African Trade Pact Is A Double-Edged Sword
By ODILIM ENWEGBARA
Anywhere that you are the latecomer you should expect to have the least advantage since in most cases you only enjoy the leftover. Nigeria is grudgingly signing the agreement, an agreement it should be the first signatory were things in our favor.
For the first time Buhari has done the right thing in economic decision making. I truly appreciated his uncommon patriotism, which led to his taking his time to constitute a team of experts to advice him better. But the experts discovered that it’s a kind of trade ambush Nigeria had no option but to surrender itself to the trade tax masters.
I am sure that from their findings it became obvious to Buhari that it was a double edge sword. Should Nigeria fail to sign, Nigeria would have become a minority in Africa’s economy, an economy where it is number one. It also means that henceforth, Nigeria should begin to negotiate trade agreements with 54 African countries in such a way of one versus 54 rest. And no matter how powerful one might be, 54 will always win including employing ambush strategy.
Besides one versus 54, non-African countries seeing Nigeria standing alone will treat the giant of Africa as though economically handicapped. For this reason during trade negotiations, Nigeria would have the least opinion and will always end up to slavishly sign unfavorable trade agreements.
It is unfortunate that we went into this unprepared, without fallbacks; no competitive advantage of any kind; no trade shocks absorbers. Because of our unpreparedness, we will soon discover what signing the trade pact turns us into — a trading dumping ground for the rest of Africa.
Are we not repeating what happened to the US as a member of the World Trade Organization and as well as a member of North American Free Trade Area (US, Canada and Mexico) where every big and small economy had to dump all manner of goods forcing US producers of same to relocate offshore in order to join in the race to the bottom against their own national economy and as a results millions of jobs became exported overseas too.
Our huge infrastructure deficit is our biggest barrier to gaining in the continental free trade. This because without competitively supporting manufacturing, we cannot be competitive favorably in the free trade. So, soon big time manufacturers from EU, China, India, etc., eyeing Nigerian consumer market, will begin to just relocate their factories to neighboring Africa states to produce and dump all manner of goods in Nigeria. This is because the accompanying African customs union is only against fully imported goods from outside African member nations.
But it is also now a wake up call for us. We will either do things right going forward or we will expect to become economically subordinated to countries like South Africa.
Another major problem is going to become social disharmony. It is consequence of such a race to the bottom where states will no longer have enough taxable revenue to spend or should they impose high corporate tax or VATs, companies will migrate to where they enjoy social and environmental free rides and consumers will shop online.
Nigeria will discover that its only option now is to industrialize or else it will economically go into a kind of self-led economic extinction.
Nigeria now has no option but retool its economy starting with economic regionalization. This is must. Our present political regions must be transformed into economic regions. This healthy competition was what Abubakar Atiku planned for the country during his administration. So, whether Buhari likes it or not, he must allow economic regions to emerge out of present political regions.
The good news for our Igbo traders is that they will enjoy borderless movement of the trade. No more problems again. They can now set up shops and their cottage factories in neighbors countries since no nation within the new trade union will obstruct them.
It is also a wake up call for us to know that unless we replace grazing reserve livestock policy with ranching, and do so to attract large scale investors in the livestock industry, South African and Ethiopian beef will soon invade our meat consumer market sending Fulani herders to instant extinction. This is because there is no way they can compete with world leading companies in the bovine business.
It also means that our monetary policymakers should begin to be pro-business in their MPC decisions. The same thing to be expected from the fiscal policymakers. They too should come up with fiscal expansionary measures rather than the present fiscal prudential measures in order to begin to provide the kind of pro-private sector economic growth. *Odilim…a Development Economist writes from Abuja*
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