AfCFTA as imperative of one African market

                              By Bayo Ogunmupe

    On March 21 this year in Kigali, Rwanda, 43 of the 44 member countries of the African Union (AU) signed the African Continental Free Trade Area Agreement (AfCFTA). Nigeria is the only dissenting member of AU. Though we went the whole hog in the negotiations, Nigeria did not sign the agreement. the decision to establish AfCFTA was taken in 2012 by all the heads of state and government of AU at their 18th Ordinary Session while negotiations actually started at the AU Johannesburg summit in 2015. With AfCFTA the union agreed to establish a common protocol that will facilitate free movement of goods and services among its member nations.

    The main features of AfCFTA include the removal of tariffs on 90 percent of goods with 10 percent of sensitive items to be accommodated later. This will minimize delays at borders and liberalize trade services. Indeed, this treaty is one of the main projects of the 2063 agenda of the AU. Other projects include a single African Air Transport Market, free movement of people without hinderance and a common currency. Economists describe it a game changer due to its potential to impact positively on the welfare of the people and the economy of the continent.

    Under this agreement, Africans seek to increase intra- African trade which would spur sustainable economic growth of member states. The proposed single African air transport market is expected to open and connect markets with airlines able to fly any intra African route based on economic considerations. In spite of these benefits for member countries, Nigeria's Organized Private Sector-- mainly the Manufactures Association of Nigeria (MAN), the Nigeria Labour Congress and the stakeholders in the aviation sector have taken the view that AfCFTA would undermine  local businesses and therefore the Nigerian economy will be worse of if Nigeria acceded to the AfCFTA treaty.

    It was further believed that local industries will face a lot of competition from member countries. Though it is true Nigeria will face keen competition and due to in-fighting in Nigeria, it might exacerbate unemployment here. But this can be mitigated, given that each country will be allowed to develop local industries through the application of the provisions of the sensitive products of its 10 percent rule. Moreover, safeguards such as anti dumping measures are available to ameliorate the adverse effects of liberalization. 

    However, as the largest economy in Africa, Nigeria's membership of the organization will give us a voice in  the formulation of its trade rules. The Dispute Settlement Mechanism of AfCFTA promises to stop  hostile and discriminatory treatment of Nigerians trading in other African countries. It will also provide a platform for Small and Medium Scale Enterprises in Nigeria to connect with regional and continental value chains while consolidating the country's position as the biggest economy in the continent.

    As a member of AfCFTA it will provide Nigerian firms a veritable opportunity to access a continental market and gain from economies of scale which will boost job creation for Nigerians. In fact, pressures from increased competition will compel improvements in the efficiency of our firms rather than undermine local manufacturers and entrepreneurs. Indeed, the likes of Dangote Group of Companies with their presence in many countries would leverage on a single market of 1.2 billion people and over US$2 trillion Gross Domestic Product. Thus, President Buhari's refusal to join AfCFTA is a great misjudgment.

    Similarly, the fear of losses in government revenue if tariffs on imports from within Africa are eliminated is unfounded, for any loss in tariff revenue can be offset from increases in internal revenue resulting from trade expansion. Though immigration will rise on the back of our membership, leading to pressures on housing and infrastructure, Nigerians stand to benefit from an equivalent right to live and work anywhere in Africa.

    Given Nigeria's huge population, the net effect of our membership will be positive from increased Diaspora remittances. Therefore, free movement of people and services across the continent promises new job opportunities for Nigerians in the Diaspora. Then, finally, with Nigeria's penchant to ignore the rule of law,it is arguable whether our officials will implement the provisions of the treaty faithfully. In Nigeria,domestic and international law provisions hardly feature in the policy-making process, treaties such as AfCFTA may suffer neglect.

    So beyond the signing, ratification and entry into force of the treaty, the real challenge of implementation lies ahead. And going by precedents, the prospects are not good but with a new set of leaders coming on board now, miracles may occur.