President Muhammadu Buhari Wednesday in Abuja announced his preparedness to sign the African Continental Free Trade Area (AfCFTA) agreement in accordance with recommendations of the Presidential Committee on the Impact and Readiness Assessment of AfCFTA.
The president’s commitment to sign the agreement confirms report last week that Buhari, after receiving the committee’s report, would sign the agreement.
The president’s decision received immediate support from his allies, Manufacturers Association of Nigeria (MAN) and Lagos Chamber of Commerce and Industries (LCCI), who had stood with him in his objection to the agreement on the ground that it might open up the Nigerian market to imported goods at the detriment of the domestic producers.
A statement by a presidential spokesman, Malam Garba Shehu, said Buhari would be signing phase one of the agreement while attending the Mid-Year Coordination Meeting of the African Union and 12th Extraordinary Summit on AfCFTA in Niamey, Niger Republic in a few days’ time.
According to the statement, countries which signed the first level of the agreement would then go into country level discussions leading to treaties after safeguards are agreed to.
Shehu recalled how Buhari, while receiving the report last week, made it clear that the federal government would be seeking to include terms that engender the development of policies that promote African production, among other benefits.
“Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of ‘made in Africa goods.’ That is, goods and services made locally with dominant African content in terms of raw materials and value addition.
“If we allow unbridled imports to continue, it will dominate our trade. The implication of this is that coastal importing nations will prosper while landlocked nations will continue to suffer and depend on aid,” the president had stated.
However, after months of consultations, the Manufacturers Association of Nigeria (MAN) and the Lagos Chamber of Commerce and Industry (LCCI), yesterday endorsed the decision by the federal government to sign the agreement establishing the African Continental Free Trade Agreement (AfCFTA).
Top officials of MAN and the LCCI as well as analysts that spoke in separate interviews with THISDAY, said Nigeria joining the continental trade deal would provide opportunity for the country to contribute in strengthening the agreement.
This is just as Moody’s, one of the leading global rating agencies, in the note to THISDAY said as the largest African economy, Nigeria’s membership of the African Continental Free Trade Area would play a key part in the trade bloc reaching its maximum potential.
The presidency had yesterday said on its Twitter handle: “Nigeria is signing the AfCFTA Agreement after extensive domestic consultations, and is focused on taking advantage of ongoing negotiations to secure the necessary safeguards against smuggling, dumping and other risks/threats.
“Let me state unequivocally that trade is important for us as a nation and to all nations. Economic progress is what makes the world go around. Our position is very simple; we support free trade as long as it is fair and conducted on an equitable basis.”
The AfCFTA aims to eliminate tariffs between member states, creating a market of 1.2 billion people with a combined GDP of more than $2.2 trillion.
Apart from Nigeria, only Eritrea and Benin have chosen not to join the zone.
Speaking in an interview with THISDAY, the President of MAN, Mr. Ahmed Mansur, said the concerns of his association had been addressed by a committee that was set up by the president.
He added: “Our concerns were basically that we should understand the impact of the agreement on our economy and business before we sign, so that we do the right thing and for our economy not to suffer.
“So, the committee that was set up by the government undertook a wide study to understand issues around the AfCFTA and we are satisfied with the steps taken so far. So, we are in support of the government going ahead to sign the agreement.”
On his part, the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said his members are fully in support of signing the agreement.
“The AfCFTA is work-in-progress; when you are part of it, you continue to fine-tune it until you get the best. Of course, there would be challenges, just as there are opportunities, just like the ECOWAS, which we have remained part of.
“Given Nigeria’s status and the role we have been playing in facilitating trade in the continent, we have to be part of it. You cannot influence something from outside, you have to be part of the discussion to make input.
“So, it is good that we have agreed to sign so that we can be on the negotiation table to get the best out of AfCFTA,” Yusuf explained.
Commenting on the decision by Nigeria to sign the agreement, Vice President/Sovereign Analyst at Moody’s, Aurelien Mali said: As the largest African economy, Nigeria’s membership of the African Continental Free Trade Area will play a key part in the trade bloc reaching its maximum potential. However, important structural challenges remain. Power generation and logistics infrastructure are weak in most countries in the trade area, both of which play a crucial role in supporting trade and manufacturing in Africa.”
Also, a Senior lecturer, Department of Economics, Pan-Atlantic University, Dr. Bongo Adi, said: “First of all, the benefit of free trade can never be over re-emphasised especially given the gravity. The gravity model shows the concentration of economic activities such as export and imports within a free trade area.
“Nigeria given its dominance in Africa as the largest economy in Africa, the most populous and in every way, the most dynamic, cannot be said to be doing very well.
“So, Nigeria is a hub of African business regardless of the fact that the economy is not doing as good as Ghana, Rwanda or some other countries but that does not take anything away from the place of Nigeria as the strategic business hub of Africa.”
He further added: “Nigeria opening up gives enormous power to Nigerian businesses and even individuals. Having a free trade is an enormous advantage to Nigeria and that is why some of us didn’t understand why the government didn’t want to sign it in the first instance.”
But the Chief Executive Officer, Eczellon Capital, Mr. Diekola Onaolapo, maintained that the presidency should look more closely at the pros and cons of the agreement.
“I can only hope that we, in the near term, derive the benefits that its (AfCFTA) proponents think we are going to have from it. The AfCFTA is a positive initiative, however, its touted benefits are more futuristic and do not necessarily address many current, clear and present, issues that may prevent its long term vision,” he said.