Incoherent trade policy setting Nigeria back

It is not in doubt that Nigeria is a country plagued with multiple sociopolitical and economic challenges that require urgent and sincere attention. As a result, the country strives to ensure a moderated and long-run sustainable economy, which prompts the need to drive economic growth through trade, among others. Nigeria thus finds itself amidst member countries of many global and regional trade integrations, the latest of which is the Continental Free Trade Area (CFTA). Although Nigeria’s intended agreement to the CFTA has raised a lot of eyebrows from  some labour unions (NLC and NUPENG) and eminent Nigerians, economy experts from Covenant University have disclosed reasons why caution should be exercised before the agreement is signed and ratified.

On March 1, the university’s faculty, staff and post graduate students in the Department of Economics and Development Studies, College of Business and Social Sciences, launched its Centre for Economic Policy & Development Research (CEPDeR). The theme of the roundtable was timely, coming at a time when the African Continental Free Trade Area (AfCFTA) was three weeks away to be signed by all African Heads of State and Government. Jonathan Aremu, a professor of International Economic Relations, kick-started the Roundtable when he observed that 51 Heads of State and Government signed the Abuja Treaty of the Africa Economic Community (AEC) in 1991 as the continental economic integration agenda; and it entered in force in 1994, with a roadmap of six phases. The economic integration agenda is currently in phase 4 (CFTA) which was expected to be completed by December 2017.

Professor Aremu said that the CFTA negotiations were to be conducted in two stages: (a) Stage I would establish the Single Market for Trade in Goods, Services and Settlement of Disputes; Stage II would establish rules for continental Investment, Intellectual Property, as well as, Competition Policy. However, on the 4th of July, 2017, after a Progress Report on the AfCFTA was presented by H.E. Mr. Mahamadou Issoufou, President of the Republic of Niger and champion of the CFTA Process, all the Heads of State and Government called upon AU Member States “to undertake nationwide stakeholders’ sensitisation activities so that citizens of African countries are fully aware and own the process of establishing the Continental Free Trade Area.” The sensitisation opportunity was expected to provide open public type of engagements that will allow the participation of a wide spectrum of stakeholders, as well as, guarantee a more direct interaction with them so they can complement each other in such discussions and consequently own the CFTA initiative.

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Discussants at the roundtable doubted whether the stakeholders’ sensitisation has been carried out in Nigeria. While there have been discussions and negotiations on CFTA by the various Technical Working Groups (TWGs), little efforts have been made to give Nigerian stakeholders the opportunity to discuss these dynamics in the development and future implementation of CFTA. The panellists regretted that Nigeria has no ideal trade policy (since 2002) as of now to be used in negotiations at regional, continental or global levels of integration. The question that emerged from the discussion is: with what domestic trade policy is Nigerian government using to negotiate CFTA?’ Also, the ECOWAS trade policy which should have been used as a proxy is yet to be concluded. The discussants, therefore, advised the Nigerian government to first and foremost formulate a coherent trade policy to capture the government’s development policy objectives as documented in the Economic Recovery and Growth Plan (ERGP). The policy objectives of such trade policy should be based on Nigeria’s national development strategies, which will lead to the creation of detailed internal and external trade policies that will, in turn, inform the basis for any trade negotiation strategy at regional and multilateral levels.

Prof. Alege, Dean of the College of Business and Social Sciences, said that there are some pertinent questions to be addressed if we are to achieve the objectives of policies. ‘How do we benefit from competitive advantage if nearly all our imports are mainly finished consumer goods? How do we survive in a world economy where we export raw agricultural and mineral resources with little or no value addition?’  According to Prof. Osabuohien, Head of Department of Economics and Development Studies of the University, the CFTA is not without challenges. He said that with goods and services moving freely across the continent, if Nigerian firms were not fully equipped to maximise their positions, there is every possibility of some of the firms being negatively affected. He, however, said that  CFTA becomes an opportunity if the local firms embrace the capacity to expand their production and employ more workers.

This, he said, hinged on how well Nigeria can align itself with the process of integration by improving physical and social infrastructure, such as boosting the rail lines, fixing the power situation and most importantly engaging indigenous trade lawyers that will enhance the trade negotiations. Meanwhile, discordant voices have risen in Nigeria, asking President Buhari not to immediately signing the continental document. This is however not without consequences. Giving that Nigeria is the largest market in the continent, the benefits of the CFTA are  enormous, but so are the risks.

Afolabi is a student of Covenant University