Following Nigeria’s signing of the first phase of the African Continental Free Trade Agreement at the African Union summit, the former Minister for Industry, Trade and Investment, Dr. Okechukwu Enalamah, speaks to Adedayo Adejobi on the country’s role in developing intra-Africa trade framework, how Nigeria can take advantage of the AfCFTA and the possible potential gains of intra-Africa trade, and the role of the organised private sector in the initiative. Excerpt:
What Nigeria’s role in developing intra-Africa trade, how can Nigeria take advantage of the AfCFTA and what are the possible potential gains of intra-Africa trade?
The AfCFTA is an idea, policy and agreement that came from the very top of the African Union summit, which is where the heads of state meet to envision the Africa they want to see. Part of that vision is to ultimately increase intra- Africa trade and that economic corporation and integration should be a long-term goal to achieve. If you look at intra-Africa trade, it’s been in the teens. Not more than 15 per cent. No other region, continent or economic bloc is that low in the world. And there is no question that there are a lot of opportunities and challenges in correcting that problem of low intra-Africa trade where it trades with others, but very little with itself.
Therefore, it was agreed that it would be nice to have an agreement and framework that would support intra-Africa trade. This has been on for many years. But in the last few years, particularly in 2015, a timetable was set to work on it. And the former minister for trade alongside other African ministers of trade was asked to coordinate that effort. And so Nigeria, under which I was the minister of industry, trade and investment, was playing the leadership role of African ministers of trade (AMOT). We also had a technical committee that was made up of chief negotiators and trade experts. Nigeria again chaired that committee through our own Ambassador Chiedu Osakwe. And that’s to say we were involved in the crafting of the agreement. As you know, those agreements led to a decision that a framework agreement would be signed by the first quarter of 2018. And we were prepared to sign that agreement because it was a framework that would form the basis for more detailed work programmes on goods, services and investments. It was at that point during an extra-ordinary meeting which held in Kigali, Rwanda, where we decided as a country, under the leadership of the president that there was probably no need to be the first to sign if we haven’t done the kind of consultation required back home.
Part of the issues that came up was that some of our stakeholders whom we have had meeting with, did not feel they had seen the document or read it. And secondly, they didn’t understand some of these implications. My view then and now is that those concerns were legitimate and that answers were to come. And that was the way it was planned. This vision came from the top. Leaders can decide to have a vision and say we’ll carry our people along. From that point of view, I believe it was entirely appropriate that African leaders decided to give us a framework to go work out the details.
For Nigeria being a big country and one that would play a major role, it was also appropriate for our key stakeholders to say before we sign anything, we would like to have some more education. The President then exercised his Presidential discretion or authority to say he would withhold his signature until you finish this, as a show of my good faith to my own stakeholders. And honestly, it’s been very well received. As far as we can tell Nigeria hasn’t lost anything. There was a sort of concern as to how can Nigeria not be at the fore of this, but you know you can lead something from the front and still do what you want to do choosing your own timing, and I think that’s what happened.
What were the compromises reached by stakeholders, which may have allowed for getting ahead on the signing?
It’s a very good question. For the stakeholders, what they wanted was just to understand it and how it would be implemented. That’s why I said, it was a deliberate by the African Union to say let’s sign a framework. You and I can agree to agree. They agreed that they wanted intra-African trade to increase and it was also agreed in terms of framework. Remember a lot of the framework has already been spelt out by institutions and multi-lateral agencies like the World Trade Organisation. So, because other regions have done this, there is some body of knowledge and work on how you put together an agreement for trade and economic integration.
The real work lies in working out the details. For instance, things like what would be the exceptions. As you know it’s about goods moving freely. A country can decide as we have, that the following things can be on what they call an exclusive or sensitive list, which would require assurances before you open up your market to infant industries. All these are allowed for all countries. It’s just that the detail would be worked out, and that’s what we are doing now.
Coming to the question on issues to be addressed, I’ll keep emphasising that these issues are not entirely unique to Nigeria. Nigeria has a strategic role to play because of our size. Issues like how do I prepare infrastructure -wise to produce more to sell to Africa? It’s important, but remember that we need to prepare to sell in our region and ultimately beyond. So, that work is on-going. Questions like Rules of Origin have been raised. How do we make sure that when this agreement is signed and implemented, that it’s goods produced in Africa that are being sold in Africa, versus what you call a transshipment problem where people just land the goods in some country that is willing to lay that role and then move it into the rest of Africa. But these are bit of problems that have not been addressed before.
