Business

AfCFTA: Prioritising infrastructure devt

With the recent measures taken by the Federal Government to remove fuel subsidy and increase in electricity tariff to face the country’s infrastructural development, private sector operators are excited that the move would boost the country’s chances in Africa Continental Free Trade Area (AfCFTA) agreement. Taiwo Hassan reports

For sometime now, members of the organised private sector (OPS) in the country have been jittery over Nigeria’s preparation for AfCFTA. The trade pact is expected to kick-off on January 1, 2021. The concern was over the deplorable state of the country’s infrastructure, which places the country at a disadvantage to compete among its peers. In fact, AfCFTA was originally planned to be flagged-off this year but for the sudden emergence of coronavirus pandemic that orchestrated its take off being shifted to 2021. Ideally, for the OPS, it was a blessing in disguise because, according to the Manufacturers Association of Nigeria (MAN), a leading voice in the country’s OPS, Nigeria was not ready at all for the agreement amid infrastructure deficit. The postponement was an opportunity for the government, private sector operators and other stakeholders to look inward as regards boosting the country’s infrastructure. For MAN’s President, Engr Mansur Ahmed, Nigerian market is the hub of the continent’s Af- CFTA trade. He insisted that government must create an enabling environment for Nigerian manufacturers to participate. To him, revamping the country’s infrastructure is key to the success of the AfCFTA takeoff in the continent.

FG’s stance on AfCFTA

While speaking on AfCFTA take-off recently, the Nigerian Vice President, Professor Yemi Osinbajo, San, stated that as African coun-tries braced for the effective implementation of the agreement, one of the many ways by which the continent can maximise its benefits is to ensure that trade negotiations with the rest of the world be based on the free trade agreement rather than deals separately through regional economic blocs. Osinbajo stated this in his keynote at the 61st annual conference of the Nigerian Economic Society (NES) themed “African Continental Free Trade Area (AfCFTA) in Post COVID-19 Era: What Next for Nigeria?” The event, which held virtually, was attended by a host of Nigeria’s leading economists. According to Prof. Osinbajo, “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 Af- CFTA rather than through arbitrarily designed regional blocs. “African countries should not allow themselves to be lured into arrangements which do not serve their longterm development objectives.” Speaking further about how the agreement can bolster trade and development on the continent, the vice president said “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 liberalization 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. “Successful 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 revenues, African countries will face implementation costs, including undertaking reforms, establishing new traderelated bodies, improving and upgrading existing facilities,” he added.

On Nigeria’s infrastructure deficits

The president of MAN said: “Despite these policies and initiatives of the Federal Government, our economy has remained fragile and the manufacturing sector, in particular, still continues to face daunting challenges.” “The state of our infrastructure as we all know has deeply eroded the competitiveness of the sector. “The supply of electricity, access to our ports and their low operating efficiencies, the poor condition of most of our highways and waterways, and the absence of a credible rail network all constitutes impediments to operating efficiencies of our manufacturing establishment inducing high costs of production and distribution and rendering our manufactured goods uncompetitive. “We are aware of course that government is doing much to alleviate these impediments and we are confident that these efforts will be scaled up during this second term,” he added.

MAN president’s position on AfCFTA

Ahmed explained that robust development of local production was key to AfCFTA success.
ccording to him, “the Nigerian domestic market will be a driving force in repositioning the continent trade during AfCFTA and “there is need for us to get our infrastructure development right before the trade agreement come on stream. “As you are already aware, President Muhammadu Buhari, signed the Africa Continental Free Trade Area (AfCFTA) Agreement on July 7, 2019 at the African Union (AU) extra ordinary meeting held in Niamey, Niger Republic. So, overall, we should all work towards having a beneficial trade engagement in Africa towards effectively mitigating the risks and taking advantage of the opportunities of a 1.2 billion markets and $2.5 trillion GDP. “So MAN has been joining Government and other private sector groups to critically analyze the continental market and strategically capacitate our domestic economic actors to benefit maximally from the AfCFTA. “You would recall that MAN had earlier cautioned against signing the agreement without first adequately consulting the relevant stakeholders and carrying out a country specific study to assess the potential impact of the agreement on the manufacturing sector in particular and the Nigerian economy in general. But we were glad to note that the Federal Government did carry out an allinclusive nationwide consultation and just like MAN, conducted a country-specific study on the potential impact of AfCFTA. “However, we told Mr. President that following the signing of AfCFTA agreement, MAN recognizes that AfCFTA takeoff will significantly open trade opportunities for our manufacturers and other economic sectors. “Also, it will expose our economy to some real risks and challenges if the infrastructure deficits are not tackled earnestly.”

Presiden Buhari justifies borrowing for infrastructure

Meanwhile, President Muhammadu Buhari justified government borrowing to finance infrastructure, asserting that his administration took loans in the interest of the country to solve the dire shortfall in infrastructure. Speaking at a virtual meeting with members of the Presidential Economic Advisory Council (PEAC) at the State House, in Abuja, recently, Buhari said the country must fix its roads to save lives from soaring road accidents. “We have so many challenges with infrastructure. We just have to take loans to do roads, rail and power so that investors will find us attractive and come here to put their money,’’ the President said. He regretted that the failure to provide the infrastructure for effective transportation deprived the country of its well-deserved status as the West African hub for Air cargo transportation and transshipment of goods.

Last line

The attention of government shifting to revamping the country’s infrastructure for AfCFTA take-off has been roundly applauded by MAN and others, even amid low purchasing power as inflation continues on the uptrend.

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