Two years after the commencement of trade on the African Continental Free Trade Area (AfCFTA) platform on January 1, 2021, manufacturers in Nigeria have cried out over challenges inhibiting the progress of the initiative.
Expectations were high at the ratification of the AfCFTA, that Africa’s largest economy, with huge industrialisation potential, would be among the major players leveraging the platform to boost intra-Africa trade and the local economy.
But years into the trade, there are concerns that the challenges bedevilling the country’s economy may also hamper Nigeria from benefiting from the AfCFTA platform anytime soon.
The AfCFTA could deliver far greater benefits in terms of jobs, growth, and poverty reduction than previously estimated if its ambitious goals are fully realised.
With the recent developments in Nigeria’s macroeconomic environment – hyperinflation, rising interest rates, foreign exchange scarcity, and a persistent energy crisis, there is a huge setback to attaining the goal of trade.
The consequences of the country’s economic crisis have seen manufacturers struggle to stay afloat while several companies have shut down operations.
Lamenting Nigeria’s increasing production costs, threatening the sector, MAN President, Francis Meshioye, said the situation calls for concern at a time when the AfCFTA is around the corner.
At a capacity-building programme for exporters, the Chairman of MAN Export Group (MANEG), Odiri Erewa-Meggison, emphasised the need for Nigeria to sort out the issues that have prevented the country from capitalising on the AfCFTA platform. Erewa-Meggison said it was high time Nigeria started living up to its potential in the area of non-oil exports to fully leverage the platform of AfCFTA.
She noted that the road to AfCFTA remained long and tortuous as several challenges militating against exporters had hampered Nigeria’s chances of taking advantage of the free trade agreement.
According to her, Nigeria is being constrained by weak competitive ability, which is currently a major impediment to trading under AfCFTA.
Decrying the impediments to trade in Nigeria, the Export Manager of Aarti Steel, who is also an executive of MANEG, Okhai Ehimigbai, said the challenges have persisted because the government is not taking it seriously, saying “It is so because both the National Action Committee for AfCFTA and the Nigeria Office of Trade Negotiation, are not funded by the government. He, however, disclosed that there was a ray of hope as information reached me is that Nigeria is preparing to be in the 2nd batch of countries that will be on the AfCFTA Guided Initiative on Trade (GTI). So, hopefully, by mid-2024, this will happen.
“But it’s unfortunate that smaller countries like Rwanda, and Sierra Leone are already trading.”
The Interim President of the Pan African Manufacturers Association (PAMA), Mansur Ahmed, said the dream to achieve “The Africa We Want” remains lengthy and arduous, with intra-African trade still below 18 percent and Africa’s global trade contribution at a mere four percent.
He explained that many African economies were still struggling with underdevelopment, low productivity, and minimal value addition, leaving a large portion of the population in poverty.
To change this narrative, he said transformation was required across every sector, especially the manufacturing sector, which stood out as critical for economic growth.
“In the modern global economy, manufacturing accounts for around 70 percent of global trade and more than 30 percent of service jobs. “To achieve the goals of Agenda 2063, African manufacturing must undergo transformation and expansion, which is no easy feat and cannot be left to chance. Both the public and private sectors must make sustained efforts to successfully implement AFCFTA and attain Agenda 2063’s objectives.”
For President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa, efforts had not been hastened towards getting Nigeria ready to leverage the opportunities provided by the African Continental Free Trade Area.
He stated that Nigeria’s dominance in Africa in the services industry had led to a lethargic attitude towards replicating this dominance in the area of trade.
“The fact is that we are not moving fast enough. Manufacturing has to work hard; but, unfortunately, they have their hands tied behind their backs.”
Stakeholders at the Afreximbank Annual Meetings (AAM2023), held recently called for more intra-African trade synergy.
Egypt’s finance minister and chairman of the (AAM2023), Mohamed Maait, had said Africans must work collaboratively towards finding integrated solutions to the new challenges confronting the continent.
The secretary-general of the AfCFTA Secretariat, Wamkele Mene, said if the continent did not eliminate barriers in trade and finance, all the efforts would have been wasted.
To the national president of the Association of Micro Entrepreneurs of Nigeria (AMEN), Saviour Iche, “the AfCFTA has not worked.”
Iche, who produces cosmetics, said there are restrictions on taking products from Nigeria to Togo, Ghana, and other neighbouring countries.
“If your product is not certified by their regulatory authority, they will seize that product. Remember, 72 percent of what Nigerians produce, both by small and big companies, are being sold outside the country. We only consume 28 percent,” Iche said.
He lamented that it is easier to carry goods to China than to cross our borders to other neighbouring countries.
“Before, within a month, we had sold our products – as many as 400 cartons – but now we hardly sell about 30 cartons because foreigners are no longer coming into the country to buy.”
Despite the challenges, the coordinator, of the National Action Committee on AfCFTA, Mathew Oloba, said African countries had started leveraging the AfCFTA to harmonise trade procedures, which is one of the critical objectives of the Agreement.
“Scheduling of tariff concessions on trade in goods has been completed by many state parties. As a way to surmount the challenges of the timely commencement of concrete trade under AfCFTA, trading under the agreement has since commenced through a temporary arrangement known as the Guided Trade Initiative (GTI).”
Nigeria is on the verge of joining the GTI and Oloba disclosed, noting that eight countries, representing five regional economic communities in Africa, had met the minimum requirements and were already trading under the GTI.
“Countries that are piloting trade under the GTI are Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia.
“Some of the products ready for trade are ceramic tiles, batteries, tea, coffee, processed animal products, corn starch, sugar, pasta, glucose syrup, dried fruits, and sisal fibre etc,” he said.
According to Oloba, the AfCFTA’s GTI had been able to help test the operational, institutional and legal framework and trade policy environment under AfCFTA, and the readiness of the private sector for intra-African trade.
AfCFTA is the largest free trade area bringing together the 55 countries of the African Union (AU) and eight regional economic communities (RECs) to create a single market for the continent.
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