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AfCFTA: Nigerian trade structure threatens $450bn potential

Despite coming late into the regional trade pact involving 55 African countries, indications emerged yesterday that Nigeria is on the verge of losing out in the $450 billion African Continental Free Trade Area (AfCFTA) agreement.

Emerging developments indicate that lack of preparedness and unnecessary tariff barriers are some of the factors already putting a wedge in the free run of the unprecedented trade fellowship aimed at boosting the continent’s Gross Domestic Product (GDP).

Other foreseen challenges are general political instability, inadequate trade  infrastructure, transportation, poor port facilities and inconsistent agreement among member states.

Giving indication to this effect yesterday in Lagos, a freight forwarder, Mr Francis Omotosho, said Nigerian economy was plagued by microeconomic challenged as a result of poor infrastructure,  poor access to capital and increased contractions in the Gross Domestic Product (GDP) growth  in the post-COVID-19  era.

He said this had led to competitive devaluation, adding that trade barriers were posing great obstacles to AfCFTA implementation.

Omotosho, who spoke in Lagos at a day workshop organised  by the Lagos  State  Council of the Nigerian  Union Journalists on the challenges of AfCFTA on Nigerian business, explained that as Africa emerges a viable investment  opportunity,  demand had not driven supply, thereby increasing risks and reducing opportunities for investment in Small and Medium Enterprises (SMEs). 

He said: “Payment providers currently have difficulties  providing services. They include trade barriers manifested in form of discriminatory  regulations, treatment of foreign  providers, requirements  for local incorporation, licensing, prohibition  on cross border services or limitations in the movement of capital as well as intra trade  bariers, difficulty  in transmitting money from one country to another due to cross-border connection or the payment systems in either country.”

Omotosho added that Nigeria still lacked effective  regulation stability, which could work against the benefit of AfCFTA.

He noted that while AfCFTA is a rule based system,  the country had weak laws with inability to protect small business against property right, intellectual  property theft, strong monopolies and labour rights.

He expressed worries that the agreement is yet to determine how to settle disputes between  private  parties, the jurisdiction  of legal proceedings and the implementation  of judgment. 

For AfCFTA to work, he explained that there should be flexibility that would aid trade such as reducing bottlenecks to ease of doing business.

He stressed that government needed to overhaul regulations relating to  tariffs, bilateral trade,  cross-border initiative as well as capital  flows across the  region.

Earlier, the Chairman of NUJ, Lagos Council, Adeyeye  Ajayi, in his opening  speech, listed the objective of the agreement to include creation of single market, deepening  the economic integration of the continent; establishing liberalised market through mutiple rounds of negotiations; aiding the movement of capital and people, facilitating investment and encouraging industrial development through diversification and regional value chain development,  agricultural development  and food security.

He explained that AfCFTA  was the largest in the world in terms of the number of participating countries since the formation of the  World Trade Organisation.

Ajayi noted that the agreement initially required members to remove  tariffs from 90 per cent of goods allowing free access  to commodities, goods and services  across  the continent.

He said: “The United Nations Economic Commission for Africa estimates that the agreement will  boost intra-African trade by 52 per cent by 2022.”

Also, a Deputy Director at the Lagos State Ministry of  Commerce and Trade, Omolabake Bashiru, who represented the  Lagos State Governor, Babajide Sanwoolu, explained that inter- ministerial  committee had been working on how to key into AfCFTA  benefits.

She explained  that the ministry was already working for the export of  three goods-coconuts, fish and vegetables  produced  in Lagos, adding that the ministry had also established  fashion hall in Ikeja to promote trade.

Bashir added that the government had created awareness to promote businesses in the state.

Also,  a director at the Nigeria Shippers’ Council (NSC), Mrs Juliana Saka, who represented the Executive Secretary of the council, Emmanuel Jime, explained that NSC had established trade border posts to asssist exporters at Seme, Jibiya and  Illela, saying that the next one would be established  at Mfom, Cross River State;  Idiroko,  Ogun State and Shaki, Oyo State.

Saka explained  that the council was statutorily established to monitor trade in the country.

She also stressed that cumbersome procedure, poor infrastructure  and logistics had been been discouraging shippers in the port.

Saka called for speedy development  of railway, rehabilitation of  border roads, and folavourably exchange rate to facilitate trade in the country.

 

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