Is the AfCFTA becoming unraveled? Nigeria plays the bad boy.

Last month this Newsletter celebrated that the African Continental Free Trade Agreement (AfCFTA) was launched on 30 May with 52 signatories – only Nigeria, Benin and Eritrea had not signed. The celebration will take place in the capital of Niger, Niamey, on 4-8 July. However, reports have recently surfaced that Nigeria is still not prepared to sign the AfCFTA. In a meeting with the Manufacturers’ Association of Nigeria (MAN) in Abuja President Muhammadu Buhari said “I don’t think Nigeria has the capacity to effectively supervise and to ensure that our colleagues in the AU (African Union) don’t allow their countries to be used to dump goods on us to the detriment of our young industries and our capacity to utilise foreign exchange for imported goods”. Concerns over the disadvantages of the AfCFTA to Nigeria’s local manufacturing may be valid, but there is enough empirical evidence to show that the advantages of free trade outweigh the likely costs if properly prepared for. In August 2018 an independent survey  of 512 business leaders and owners by the Nigerian Office for Trade Negotiations (NOTN) reportedly showed an “overwhelming expectation of positive impacts of AfCFTA on businesses and the economy”.

In South Africa, President Ramaphosa announced in his State of the Nation speech that tariffs with the other African nations would fall. It was a quick reference without explanation and in the midst of talk on trying to promote a “made in South Africa” campaign to booster employment, however, in just a couple of words it gave recognition to the central pillar of the AfCFTA.

Meanwhile, governments across Africa are attempting to ease travel restrictions across the continent, agreeing to both a Continental Free Trade Agreement and a Single Air Transport Market over the past 18 months. Countries like Kenya, Senegal, Ethiopia and Namibia have also relaxed their visa rules for Africans, but achieving full Africa-wide integration will remain a work in progress as a majority of African countries still require visas to travel across most of the Continent.

As an interesting article in BizCommunity News of 7 June put it: “AfCFTA has put the cart before the horse. Although it is now in force, many of the actual rules still need to be agreed upon. The process of negotiating rules of origin, tariff schedules, and service sector concessions will be long and cumbersome.” The AfCFTA does not even have a secretariat. This will be a semi-autonomous part of the AU. It is said that six countries are competing to host it – and that decision needs to be taken at the AU Ministerial meeting in Niger next week.  As BizCommunity points out, just as all these issues need resolving, the AU’s Department of Trade and Industry has been hampered by budgetary cuts. The article concludes – “The road ahead to an effective free trade agreement that delivers results to Africans is still long”. I agree, much research needs to be done to prove to the nation states that there are greater benefits in joining than in going it alone in these days of global trade. From my experience of the European Union, I disagree with BizCommunity that smaller economies will be the losers – economies of scale will benefit all nations, but there is a point that larger nations can bully smaller ones – and this tendency needs to stopped by creating a balance in decision making.