Following the approval of an impact assessment report demanded by President Muhammadu Buhari, Nigeria is now close to signing the African Continental Free Trade Agreement (AfCFTA).
Nigeria had so far refused to sign the pact over concerns of trade imbalance with other member countries, which could hinder the development of its own economy. But it now appears Africa’s largest and most populous economy is ready to join its fellow member countries in tendering its signatory on the pact.
“I think the president has a sense of urgency about this because when he asked us to conduct an impact assessment study, we were given just three months to finish everything and we have done so,” Nigeria’s Minister of Industry, Trade and Investment, Okechukwu Enelamah said.
The AfCFTA’s main objective is the establishment of a single continental market for goods and services as well as the free movement of business people and investments. To achieve this, member countries under the accord are expected to remove tariffs from about 90 percent of the 200 traded items on the continent in a bid to make them more affordable for consumers.
The initial worries the Nigerian government had was that opening up its border to goods from other nations without tariffs would be detrimental to the growth of its local production and manufacturing, turning the country into a receptacle for finished goods. Thus, the country is one of the three that are yet to sign the pact, of the 55 member nations that launched the trade agreement at the African Union (AU) Summit in Kigali last year.
However, Nigeria seems to have changed its stance and would like to key into the largest trade pact the continent has ever seen before it gets too late. As the minister said, “We do need to conclude our processes and make sure that the train doesn’t leave the station and go far before we join.” The other two countries that have not signed are Benin and Eritrea.
Policy dialogue ahead of takeoff
As indicated beforehand, the continental trade pact is supposed to take effect 30 days after the 22nd ratification – that is, on May 30 with the total number of ratifications (from 23 member countries so far) needed for implementation now complete.
However, the operational phase of the agreement may likely commence in July, AU Commissioner for Trade and Industry, Albert Muchanga revealed. According to the Union chief, talks across the region that could see the AfCFTA begin operating in the second half of the year are almost complete. In preparation, delegates from across Africa are on a policy dialogue this week to outline a blueprint for the AfCFTA.
The two-day dialogue which started yesterday in Addis Ababa, Ethiopia, is jointly organised by the AU and the Coalition for Dialogue on Africa (CoDA), a development platform for discussions and reflections.
Among other activities, participants at the summit are expected to draft a strategy for successful implementation of the free trade agreement and set the pace for Africa’s ambitions outlined in Agenda 2063 – a roadmap for transforming the continent into a global powerhouse.
Bidding competition over the secretariat
With the implementation nearer than ever, several African countries are locked in a bidding war over the hosting of Africa’s free trade zone’s secretariat. Among those vying to host the secretariat are Kenya, Ghana, Senegal, Egypt, Ethiopia, Madagascar, and e-Swatini.
According to reports, Kenya is ahead of the pack and senior officials from its Foreign Affairs Ministry have had a meeting with a team of evaluators from the AU who will make recommendations to the Council of Ministers to pick the winner for the bid.
The AfCFTA is expected to form the basis of a Continental Customs Union like that of the European Union (EU). It seeks to bring together all 55 member states of the AU covering a market of more than 1.2 billion people with a combined gross domestic product of more than $3.4 trillion. This will be achieved by opening up African nations’ borders, relaxing immigration rules and other non-tariff barriers to boost intra-African trade from a meagre 14 percent to over 50 percent.
The AU and African Ministers of Trade are expected to finalise work on supporting instruments to facilitate the launch of the operational phase of the AfCFTA during an Extraordinary Heads of State and Government Summit on July 7.