Have you heard about the African Continental Free Trade Area (AfCFTA)?
On the 17th -18th March 2018, the African Union held a summit in Kigali, Rwanda The summit was a step forward for the AU’s 2063 project for closer African integration, with 27 member states also signing a commitment for the free movement of persons. The AfCFTA has the potential to bring over 1.2bn people together into the same market. The bloKc of 55 nations would be the largest in the world by member states.
If successful, it will be the biggest trade agreement since the formation of the World Trade Organization in 1995. By reducing barriers to trade, such as removing import duties and non-tariff barriers, African countries hope to boost intra-continental business. The AfCFTA could improve trade between African countries, which in 2016 estimates stated accounted for only 10%.
Nigeria, being one of Africa’s largest economies and the most populous, declined to sign the agreement. Commenting on Twitter, Nigeria’s President Buhari said: “We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods.”
A huge debate on whether Nigeria should sign the agreement or not took the front burner at the 12th Annual Business Law Conference of the Nigerian Bar Association Section on Business Law (NBA-SBL) in Abuja and I was there.
Some say it is an ambitious dream and the objectives are grand. I also know that there are fears. But proponents of the African Continental Free Trade Agreement (AfCFTA) argue that the merits outweigh the risks. The AfCFTA has been hailed as capable of transforming Africa’s economy. I think that the necessary legal processes should undertaken before Nigeria signs this agreement.
Please note that the goal is to create a single market, followed by free movement and a single currency union. Also, signing the agreement does not yet establish the African Continental Free Trade Area. It will function as an umbrella to which protocols and annexes will be added. Once all documents are concluded and ratified by African states, the free trade area will formally exist.
Negotiations will continue this year with Phase II, including competition policy, investment and intellectual property rights. A draft shall be submitted for the January 2020 AU Assembly. Being the sharp lawyer, I am taking steps to prepare for the juicy opportunities that I see coming from the AfCFTA. (LOL).
MERITS OF SIGNING
- When AfCFTA takes effect, there will be a single continental market for goods and services in Africa.
- There will be free movement of business persons and investments. The agreement will pave the way for accelerating the establishment of the continental Customs Union.
- According to the Common Market for Eastern and Southern Africa (COMESA) Competition Commission Chief Executive Officer George Lipimile, AfCFTA’s objective is to expand intra-African trade through better harmonization and coordination of trade liberalization.
- It is expected to enhance competitiveness at the enterprise and industry level, and support economic transformation through exploitation of economies of scale, continental market access and better reallocation of resources.
- AfCFTA’s Continental Competition Rules, Lipimile said, will introduce a “one-stop shop” for cross-border transactions, expectedly easing the cost of doing business on the continent.
- There will no duplicated legal hurdles to cross. There will be reduced filing fees for registration requirements, and the risks of different decisions from different competition jurisdictions will be eliminated.
- Unlike the national competition authorities whose jurisdiction is limited by national boundaries, AfCFTA competition rules would provide extra-territorial jurisdictions powers to investigate restrictive business practices across the continent.
FEARS AND CONCERNS OF NIGERIA
- According to Nigerian Chief Trade Negotiator/Nigerian Office for Trade Negotiations Director-General Ambassador Chiedu Osakwe, the agreement could bring negative consequences. he said, AfCFTA establishes a legal order for trade within Africa previously not had, balances rights and obligations and has no fewer than nine safeguards, including opportunity to waive obligations, as well as what he called, “iron-clad” trade remedy provisions.
- The provisions include the anti-dumping policies that allow for offsetting of duties. “AfCFTA is about the rule of law in trade. It’s about mordenising our trade environment, about mediation rather than militancy,” he said.
- Stakeholders from the Six Geo-political zones raised long-standing competitiveness issues on power, transport infrastructure, difficulty in the domestic market arising from undue obstruction by security forces, trans-shipment and branding, how to integrate women and the informal market, among others.
- Vice President Yemi Osinbanjo, shared concerns that due to the prevalence of dumping on the continent and the potential for its escalation, one would argue that free trade in Africa may not necessarily be fair. It is important for us to work on internal arrangements and to ensure that by no means do we just simply become an easier target for dumping and smuggling by signing the continental free trade agreement.
BENEFITS FOR NIGERIA
There is significant support by stakeholders in the six geopolitical zones that Nigeria goes ahead with this for much of the reasons they gave – our leadership, our geo-political standing, market access, an opportunity for growth among others such as;
- Chief Justice of NIgeria, Hon. Justice Walter Onnoghen believes the need for collaborative relationship among African nations is indisputable, more so, given our common resolve to build a new Africa, founded on common identity, integration, common economic development, tenets of social justice and accountable leadership.
- Professor of International Law and Jurisprudence Akin Oyebode said Nigeria seemed to be cutting its nose to spite its face by not signing the AfCFTA. He said he was appalled when Nigeria “dis-invited” itself to the Kigali meeting. We must resume negotiations to ensure we continue to play the role that destiny has placed on us. It’s not too late to resume discussions. We should stop underrating ourselves. My plea is that we should cut our losses by resuming negotiations for AfCFTA. We have to do whatever makes us competitive so that we’ll never apologize for being Africans,”
- Political economist Prof Pat Utomi who believes there will be winners and losers with AfCFTA signing, spoke of the need to find a win-win balance. Explaining that the benefits are worth the risk, Utomi said: “We need to change our mind-set. We have an elite still living in a rent economy. We need to grow intra-Africa trade. We could co-produce. We have to find a way to encourage manufacturers to play in a global value chain where they will be more enriched.
- Gombe State Governor Ibrahim Dankwambo, blamed poverty in the North to the severance of the region’s trade with the rest of the world. He recalled that hide and skin used to be exported through the North, adding that had such policies been sustained, the region would have been better off.
- Akwa Ibom State Governor Udom Emmanuel, said the state has simplified its legal process and framework to encourage businesses. He added that creating the right environment would encourage foreign investment. With his state engaging in various manufacturing endeavors, he said signing the AfCFTA would afford it more export opportunities.
- Former Federal Inland Revenue Service (FIRS) executive chairman Mrs. Ifueko Okauru backed AfCFTA, saying there was need not only for country integration and corporation, but regional integration.
- Ogun State Governor Ibikunle Amosun, believes AfCFTA would create more trade opportunities for the state’s industries and lead to more investment. He said Ogun remains a destination of choice for investment.
- Former Edo State Governor Oserhieme Osunbor, said: “Intra-Africa trade will lead to the creation of wealth and employment.”
Finally, having put together all the I have learnt about the AfCFTA, I think that Nigeria should sign because the merits outweigh the fears and concerns we have. I expect that Nigeria should lay a solid foundation to welcome this new development that could change the lives of Nigerians and the economy as well. Legislation should be enacted to take care of the possible issues that will come up when this agreement is signed. Legislation on Competition policy, investment and intellectual property rights etc should be enacted. Most especially, the bill on Competition law that the President has so far refused to assent. Legislation to curb or put a strong barrier against dumping which is a major concern is also very crucial. If Nigeria fails to sign the AfCFTA, the world will not end but the train will leave us behind until we are ready to catch up with the rest of Africa.
What do you think? Should we or should we not sign ?