Three years after signing the African Continental Free Trade Area (AfCFTA), Nigeria appears unprepared to compete in the trade regime, writes Anozie Egole from PUNCH.
On March 21st, 2018, some African countries signed an agreement to establish the African Continental Free Trade Area. It is the largest free trade area by number of member states after the World Trade Organisation. This is symbolic because it involves a market size of 1.3 billion people across the world’s second largest continent.
The agreement was initially signed by 44 member states in Kigali, Rwanda, but 10 more states were added around July 2018, when Nigeria signed the agreement. The Republic of Benin was the 54th country to sign the agreement.
Under the agreement, members agreed to eliminate tariffs on most goods and services over a period of five years and above. But the number of years would depend so much on countries’ level of development or the nature of the goods manufactured.
The overall aims of AfCFTA are to increase trade among African nations, reduce poverty, and make Africa more competitive in the global economy.
The agreement has the potential to create a continental free-trade zone with a combined Gross Domestic Product of $3.4trn, according to the African Union. This trade agreement, if implemented fully, would become the largest in the world.
With Nigeria populated with about 206 million citizens, the country no doubt has all it takes to take full advantage of the agreement as far as demography and human capital are involved. Despite the untapped potential, the country may likely lose out of these numerous benefits, no thanks to poor administration, infrastructural decay, insecurity amongst others.
Why we may not enjoy the full benefits
A former chairman, Oil and Gas Free Zone Authority of Nigeria, Dr. Chris Asoluka, said it was one thing to have the population but another thing to leverage that for economic development.
“Nigerian population could give advantage, but it is one thing to have a potential but it is another thing to activate the potential. So, if it is not activated the competitiveness of Nigeria could remain potential just like every other thing about Nigeria. We are potentially a great nation, so on the strength off this, we will be a dominant nation in the free trade zone,” he said.
For the Chief Executive Officer of the Center for the Promotion of Public Enterprises, Dr Muda Yusuf, there were areas where Nigeria had a competitive advantage and those areas it was lagging behind.
He said that in the area of financial services and entertainment, amongst others, the country was doing so well, adding that it was not measuring up in the area of manufacturing and agriculture.
“Well, to me, there are areas we can compete while there are also areas we can’t compete. In the services sector, for instance, we are really very strong, like financial services, entertainment, Information Communication Technology, amongst others. But we are not anywhere in manufacturing, agriculture and things like that. We can only be partially competitive. We are strong in services but not in production. We just have to make our real sector more competitive. We already know the problems our real sector is facing and we need to address them. The environment is not enabling for them. Areas for which we can also be competitive is oil and gas. We can be very competitive in the oil and gas sector.”
The acting National President of the Association of Nigerian Licensed Customs Agents, Kayode Farinto, said that the country had the market, which was the population, to its own advantage.
He pointed at the administration of the Nigeria Customs Service as one of the major challenges that would hinder the country from being competitive under the AfCFTA agreement unless it was properly addressed.
“This is a technical question. Talking about competition, there are factors we have to consider. You have to consider the market, which is the population, and we have that as our own advantage. That is the factor that can make Nigeria competitive compared with other countries. But there are factors that hinder certain things. Nigeria is a signatory to Economic Community of West Africa States Trade Liberalisation Scheme. If other things are put in place, we will be competitive? There is going to be competition, but competing with every other African nation will be a problem in the area of Customs administration.
“We do not seem to be in line with the mode of operation, particularly on Customs administration. We are not in line with international best practices and the local practices here are affecting trade. For us to actually enjoy AfCFTA, there must be a national committee that will look at this issue and come out with a blueprint. We may consider giving traders incentives that can make them compete with others in the African market. We have the market, there is no doubt about that, because we have the population, but we need to put a lot of things in place for Nigeria to benefit from AfCFTA. If not, Nigeria may become a dumping ground.”
For truckers, there is need to properly address the issue of logistics and infrastructure for the country to enjoy the full benefits of the agreement.
The President of the West African Transport Union, Mr Aloga Ogbogo, said bad road network, insecurity and extortion might hinder the country from enjoying the full benefits of the agreement.
“Basically, the AfCFTA is a concept within the African continent, but there needs to be some basic infrastructures on ground before the project will thrive. It is about trade for the hinterland, but are the roads good? What of the state of insecurity? There is extortion, and basic infrastructures are not there. The project is well-conceive, but, again, the basic infrastructures needs to be on ground before that project can thrive. It is about generating trade and volumes. Look at the Apapa wharf, do you know the challenges before you access the port? So, these are the things we need to address and they have to do with infrastructure.
“The port is just a transit area and these things have to come to the ports before they can find their way.”
Also speaking, another member of ANLCA, Anthony Ojo, said that the policy of the government was frustrating businesses, casting doubts over the country’s capacity to reap the benefits of the AfCFTA.
“Because of the policy of the government, it will be very difficult for us to ascertain our position. It is the policy of the government that is frustrating and it is the challenge that we are having.
“It is a trade connectivity that all the regions are expecting to be positive for them. But, unfortunately, the policies of our government and the economy are areas of concern. So, for now, we won’t be able to say much about that so that we won’t predict wrongly.”
Ojo urged the government to put palliatives in place to rescue and protect Nigerians.
“What are the palliatives that the government is giving to rescue and protect her citizens? This is why it falls back on the issue of polices. Look at the restriction of over 40 items by the CBN.”
Conclusion
Ogbogo, who is also the Executive Secretary of the Nigerian Association of Road Transport Owners, called for a re-fleeting of the trucking sector.
“Let us look at haulage for example. Are trucks everywhere? We have aging trucks and for the aging trucks we need to address this issue of truck re-fleeting. The aging trucks need to be renewed, and we don’t have a regulatory body that will oversee the haulage sector. So, there are lots of issues that will militate against the success of that project and they basically have to be addressed.”
He stressed the need to have a transport development bank to help in the acquisition of newer trucks and boost the sector.
“We have bank of industry and agriculture, where is the transport development bank? These trucks are aging. In transportation, trucks are the prime movers of the economy. There are certain things you need to address before that project will see the light of the day. The trucking industry is faced with lots of problems. If you talk about trucking within the West African sub-region, I am not sure any body is doing it outside Dangote.
“Nobody is doing it outside Dangote and he has fleets. We need to go beyond that. Dangote alone has over 6000 trucks and this is not about one person, it is about the industry. The government needs to address the issue of truck re-fleeting.
“The policies are not helping the people except the ruling class. The trade facilitation has to be improved so that the economy will grow. From statistics, importation of goods is dropping daily. Nobody is ready to invest his money in Nigeria because there is no electricity; nobody is ready to invest in a country where there is insecurity. So, these are the areas we are talking about. Importation and exportation in the country are going down seriously and instead of the Nigeria Customs Service to sit down with the government and make them realize that some targets are not realizable, the agency still shifts all those challenges to the poor importers. Now, the burden is seriously on them and the burden will be shifted to the masses.”
Quote: “We are strong in services but not in production. We just have to make our real sector more competitive. We already know the problems our real sector is facing and we need to address them.”
