There was a lot of excitement in the air on Wednesday, as history was made in Kigali, the capital city of Rwanda where 44 African Union member states signed the African Continental Free Trade Area (AfCFTA) agreement, which commits involved countries to removing tariffs on 90 percent of goods, with 10 percent of items regarded as “sensitive” to be phased in later.
The signing is seen as the future Africa has awaited for decades. In the absence of an African-wide deal, sub-regions across the continent had often formed trade groups, with countries that understood the benefits of membership of such groups even belonging to more than one. Kenya, one of the members of the East African Community (EAC) also belongs to the Common Market for Eastern and Southern Africa (COMESA), so are fellow EAC members Rwanda and Uganda. Kenya and Uganda are also members of the Intergovernmental Authority on Development (IGAD).
Most countries in Africa rank low on the United Nation’s Human Development Index and about 15 are landlocked, contributing to high trade transaction costs. For poorer countries to join forces with richer ones and landlocked States to team up with those with access to the sea makes sense for Africa. Hence, when an opportunity for the 55 member states in the African Union to link up, most grabbed the opportunity with both hands.
However, one man, who apparently did not immediately see the significance of AfCFTA was conspicuously absent from the summit, canceling his Kigali trip only days before the historic event. Nigeria’s President Muhammadu Buhari said his decision was made to allow time for broader consultations.
The Nigeria Labour Congress (NLC) had warned that the agreement was a “renewed, extremely dangerous and radioactive neo-liberal policy initiative”, and urged Buhari not to sign it. Ayuba Wabba, the president of NLC had said the agreement would impact the Nigerian economy negatively by crippling local businesses and leading to job losses.
Regardless of all its benefits, labour unions have always been wary of trade deals often citing the possibility of such to inhibit domestic investment, particularly in manufacturing, by offering benefits to companies that relocate operations and jobs abroad where cost of production and labour cost is lower. Others argued that, as a net importer that brought in goods worth N637.4 billion in December alone, Nigeria would fast become a dumping ground for the rest of Africa. These possibilities were considered at the Federal Executive Council (FEC) meeting last week, where Vice President Yemi Osinbajo, in the absence of his principal, approved the framework agreement for establishing AfCFTA. Nigeria’s Minister of Trade and Investments, Okechukwu Enelamah, even said after the meeting that Nigeria was bidding to host the secretariat of the AfCFTA.
The u-turn by Nigeria’s President Buhari was, therefore, shocking to many, who expected the supposed giant of Africa to take a leading role in the process.
More so, the loudest voices against Buhari’s signing of AfCFTA have been the NLC, a body several Nigerians have lost faith in, due to their inability to genuinely represent their interests, and members of the Organised Private Sector (OPS), particularly the Manufacturers Association of Nigeria (MAN). It is therefore hard to understand for many, why the Nigerian government would bow out of a process they have been part of for several years at the last minute.
But how best to ensure the government-backed monopolist continues to grow revenue even when sales drop? Lobby and get concessions that can cover the government’s darling who Nigeria has allowed to continue to determine the price of cement and to build the refineries the country is in dire need of. Forget his company’s presence in 14 African countries, Nigeria remains his major profit hub. Remove him and Nigeria’s inability to get the simple things right, and the country would have been the 45th country to sign the AfCFTA.
Free trade is a good thing, especially in Africa, with a market of more than 1.2 billion people and a combined GDP of over $2 trillion. Division of labour, comparative advantage, supply and demand, among others, would all work together to ensure improved specialization, more productivity and greater output.
Intra-Africa trade has for long been a goal for several governments and businesses in Africa. In a 2016 interview, Mohamed Samir, President – India, Middle East and Africa (IMEA) for Procter & Gamble (P&G) told The Nerve Africa how excited he was about the opportunities free trade in Africa offers. One of the many things Samir hoped could be achieved is the liberlization of the skies, “making it one Africa.” Studies have found out that liberalised air markets benefit from reduced air fares, increased air traffic, more competitive airlines and a consequent growth in employment and GDP.
There are several other benefits that come with agreements like AfCFTA, hence, the excitement about it and why many found it hard to understand why the largest economy in Africa would boycott such. Former President Olusegun Obasanjo and Former AfDB President Donald Kaberuka minced no words in their reactions. Obasanjo said he was surprised that any “African leader at this time would be doubting or debating the benefits of what is going to be signed here and fail to show up. I find it criminal!” he said.
Kaberuka also said whoever has reservations about signing the AfCFTA is a big disappointment to the continent. Maybe Nigeria’s president is, but that is too early to say. Countries that have not signed the agreement can still sign within 160 days. Those that have signed also have the same number of days to ratify the agreement. Before then, Nigerians would expect their president to have concluded consultations. The agreement will only come into force when ratified by at least 22 countries.
The world witnessed how improved economic integration contributed significantly to declines in poverty and increased economic competitiveness in Europe, especially the Central and Eastern parts. Africa could tell a similar story in a couple of years and Nigeria would only have itself to blame if does not sign the AfCFTA agreement.
Like Strive Masiyiwa rightly said at the event on Wednesday, “Africa will not be able to face the 4th Industrial Revolution if the private sector” and indeed every government in Africa does not support and embrace the AfCFTA agreement.