One of the things to keep emphasising to us as Nigerians is that if we learn from the experiences of others, we’ll be well on our way. And the reason is that there are no problems we are dealing with that are not common to countries and to men- smuggling, dumping sub-standard goods. So, how do we make sure we address them just like other countries have addressed them in other markets? That’s what this agreement is about.
You could argue that the purpose of this agreement is to implement best practices in the area of trade and local production in favour of Africa and African countries. That’s what the agreement is about. If you understood and accepted that, you would then not necessarily take the view that Africa is not ready for the agreement, because it’s the agreement that would help Africa to be ready.
All the other regions also had to do that. And what would happen is that all the African countries would then have to protect the market, of which Nigeria is a major part, from external threats and people, who want to undermine local production.
There is also a body of work to be done, and this agreement would not go into effect in terms of the actual tariff reduction and movements until about five years. So you sign the agreement to do the work. And like the European Union, it takes time to implement. Like they say, the journey of a thousand miles starts with a step. And whenever you wake up, it’s your own morning. It’s better to get that work going. I think the commitment to the AfCFTA is appropriate.
Does Nigeria have the will to go beyond political commitments in honouring the agreement?
The idea of AfCFTA and Africa trading itself is a very sound and robust one. It transcends administrations and individuals. The work that needs to be done needs to be done anyway and it’ll be a shame if we don’t do that work. There is nothing uniquely ideological. My view is that Africa would implement the AfCFTA and Nigeria would lead. It is true, however, that a lot of work and political will is required. But I would also say the commitment of the business community is also important. If you look at who would benefit from the AfCFTA and implement it, it’s as much the organised private sector and Africans as African governments. One of the most urgent requirements is to form those partnerships and working groups to champion the implementation of these steps required to bring the AfCFTA into full effect. You would find out that there are already committees working at various levels. I’m reasonably confident that Nigeria would be part of that in a very robust way and that if we do the work, we’ll get the results.
What is the ideal role of the organised private sector in this alliance?
Starting from the negotiations, the private sector should be part of the working committees. It should also be part of the implementation. It requires them to identify the sectors they’ll be into, what they want to produce and in what time frames. It requires some rules of engagement. The private sector should tell us where the shoe pinches or where the problem areas are, and what they’ll like to see solved. Their input and collaboration would be required. For me, the most important role –who would handle these productions? Who would make the investments? Who would set up the factories? Who would do the agro-industrial value chain? All that would require private sector participation and leadership.
How do you think the AfCFTA will impact the food, agricultural and manufacturing sectors in Africa?
The goal of the AfCFTA is to help those sectors develop more and become more relevant to Africa. Africa is endowed with good weather conditions and land, which supports agricultural production. Secondly, we’ve been doing light manufacturing, but we can do more if the market was bigger and the support was better. All these are the objectives of the AfCFTA. Therefore, I view it as an agreement that would help implement Agriculture and Agro-Allied industry, and also manufacturing from the point of view of both raw materials and the investment. One of the things we pursued in President Buhari’s first term and we’re pursuing going forward, is the Special Economic Zone and Industrial Parks. And these are essentially industrial infrastructures to increase local production. We all know that what hampers local production is lack of infrastructure. Whether its power or even the actual factories that are running and cost competitive. These things don’t happen by accident. You engineer them, usually in partnership with government and that’s what we are doing. This would be supported and would also support AfCFTA by giving you a larger market to sell into. It will also support AfCFTA by meeting its objective of easing local production because now you have infrastructure. If you look at services, already, there were lots of Nigerian services industries that wanted to go African. The agreement would help them.
Trade flourishes when countries produce what their trading partners are eager to buy. With a few exceptions, this is not yet the case with Africa. It produces what it doesn’t consume and consumes what it doesn’t produce. It’s a weakness that often frustrates policy makers; it complicates regional integration and it’s a primary reason for the low intra-regional trade, which is between 10 per cent and 12 per cent of Africa’s total trade. Comparable figures are 40 per cent in North America and roughly 60 per cent in Western Europe. How do you see Africa moving the needle over?
It’s a very good observation. And that’s a question you ask around: is Africa in effect producing what it doesn’t consume? Or put in a different way, African countries all facing international communities and we are all raw material producers. One has to understand that there is nothing fundamental or natural about them. They developed as a result of other consequences. Whether it’s going back to colonial era, where people came from elsewhere to say I want to get your raw materials, prepared you to give them raw materials, or from our own low industrialisation in terms of infrastructure. The training that engenders industrialisation not being there, markets not been developed. Someone has developed his market where he’s able to take your raw material. Remember, the market for your raw material is a factory. Whoever has market has a factory, so when they say there is no market, they are saying there is no factory. I was told in secondary school that the Japanese ask ‘why’ seven times. You keep asking, and then you get to the root causes and address the fundamentals.
