Nigeria, Africa free trade agreements and development

IN November 2016, ministers of industry, trade and investment from across Africa met for the second rounds of negotiations in Nairobi, Kenya in furtherance of the on-going negotiations to design the structural framework that will drive the proposed Continental Free Trade Area. The CFTA is expected to deepen intra Africa trade as well as fast-track efforts at achieving greater regional integration within the continent.

The Heads of States and Government passed a resolution for the commencement of the process towards the continental free trade negotiations at 2012 Summit in Addis Ababa, Ethiopia. At the moment intra Africa trade relations remain very low, despite abundance of raw materials, goods and services, and several economic opportunities in the continent. In response to reverse trend of low trade and transactions among Africa countries as attested to by several reports by development institutions and bilateral agencies in the last two decades, AU leaders took this proactive initiative.

The African Development Bank (AfDB) indicates that intra Africa trade remains low compared to intra-regional trade in other parts of the world.  According to United Nations Conference on Trade and Development (UNCTAD) forecast, the current intra-Africa trade which is 10.2 per cent will improve to 15.5 per cent from 2010 – 2020 if tariffs are removed, but with enhanced trade facilitation measures; it has the capacity to increase to 21.9 per cent. Therefore, CFTA provides an ample opportunity for Africa to increase its intra-Africa shares of trade, movement of goods and services including increase in capacity utilisation for manufacturing beyond primary products.

Nigeria’s Minister of Industry, Trade and Investment, Dr Okechukwu Enelamah, led the Nigerian team to the negotiation rounds. The Nigerian team equally made invaluable contributions that will guide the AU ministers and their countries’ team as they seek to design guiding principles and modalities for the process. It is no doubt that Nigeria’s rich experience and previous engagements on free trade agreements will be of immense benefits in this regard.

Additionally, the Nigeria’s team canvassed the need to develop a CFTA that supports and promotes structural reforms in Nigeria and across the continent rather than undermine it. It also urged the 54-member AU bloc to pay attention to the technical work that is required for the adoption of the CFTA by the AU Summit. The CFTA is expected to be adopted by African Heads of States and Government in December 2017.

For Nigeria, AU needs to adopt best practices in the process to enhance ownership through increased consultation with their domestic authorities and critical stakeholders, in order to deepen ownership of the process. It also canvassed that AU negotiators need to include a proviso on “flexibility” that allows it to safeguard the economy from a flood of imports, even as it remains an open economy as this will make for a CFTA that works better for the continent.

According to Enelamah, “trade agreements with binding obligations and economic consequences are not to be taken lightly. Trade liberalization is good but complimentary policies are required. Negotiations must be based on negotiating mandates that reflect national economic priority. Nigeria is reversing weaknesses and failures that we made in previous agreements. Those failures were made due to insufficient consultation with stakeholders and not taking into consideration the vulnerabilities of our domestic market.”

From Nigeria’s experience in several trade negotiations the involvements of civil society groups, professional and trade associations, students and labour helped in deepening ownership of the process, as well as makes the implementation much easier.  Lessons from Nigeria as enunciated by Dr Enelamah therefore are instructive if the AU needs to fast-track the process with results and success stories.

The development profile and economic outlook within Africa will increase as a result of the free trade agreements. Some of the expected benefits will include the economies of scale, knowledge sharing and transfer of technology, expanding infrastructure such as cross countries rail and road networks, harmonisation of tariffs and duties on goods as well as the free movement of labour including skills and technical know-how within the region.

Today, the combined Gross Domestic Products (GDP) in EU is a strong factor for negotiations with several countries given her size. This confers on them an advantage in negotiating with others. Africa countries could leverage the size of its market which presents a huge chunk of the global population as its bargaining power.

The role of Nigeria in promoting the common goal of development in Africa is steeped in her long history of African brotherhood dating back to the early 1960s during the formation of the then Organisation of African Unity (OAU), now AU. Nigeria’s commitment to Africa therefore is predicated on the positive outlook that the proposed free trade agreement will bring to all member states leading to increased prosperity and livelihood for citizens in countries across Africa.

How the AU Trade and Investment Ministers and trade negotiators navigate through the transition will determine the outlook of the proposed CFTA and intra-Africa trade going forward.  Many are optimistic that this is a plus given that lessons learned would be handy at continental stage.  Additionally, the AU negotiators will also be required to harmonise various existing tripartite trade partnership agreements signed by Africa countries and other regional blocs into the CFTA’s framework.

Expectedly, Nigeria as the largest economy in Africa should work collaboratively with other Africa countries to ensure the success of this timely initiative. It will help to accelerate economic development and integration of the continent. Though a daunting task, the AU needs to continue on the path of progress that will be mutually beneficial to all member states. For Nigeria, the primacy of trade to our economic recovery cannot be over stressed in the face of global low commodity prices that affected the economic fortunes of the country. In other words, trade should be the new frontier for Nigeria given our numerous comparative advantages.

The AU ministerial forum on CFTA negotiations is a step in the right direction that will elevate the status of Africa as a continent, add value to her resources, skills and technical expertise. This will reverse narratives about Africa as dark and uncoordinated peoples by historians and analysts. There is a consensus across Africa that the current data on intra Africa trade could change for the better if, and only if, African leaders under the platform of AU remain on course and follow through the implementation of the Africa Free Trade negotiations.

As the consultations progresses, Nigeria’s minister’s suggestion that AU should engage in country level consultation and sensitisation among its nationals to ensure participation of all stakeholders is instructive. Adopting a bottom to top approach will increase the buy in of more citizens who will be the real beneficiaries of the integration efforts.

As consultations continue at various levels, many Africans including Nigerians are hopeful that the process will scale up intra Africa trade, which currently ranks low. Improved trade will accelerate economic development and inclusive growth in the continent as socio-economic activities will translate into jobs, improved public infrastructure, among other benefits.

If the AU negotiators are able to keep to the December 2017 timeline for the adoption of the CFTA, and African leaders including Nigeria’s President, Muhammadu Buhari are able to rally support for other sound initiatives, perhaps the next decade, may become the age of Africa development. The legacy of the Nigeria’s minister and his team of negotiators will be remembered by generations to come.

  • Ishola Abraham, a Public Affairs Enthusiast sent this piece from Lagos.
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