Nigeria & AfCFTA: Rhetoric & reality

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With the delay and eventual signing of AfCFTA by President Buhari, it now seems that Africa is on the road to El Dorado with big brother Nigeria on the cruise.  After drafting the agreement in March 2018, Nigeria delayed signing for over a year to ensure we get it right through proper and wide consultation. As commendable as the delay was and as beneficial as the agreement can be to Nigeria, the key question is if we are ready as a country to lead and benefit from AfCFTA. While the execution will start in 2020, there are no convincing signs internally and externally that we are willing and ready to lead or even benefit from the agreement. As the biggest trading bloc in the world with over 54 countries on board, there are certain strategic moves that are required to show seriousness and commitment to lead and benefit.

On the external front, two recent developments stand out. With the signing of the agreement by 54 African countries (remaining only Eriteria), African leaders voted to have Ghana as the headquarters of the forthcoming Africa free Trade Zone. Interestingly, with the free trade zone headquarters comes the African aviation hub to be built in Ghana also in addition to further developments of the sea ports. Even without much details, the immense benefits of Ghana’s strategic move and positioning can only be imagined.  Think of the job creation, inflows of both foreign direct/portfolio investments, access to international finance and capital market development, manufacturing hubs and spill over products and services that will follow.

As Nigeria fully and significantly participated in all discussions leading to the drafting, signing and expected execution of the AfCFTA, the question is whether we forgot or are ignorant of the benefits of having Read More...

Finally, we’re in the AFCFTA

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After months of deliberations and the work of committee after committee trying to evaluate the impact of Nigeria joining the African Continental Free Trade Agreement (AFCFTA), the administration finally bit the bullet and signed Nigeria up. About time really. Given that all but three African countries had signed up, Nigeria increasingly looked isolated as the only big holdout.

Officially the reasons given were to address key stakeholder concerns around the rules of origin and market access. These concerns are valid of course. Imagine a company based in Japan decided to import an almost fully built car into Cotonou, paint it, strap on some headlamps, and re-fit the tires, and then tries to brand it as a made in Benin Republic vehicle granting it tariff-free access to Nigeria. Now that would be ridiculous. Yes, I’m looking at you, national automotive policy. The potential for abuse of rules of origin was and is a very real problem. But this problem, and most of the others pointed out by the do-not-sign camp, apply to all the members of the AFCFTA. In fact, deliberations on rules of origin and other such details were only set to happen last June. And how can you tackle these challenges if you are not at the table?

Unofficially, you didn’t need to be a conspiracy theorist to see why there was a bit of hesitancy in signing up. One of the popular slogans of this administration has been “we must produce what we consume”. That is philosophically at odds with the idea of free trade with anyone. You can’t shake off the protectionist leaning tint in policy making over the last few years.

To be fair this administration is not the first to dabble into the protectionist arts. Nigeria has historically been a high-import-tariff … Read More...

Nigeria’s signing of AfCFTA must be meaningful, not perfunctory

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Two weeks ago, on 7 July, President Muhammadu Buhari signed the agreement establishing the African Continental Free Trade Area (AfCFTA) at the 12th Extraordinary Summit of the African Union in Niamey, Niger Republic. This was, of course, well over one year after the AfCFTA was launched in Kigali, Rwanda, in March 2018. Notwithstanding, as someone who wrote several times in this column urging Nigeria to sign the AfCFTA agreement, I congratulate President Buhari for eventually, if belatedly, doing so.

Yet, Nigeria’s aberrant behaviour would make a good case study in African economic diplomacy and political economy. Here is a country that has always played a critical role in developing a vision of Africa’s economic integration and that has been at the centre of the economic diplomacy and summitry aimed at actualising the vision, yet whose own domestic political economy has always led it to act at home in ways contradictory to the fulfilment of that vision. Truth is, when it comes to African economic integration, Nigeria always talks the talk, but rarely walks the walk!

Right from the establishment of the Organisation of African Unity in 1963, Nigeria was at the forefront of the advocacy for the economic integration of the continent and contributed significantly to the process of institutionally achieving that vision. For instance, Nigeria hosted, in 1980, the African Union’s summit that produced the Lagos Action Plan for African Economic Community and, crucially, the AU’s summit, in 1991, that led to the adoption of the treaty establishing the African Economic Community, known as the Abuja Treaty, which laid the foundation for formation of a continental free trade area, namely the AfCFTA. And, of course, it was a Nigerian, Ambassador Chiedu Osakwe, who chaired the Negotiating Forum for AfCFTA and it was Nigeria’s trade minister, … Read More...

As the 55-country African market opens through AfCFTA

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Opportunity beckons to the bold entrepreneurs of our land with the signing by Nigeria into the African Continental Free Trade Area (AfCFTA) on Saturday, July 6. The project commenced in May 2018 and effectively took off two months ago. President Buhari signed for Nigeria at the AU meeting in Niamey.

AfCFTAwill deliver access to all the 55 countries of Africa as a single market. The idea of the African common market is to enable better exchange between and among Africans to trade in goods and services with each other. It is one huge opportunity for our entrepreneurs and sundry businessmen.

What is AfCFTA, and how would AfCFTA serve our businessmen?

AfCFTA is a project of the African Union aimed at promoting and deepening trade between countries of Africa. Data on the trading relations of African countries shows that only 16% of business holds between and among African countries. The rest of it is with nations of Europe, America and Asia.

Various online sources such as Wikipedia state that “The African Continental Free Trade Area (AfCFTA) is a free trade area, outlined in the African Continental Free Trade Area Agreement among 54 of the 55 African Unionnations. The free-trade zone is the largest in the world in terms of participating countries since the formation of the World Trade Organisation.
The African Union brokered the agreement that 44 countries signed in Kigali, Rwanda on March 21, 2018. A central plank of the deal is the requirement on participating countries to remove tariffs from 90% of goods. They will allow free access to commodities, goods and services across the continent. United Nations Economic Commission for Africa estimates that AfCFTA will boost trade among African countries by 52% by 2022.

AfCFTA needed a minimum of 22 signatories to take effect. … Read More...

Nigeria and AfCFTA: Time to stop hiding and embrace competition

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One night in September 2016 during my brief sojourn as an Uber driver, I got a request from a popular drive-through restaurant along Admiralty Way in Lekki Phase One. The rider’s name, “Denola” caught my eye. It was an unusual name, and I knew of only one person – a classmate from school – who had that name. The last thing I wanted was to run into someone I knew in that state. Nothing screamed “failure” louder than using the car that was my graduation present as a nighttime Uber while struggling to get my startup on its feet during the day, but hopefully he wouldn’t be the one.

Sure enough when I pulled up, there was no mistaking the well-coiffed features and olive skin tone. He was the one. I was faced with a decision – either proceed with the trip and take the revenue (which I obviously needed), or choose my pride and lose the money. I canceled the trip and melted into the Lekki night, hoping he didn’t get a good look at the driver’s photo on his app.

Keeping up appearances is deadly macroeconomics

I could think of no better anecdote to illustrate Nigeria’s national reaction whenever the idea of competition and free trade comes up, especially in the context of the much-debated African Continental Free Trade Agreement (AfCFTA). Prior to President Muhammadu Buhari’s accession to the agreement, a constant feature of the conversation around it was the idea that opening Nigeria’s economy up will lead to an Armageddon of “dumping” as cheap imports “flood our markets” and “drive local manufacturers out of business.”

Like my reaction to Denola three years ago, this is an idea with very little basis in fact, but heavy on emotion and rhetoric. First of all, … Read More...