NEWS DETAIL
HOW Nigeria economy will benefit from AfCFTA
 Posted Date : 2019-07-15

It will be possible to penetrate other African countries without barriers and be able to export to any part of the continent.  One can, from Nigeria provide logistics services to any firm in Africa without in country restrictions.

President Buhari will sign the AfCFTA Agreement at the Extraodinary Summit of the African Union in Niger in July.

“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”, the Nigerian presidency said on tweeter.

Buhari has refused to sign the AfCFTA since 2018 owing to protests by manufacturers who believe it would harm the sector.

Studies, however show that AfCFTA will remove barriers to trade and services.  In simple terms, a Nigerian lawyer can render services to clients across the continent without barriers.

Again, Nigerian businesses, traders and consumers will no longer pay tariffs on a number of goods produced and traded within the continent.

Also, it will now be easier for small and medium sized enterprises to supply inputs to larger regional companies.

The South African example might help.  Due to free trade, large car makers in South Africa source leather for seats from Botswana and fabrics from Lesotho, under the preferential Southern African Customs Union trading regime, a United Nations Economic Commission for Africa’s document shows.

SMEs, which form 85 to 90 percent of business in Africa, often struggle to penetrate big markets.  But they can now tap into regional export destinations and use them as stepping stones for expanding into overseas markets.

The AfCFTA seeks to liberalise trade among African countries.  It is targeted at a borderless Africa, with an eye on a single market for goods and services on the continent.

Experts believe it is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994 and a flagship project of Africa’s Agenda 2063, targeted at creating a single market for 1.2 billion people and exposing each country to a $3.4 trillion market opportunity on the continent.

The treaty is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 and will liberalise 90 percent of products manufactured in Africa.  This means that a country can only protect 10 percent of its local industries.

The AfCFTA officially came into force on 30th May, 2019 when the required number of ratifications – 22 – was obtained, making the agreement a binding international legal instrument.  Proper operations are yet to start.

The Gambia had the two months ago completed the number of countries ratifying the trade agreement to 22.  South Africa, Ethiopia, sierra Leone, Lesotho, Burundi, Namibia, Guinea Bissau and Botswana among others, had earlier signed up.

Proposed improvements in customs clearance times and logistics in AfCFTA regime are expected to support perishable nature of most agricultural food products.

 

Business Day, 4 July, 2019