Nigeria’s President, Muhammadu Buhari, has received the report on impact of the African Continental Free Trade Area agreement (ACFTA). As you know, most African heads of states have adopted the phase 1 of the agreement. Nigeria’s president sees positives and negatives which ACFTA can bring to the nation. Then, he dropped the words:
“Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis…As Africa’s largest economy and most populous country, we cannot afford to rush into such agreements without full and proper consultation with all stakeholders. …Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of “made in Africa” goods. That is, goods and services made locally with dominant African content in terms of raw materials and value addition.”
If you are reading carefully, President Buhari was alluding to the “rule of origin” clause, making sure that the goods which will have low or zero tariffs are actually made in Africa. You do not want France to open factories in Morocco which has an agreement with it, to make things in Morocco, and then ship to Nigeria tariff-free.
Besides, the president hinted on the need to fix key frictions like logistics which will really make Africa thrive. African Development Bank had already concluded on that one also: tariff is useful but building infrastructures will deliver most impacts to Africa’s economic future.
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ACFTA (African Continental Free Trade Agreement) has been heralded by many as a possible panacea to many trade frictions in Africa. Interestingly, the African Development Bank’s 2019 African Economic Outlook may have a clear insight on what really matters: “trade costs due to poorly functioning logistics markets may be a greater barrier to trade than tariffs and nontariff barriers”. Yes, logistics paralysis in Africa is more critical than tariffs.
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In this world, with vultures all over the place, before you sign anything, always read and look well; else your name becomes sorry.
Obviously, outsiders cannot care more about Nigeria than Nigerians themselves, so what is at stake goes beyond the famed potential gains of signing continental free trade, but also the losses, which could get out of control. Few Nigerian companies selling in other African countries may not compensate for the dislocation any ill advised agreement could cause back home.
Global trade is going through a redesign, so groupthink doesn’t work anymore, if you are not sure about what you stand to gain, hold up your pen in the meantime.
Trump began it – and the world has been redesigned over the last few months for it. Nigeria needs to exist before it can anchor continental Africa. This agreement must be designed to work for ALL.