The Vice President of Nigeria, Prof Yemi Osinbajo has said that Nigeria need to be proactive to participate effectively in African Continental Free Trade Area (AfCFTA), which entail improving its ability to produce and trade competitively in goods and services, as the Federal Government is investing heavily in power, road, rail and port infrastructure projects.
Giving his speech at the 2020 Virtual Conference of the Nigerian Economic Society, held recently with the theme: AfCFTA in Post COVID-19 Era: What Next for Nigeria?, he said African economies should experience gains from trade, benefit from removing the onerous requirements of belonging to multiple and overlapping trade agreements within the continent.
According to him, “We must of course continue to bear in mind especially here in Nigeria that the AfCFTA is not a magic wand that automatically brings about growth and prosperity. The reality is that if care is not taken trade liberalisation can expose the Nigerian economy to unfair competition and sharp trade practices with adverse consequences for our producers who might have to close down their businesses and for our workers who would then lose their jobs.
“We need to be proactive if we are to participate effectively in the AfCFTA. This will entail improving our ability to produce and trade competitively in goods and services which is why the Federal Government is investing heavily in power, road, rail and port infrastructure projects. It is also why we are taking active steps to improve the business environment and to facilitate trade across our borders including through the implementation of the National Trading Platform or Single Window Project. Part of that project is the installation of scanners at our ports”, he said.
He noted that Nigerian Government needs to be able to enforce trade rules and apply trade remedies so that partnership in the AfCFTA, especially neighbouring countries, do not take undue advantage of Nigeria large market. “We do appreciate of course that the border closure has caused difficulties for many of our businesses and active steps are being taken to resolve the situation especially by consulting closely with neighbouring and proximate countries to address the issues of concern to us with regard to unbridled smuggling into the country.
“The National Action Committee on the implementation of the AfCFTA which is chaired by the Honourable Minister of Industry, Trade and Investment is actively seized with these matters. If the AfCFTA is to achieve the desired objectives, then it is also very important that Nigeria should push for the implementation of complementary programmes and protocols including the Protocol on Free Movement of Persons, the pan-African payments system and other sectoral programmes”, he said.
He added that the AfCFTA Agreement, the Protocol on Free Movement of Persons is not gathering the desired pace of ratification because of the fear of migrants out competing nationals for jobs and the likely social tensions in recipient countries. “However, since the movement of persons is key for trade especially, trade in services, such as tourism and, professional services, then it stands to reason that the success of the AfCTFA in the medium term would require a faster rate of ratification and implementation of the Protocol on the Free Movement of Persons.
“Similarly, the establishment of the Pan-African Payments and Settlement Platform by Afrieximbank will go a long way to creating the desired continental payments system and in enabling cross-border informal trade which is estimated to be about $93 billion per annum. In the area of health, the COVID-19 crisis has shown the importance of regional cooperation to come up with a continental resilience strategy to cope with similar shocks in the future.
“A salutary example is that of the African Centre for Disease Control and Prevention (Africa CDC) using digital pooled procurement system to order for chemical re-agents, diagnostic and medical equipment given that orders for test kits and health equipment by African countries tended to be small and ignored at the height of the crisis”.
He further stated that implementation of the AfCFTA requires financing to address various implementation challenges and to promote arrangements in support of integration. “For instance, in addition to making up for potential losses of tariff revenue, African countries will face implementation costs including undertaking reforms, establishing new trade related bodies, and improving and upgrading existing facilities.
“In addition to these domestic measures there are also costs associated with establishing the CFTA Secretariat and building regional infrastructure. Finding the resources to undertake these activities at a time like this when we lack fiscal space will of course prove to be very difficult for Nigeria and other African countries. Our economists should accordingly help to come up with innovative financing solutions for our economies”.
He also noted that one important objective of the AfCFTA is to overcome the economic fragmentation of the continent by bringing the regional economic blocs together in a common arrangement. “This being the case, African countries should look to negotiating trade treaties with other parts of the world on the basis of AfCFTA rather than through arbitrarily designed regional blocs. African countries should not allow themselves to be lured into arrangements which do not serve their long-term development objectives”.
Prof Osinbajo concluded that apart from reducing the spread of the COVID-19 virus and mitigating its effect on the domestic economy, Nigeria must have an interest in promoting an AfCFTA that catalyses regional value chains, enables free movement of people, attracts investments and improves the continental payments system. “As we seek to use the opportunities, we should remain alert to the need to create conditions that will enable our businesses to be able to compete and thrive within the AfCFTA. We can no longer plan without fully considering the AfCFTA, all planning and budgeting documents must take it into account”.