, it's like a landlord who hands over his certificate of occupation to the tenant.
The President of the New Partnership for Africa's Development (NEPAD) Business Group and former president of the Lagos Chamber of Commerce and Industry (LCCI), Ms. Nike Akande, said that Nigeria was not yet ripe for AfCFTA
She warned that Nigeria would become a garbage dump for all kinds of goods. Dr. Olajide Damilola, Principal Investigator at IPPA and University of Aberdeen (United Kingdom), described the absence of Nigeria in the world's technology ranking. information as it appears from the World Index of Illegal Trade (GITEI). , the global ranking of countries on the illegal trade is worrying.
The absence, according to him, is due to the lack of data. The situation is more precarious because the trade could cause serious damage to the economy without being noticed and a great fear for potential investors.
He said: "As an emerging economy fraught with socio-economic obstacles, the challenges of doing business in Nigeria" The challenges range from inadequate multiple infrastructure, inconsistencies policies, corruption, insecurity, bureaucratic bottlenecks, breaches of the rule of governance and economic growth. "In such an unfavorable environment, businesses that function legally as that net economic contributors deserve the government to encourage and protect their goods and services against the loss of commercial viability of unlawful perpetrators. "
According to him, the country must urgently work on encouraging critical factors" Some of the Critical factors considered to contribute to illicit trade are weak and unenforced government policies, supply and demand for illicit products es, transparency and the business environment and the enforcement of customs regulations "(19659003). To solve the problem, the researcher said that it was necessary to answer some questions to properly guide the policy to combat
He listed them as follows: "The action or the inaction of the government which creates incentives for illicit activities. trade to prosper in the country; How can we profit from illicit trade in relation to costs? which categories of GITEI should Nigeria improve? and if the approach of the Netherlands (where the illicit drug market was increasing, the government legalized the decline of the hard drug market and the crime rate) is practicable in Nigeria and Africa.
"The answers to these questions are very strong. In his opinion, illicit trade is a global phenomenon whose solution should be global, aimed at international cooperation and the harmonization of laws and regulations across borders, citing the global fight against money laundering as an atypical example.
"A holistic approach is needed that also involves strategies that go beyond the jurisdiction of a country," he said, adding that There can not be a single policy framework to address the problem but a case-by-case approach targeting the products: illicit trade could be a source of income for some input suppliers, with consumers having access to lower prices and a wider variety of brands, sometimes resulting in lower unemployment and, in his view, the dangers include serious health risks to consumers, s tax revenues and the increase of instability, the reduction of market share and the ability of local businesses.
"Others are damaged brand image by illicit manufacturers and as the underground economy, it does not reflect in the country's GDP," he added.
The President of the Nigerian Association of Small and Medium Enterprises (NASME), Degun Agboade, As small and medium-sized enterprises (SMEs) make up 80% of the workforce as an engine of As the economy grows, the government needs to explain to them and assure them that it will not hurt the local economy.
noting that if only approved goods and services are allowed in the country, it may attract gains from advanced economies.
But, former President Olusegun Obasanjo expressed his disappointment Nigeria was not among the 44 signatories of the treaty because of its central role in promoting the vision.
By creating a single continental market for goods and services, member states of the African Union (AU) are hoping for trade between African countries.
Intra-African trade is relatively limited; The United Nations Conference on Trade and Development (UNCTAD), the main United Nations body responsible for trade, said that it accounted for only 10.2% of the continent's total trade in 2010.
The Coordinator of the African Trade Policy Center of ECA Luke hopes that the Free Trade Area will correct this "historical anomaly".
He said: "Colonialism created a situation where neighbors stopped trading with each other.The main trade route was between African countries and European countries and between African countries and the United States. "
According to Luke, removing barriers to trade should not only increase trade in Africa, but also develop relevant trade on the continent.
It revealed that between 2010 and 2015, oil accounted for more than half of Africa's exports to non-African countries, while manufactured goods accounted for only 18 percent of exports to Africa. rest of the world, according to a report from ECA. ] "When you have this kind of economy, your young people can not find jobs, and when they can not find work, we see them trying to get to Europe and to drown in the Mediterranean ", he adds.
He says that the free trade zone will also make Africa more competitive. can go further in the supply chain would be better placed in a global context.
What are the challenges?
Following the cancellation of his trip to AfCFTA's signing, President Muhammadu Buhari stated that The decision was to "leave time for But the NLC warned the president against signing the agreement that he called, a" renewed, extremely dangerous and radioactive neo-liberal policy ". [19659003] Observers, however, say that the sudden stalemate in Nigeria meant that everyone An UNCTAD research paper concedes that the elimination of all tariffs between African countries would result in the annual withdrawal of $ 4.1 billion dollars from the coffers of the trading states, but would create an overall annual welfare gain in the long term, $ 16.1 billion
But there are fears that the benefits of the free trade area will be unequally distributed.
A manager of progra Even at Third World Network Africa, Sylves According to him, the treaty has focused on tariff reductions without taking sufficient account of the production capacities of the member countries.
He stated that the advanced countries of the continent would benefit from this treaty to sell their products, goods and services to less developed countries. "If you do not develop production capacity, when you liberalize, you will only market goods imported across Africa, which will be a terrible blow to domestic manufacturing across the continent," said M Bagooroo. Claiming that attention should be given to big economies against small economies, he said: "We must pay attention to the dominant sectors against the weaker sectors."
A researcher at the Brookings Institution's growth initiative, Eyerusalem Siba, described the idea as a welcome development, but doubted the availability of Africa for such.
He advised on the need to develop a more skilled workforce. adaptable to the demands of globalization and at the same time create social policies for those who will lose jobs due to increased competition.
"It's a good idea to eventually incorporate it, but are we ready?" All the experts I talked to did not agree with it, "he said.
The Next Steps
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Experts described AfCFTA as not important to integrate African economies, boost intra-African trade and achieve sustainable development on the continent in accordance with the 2063 Agenda of the African Union and the global goals of sustainable development
However, they argued that the liberalization of trade in goods and services could result in costs for the AU Member States that have been compensated significant long-term gains
Two long-term scenarios have been A scenario eliminates all tariffs on intra-African trade. The other allows the permanent exemption of sensitive products from tariff liberalization.
It is hoped that African countries will be able to benefit from expanded markets for African goods and services, the free flow of factors of production, and a more efficient allocation of resources to promote economic diversification. technological progress and development of human capital.
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