Nigeria has until August 30 to sign the African Continental Free Trade Area (AfCFTA) without which the country may be excluded from spirit and letters of the treaty, at least temporarily.
The world will not end if Nigeria does not sign the treaty, but investors will prefer Rwanda which has access to 1 billion people (in Africa), a potentially bigger market, than the protectionist Nigeria with an access to just about 200 million people, analysts warn.
Other countries will also move on without Nigeria and the country will be a late comer by the time it makes up its mind to sign, they warn.
“The fact that Nigeria does not sign does not mean that anybody will wait for Nigeria. It will simply mean that life will go on without Nigeria, and then it becomes progressively much more difficult for you to catch up because, eventually, to the extent that you do not want to cap your growth, to the extent that you do not want to lose the market opportunities that you have, you still have to sign,” Babajide Sodipo, regional trade adviser at the African Union Commission, said at the just concluded 12th Annual Business Law Conference of the Nigerian Bar Association Section on Business Law (NBA-SBL) in Abuja.
Nigeria kick-started the AfCFTA negotiations but pulled out in March, purportedly on the concerns of manufacturers and labour unions. BusinessDay earlier reported that Muhammadu Buhari’s decision was based on consideration of what certain parts of Nigeria stood to gain or lose.
The AfCFTA is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994, targeted at creating a single market for Africa’s 1.2 billion people and exposing each country to a $3.4 trillion opportunity. The deal is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all African countries sign up.
There will be free movement of labour and people, meaning that a lawyer in Nigeria can serve the entire African market without restrictions. Nigeria has almost 200 million population, while Africa’s population is 1.2 billion.
The Manufacturers Association of Nigeria (MAN) believes that the AfCFTA is shrouded in secrecy and that Nigeria will be worse for it if the country signs the agreement in its current form. MAN says it is coming up with studies to determine the impact of the AfCFTA in three weeks.
“We have always said Nigeria should sign. We know we have a problem with manufacturing, but the totality of our economy is not about manufacturing, which contributes less than 12 percent to the GDP. Services alone contributes up to 55 percent,” Babatunde Ruwase, president of the Lagos Chamber of Commerce and Industry (LCCI), said.
“It is Nigerian banks that are pushing the Ghanaian economy and an average Nigerian will be able to set up a shop in another country,” Ruwase said. Forty-four countries signed the AfCFTA in March in Kigali, but 49, including South Africa, which earlier refused to sign, have now joined the fray.
The treaty will liberalise 90 percent of products produced in the continent. This means that a country that is bound by the AfCFTA can only protect 10 percent of its local industries.
“Trade leads to increased prosperity for all, but there is a short-term interest always to protect the gains that come. And this is how we need to understand the plight of manufacturers in Nigeria because many of the things they are dealing with are compounded by factors somewhat beyond their control,” Pat Utomi, political economist and faculty at Pan Atlantic University, said at the NBA-SBL.
“But the question is, what track would we be travelling as a people if we were to give increased prosperity to this incredible population that is growing out of which we can reap a huge demographic dividend or from which we can create a time bomb that can threaten the whole region in a way that Robert D. Kaplan has predicted in his book, ‘The Coming Anarchy’?
“There will be winners, there will be losers. The challenge is to make sure that we encourage those who see themselves as immediate losers to rethink and have a win-win abundance kind of mentality,” Utomi said.
ODINAKA ANUDU
