- To negotiate conditions for assent
Omololu Ogunmade in Abuja
Following the recommendation of the Presidential Committee on African Continental Free Trade Agreement (AfCFTA), which submitted its report to President Muhammadu Buhari yesterday, Nigeria will sign the agreement, with conditions authoritative presidency sources have told THISDAY.
The phase one of the agreement was adopted by African Union (AU) Heads of State at its 10th Extraordinary Summit in Kigali, Rwanda, on March 21, 2018.
But Nigeria pulled out of the signing ceremony at the last minute, following agitations from the private sector that the agreement would make Nigeria a dumping ground for goods and services in Africa.
However, the presidential committee led by Dr. Desmond Guobadia after reviewing concerns about the agreement, recommended that Nigeria should append its signature, saying on the balance, the country stands to gain.
“Your Excellency, our reports show that on the balance, Nigeria should consider joining the AfCFTA, and using the opportunity of the ongoing AfCFTA Phase I negotiations to secure the necessary safeguards required to ensure that our domestic policies and programmes are not compromised,” he told the president.
Presidency sources said the president, who had allied with the concerns of the private sector on the inherent negative consequences of the agreement, which might open up the country for imported goods at the expense of the domestic market, has now been persuaded to table these concerns before the AU and negotiate favourable conditions for Nigeria before putting pen to paper.
The president had told committee that the federal government would review its submissions and consider them in making its final decision on the matter.
But a presidential source said yesterday that Buhari had caved in to pressure from pro-AfCFTA proponents having been persuaded that his concerns could be allayed by further negotiations with his brother heads of government in the continental body.
Nigeria’s withdrawal from the signing of the agreement had met with criticism from former president, Chief Olusegun Obasanjo, who has been championing the need for the country to sign the pact.
Obasanjo had said last Thursday at the 2019 Africa Export-Import Bank (Afreximbank) event in Moscow, Russia, that Nigeria had no justifiable reason for not signing the agreement, which countries such as Eritrea, Niger and even Benin, a neighbouring country, had signed.
But while presenting the presidential committee’s report yesterday in Abuja, Guobadia, listed reasons why the committee recommended that Nigeria should sign the agreement.
According to him, signing the agreement would present Nigeria with the opportunity for it’s manufacturing industry to expand its business frontiers in Africa, noting that trade barriers, which had limited expansion of business in Nigeria, would be corrected by the agreement.
He said opportunities offered by the agreement would make African goods more attractive and cheaper.
While acknowledging the risks inherent in Nigeria’s signing AfCFTA, which include smuggling and abuse of rules of origin, Guobadia said the committee believed that such risks would be high for Nigeria bearing in mind that 92 percent of its imports come from other parts of the world and smuggling.
“Our study has shown that the AfCFTA is not without major risks and undesirable impacts. The most significant of which is the potential rise in smuggling and abuse of rules of origin. The risk is that it will provide incentive for traders to disguise goods imported from outside the continent as made- in-Africa goods, to qualify for duty-free treatment.
“This risk is high for Nigeria considering that 92% of Nigeria’s imports come from the rest of the world and smuggling, under-reporting of imports and other forms of abuse of rules of origin already constitute major challenges faced by Nigeria in ECOWAS,” he said.
Guobadia added that the risks in AfCFTA is compounded by lack of capacity, resources and will by some African countries to secure their borders, pointing out that the committee realised that certain costs would be required to manage negative impacts of the agreement.
“The risk is further complicated by the lack of capacity, resources and “will” on the part of some African countries, to enforce their borders. Tackling this threat will require collective efforts at the highest level of ECOWAS and the African Union,” he stated.
However, to guard against the adverse impacts of the agreement, the committee recommended: the extension of the timelines to achieve trade liberalisation and integration ambitions and possibly replacing them with a readiness criteria; introduction of explicit rules on import quota restrictions; adoption of a common market access offer for trade in goods and services for ECOWAS, including synchronised Sensitive and Exclusive Lists; adoption of the common market access offer for trade in goods to replace and supersede the 2013 ECOWAS Common External Tariff (CET), which created vulnerabilities for Nigerian industry and manufacturing; and adoption of appropriate continental customs cooperation and other mechanisms to tackle predatory trade.
“Considering the potential impact of predatory trade on her economy, Nigeria should consider championing the effort at ECOWAS and AU/AfCFTA to implement and enforce these safeguards.
“At the domestic level, we recommend that: a National Action Committee on AfCFTA be established to coordinate relevant ministries, departments and agencies to drive the implementation of the AfCFTA readiness projects and initiatives.
“The AfCFTA negotiation mandate should be updated based on the report of this Committee and submitted to Your Excellency for your consideration and further directives,” the committee further recommended.
Responding, Buhari said AfCFTA would have both negative and positive impacts in Nigeria.
The president said free trade was good as long as it was fair and done on equitable basis and that Nigeria as the largest economy and the most populous country in Africa could not rush to sign the agreement.
According to him, if the agreement must succeed, policies aimed at promoting production in Africa must be developed, adding that if Nigeria allows frivolous importation, its trade will be dominated.
He also said the implication of such development would be the prosperity of importing “while landlocked nations will continue to suffer and depend on aid.”
He added: “Our position is very simple, we support free trade as long as it is fair and conducted on an equitable basis. The AfCFTA will have both positive and negative effects on us as a nation and on our region.
“As Africa’s largest economy and most populous country, we cannot afford to rush into such agreements without full and proper consultation with all stakeholders. As you mentioned in your report, intra-African trade is only 14 percent of Africa’s total trade. Our consumption is mostly of goods imported from outside the continent.
“For AfCFTA to succeed, we must develop policies that promote African production, among other benefits. Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of ‘made in Africa goods.’ That is, goods and services made locally with dominant African content in terms of raw materials and value addition.
“If we allow unbridled imports to continue, it will dominate our trade. The implication of this, is that coastal importing nations will prosper while landlocked nations will continue to suffer and depend on aid.
“As I stated during the inauguration of this committee, many of the challenges we face today, whether security, economic or corruption are rooted in our inability, over the years, to domesticate the production of the most basic requirements and create jobs for our very vibrant, young and dynamic population.”
The president said Nigeria would henceforth ensure that agreements that it negotiated would boost business opportunities in the country, adding that the country should only pursue an agreement that would create wealth for investors and jobs.
In addition, Nigeria will also focus on agreements that enhance the prosperity of the country.
The president said the committee report would play crucial roles in the eventual decision that the federal government would take on AfCFTA.
He commended members of the committee whom he said had deployed their skills and energy to come up with the report, saying that Nigeria would ensure that negotiated agreements create business opportunities for Africa’s manufacturers, service providers and innovators.
“The AfCFTA we aspire to have should therefore not only create wealth for investors but also jobs and prosperity for our vibrant and hardworking citizens. The benefits of economic growth must be prosperity for the masses.
“Let me assure you that your report will form part of the consideration in our decision on the next steps on the AfCFTA in particular and on broader trade integration subjects,” he said.