African Union Heads of State and governments met in Kigali, Rwanda recently and agreed to form a $3 trillion continental free-trade zone encompassing 1.2 billion people. Unfortunately, its two biggest economies, Nigeria and South Africa, did not sign the agreement, thus diminishing the impact of the agreement and the meeting.
African Union started talks on the idea of a Continental Free Trade Area in 2015. The CFTA will comprise a 55-nation bloc that would be the biggest in the world going by the number of member states. African leaders hoped that it would increase intra-regional trade, which sits at a meagre 15 per cent of Africa’s total commerce. At the recent Kigali AU meeting, 44 African nations signed up to establish the free-trade bloc within 18 months.
Rwandan President, Paul Kagame, the host of the AU summit, which was called to conclude negotiations on CFTA, declared the meeting a success. While Nigeria did not sign the agreement, saying that it needed to do more consultations at home before signing it, South Africa President, Cyril Ramaphosa, said he would sign once necessary legal processes were
done.
Buhari was quoted as saying that he would not agree to any agreement that would hinder local entrepreneurs and that on the surface, except if proven wrong, the CFTA agreement has the capacity to affect local entrepreneurship. In addition, the president said that anything that could encourage the dumping of finished goods in Nigeria would be contrary to the nation’s interest.
He also said that the country is yet to fully understand the economic and security implications of the agreement. Consequently, he set up a committee to “meet and review the contents of that proposal and they will do it within two weeks and get back to the Federal Executive
Council.”
Members of the committee are the Ministers of Finance, Budget and National Planning, Labour, Foreign Affairs, Science and Technology as well as the Central Bank of Nigeria, Federal Inland Revenue Service, the Nigerian Customs Service and the Nigerian Immigration Service. However, Botswana, Lesotho, Namibia, Zambia, Burundi, Eritrea, Benin, Sierra Leone and Guinea Bissau opted to stay out of CFTA for now.
When fully signed, the CFTA will be the biggest trade agreemenT, second to the World Trade Organisation (WTO) that was signed in 1994as. CFTA brings together 55 African countries, It will be a market of about 1.3 billion people currently and is expected to be about two billion by 2025.
CFTA seeks to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union. It will also expand intra African trade through better harmonisation and coordination of trade liberalisation and facilitation regimes and instruments across regional economies and across Africa in general.
It will also hopefully resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes; as well as enhance competitiveness at the industry and enterprise levels through exploiting opportunities for large scale production, continental market access and better reallocation of resources.
CFTA is aimed will create a single continental market for goods and services. It will also enhance free movement of business persons, investments and investors. It is also aimed at expanding intra-African trade through trade liberalisation policies.
In addition, CFTA will remove business and import restrictions within the continent. It will benefit all the smaller countries in Africa looking for markets for their
products.
Specific gains that will accrue to Nigeria from CFTA include: expansion of market access for Nigeria’s exporters of goods and services, growth and job creation; elimination of barriers against Nigeria’s products and provision of a dispute settlement mechanism for stopping the hostile and discriminatory treatment directed against Nigerian natural and corporate business persons in other African countries.
In spite of its many benefits, CFTA has its drawbacks. Among the drawbacks are that enterprises from Europe Asia and America will take advantage of the CFTA agreement to bring their production lines to neighbouring African countries with steady power supply and dump their products in Nigeria. If Nigeria joins CFTA, Nigeria will be a dumping ground for goods and services as long as it is a net importer of goods and services, more so that Nigeria