To relate it to the AfCFTA, my view is that because we are going about a deliberate process now, you would see that we will overcome these challenges. You then, in effect, put in place the industrial infrastructure to receive the raw materials. You do it in partnership. I’m not saying we should be isolated from the global value chains. Let’s do the kind of negotiations others have done. It’s all about negotiation, partnership and agreement because you can make your market very attractive.
I’ll give you an example. There’s a company group of the textile garment chain called Shandong Ruyi Group, the largest in China. They’ve become so big and a dominant player in the world, and are now looking for a partner for Africa. They are looking at Nigeria because we are the biggest market. They’ve signed an MoU to invest $2billion. You need such partners and that’s what you’ll see more of. It’s going to be very interesting. But let me underscore that there is a lot of work to do and its infrastructure, industrial basis, human capital development and also satisfying rules of engagement, rules of origin, and these local conditions. Which industries would you like to protect and how do you protect them.
To accelerate regional integration, the World Bank is advising African leaders to expand access to trade finance and reduce behind-the-border trade restrictions such as excessive regulations and weak legal systems. How do you see Africa achieving economic integration, merging 14 different regional trading blocs with overlapping members into the AfCFTA?
There are three questions bundled in that. Let me start with the last one. The regional trading blocs were an attempt to learn integration at a smaller level. And most of these African trading blocs have learnt what the issues, which have not gone away. This is now an opportunity to solve them collectively, because Africa also wants to collaborate and cooperate. The good thing about AfCFTA is that these countries and regional trading blocs came together and agreed to agree. The synergy that will develop and benefits that will come out of this is greater than the cost. Whilst many of them wouldn’t dismantle the regional trading blocs, they would use those regional trading blocs to support the implementation of AfCFTA. So you’ll find out that the same protocols you have at AfCFTA is what they are going to adopt at those blocs. The regional blocs will make adjustments that would make them consistent with the AfCFTA because they all support and are working to implement it, as opposed to where they are rivals. So, they could become implementing mechanisms.
In terms of the process of how we are going to get to the implementation of the AfCFTA, we would learn from our mistakes. A lot of the problems you point out in ECOWAS, we know, because we’ve had those problems in ECOWAS. We are going to also leverage that experience to implement the AfCFTA.
A crucial issue is that of sophisticated protectionism versus Economic Partnership Agreements (EPAs) on African countries. Many of the trade deals Africa signs with its partners ignore the continent’s efforts to promote intra-Africa trade, according to trade analysts. Will many countries African be free from these locked into trade agreements which keep them dependent on one or two commodities, especially the European countries?
It’s an excellent question because European economic partnership agreements (EPA’s) with Africa and other developing markets like the Caribbean and so on have been there for a long time. What we are saying, and of which Nigeria has led the change, is to say agreements that were meant for the 20th century may not be sufficient for the 21st century. An African country that wants to go into the AfCFTA cannot sign the same agreement it signed when it was trading with Europe. It’s not to deny the importance or strategic need for a relationship with Europe. It’s that, you need to acknowledge the realities of today. Africa now, wants to produce more here versus when it was just trading in raw materials. We are saying we will not sign the same agreement we signed yesterday. In anticipation of ECOWAS and AfCFTA agreement, we told Europe that. They kind of felt Nigeria was stone-walling, but the truth is that those people who signed it are now having to re-do the agreement to acknowledge the AfCFTA that has come into existence. They are applauding and supporting the initiative. The European Union has announced a big grant for the implementation. The reason why people do that is that they want you to implement in a way that would be favourable to them. Africa needs to maintain its independence as well to implement in a way that would be favourable to Africa.
I’m a great believer in win-win partnership, not being intellectually lazy or being narrow-minded. We have lot of partnership to do with Europe. There’ll be win-win and we’ll create wealth. People are quick to say, if he gains, I loose. That’s not true. In most cases there’s a gain-gain, loose-win, and it’s a matter of careful analysis. The concern that people have is that it’s getting to a stage of maturity and saturation, but Africa hasn’t even started. You need these people to build your factories. The machines are coming from them and the room for collaboration is huge. There’s a difference between investment and trading. Nigeria must seek win-win partnership with the rest of African and the world. We have to insist that some of these investments be done here, not at the expense of others, but to lift Africa from poverty. And that’s what AfCFTA would do for us if properly implemented.
Away from AfCFTA, what was it like serving under President Buhari?
It was a huge honour and opportunity serving my country. For love of country, I say thank you God. If you look at the portfolio I was given and the president’s passion, it was an important responsibility. He wanted us to produce more here, increase industrialisation and I did a lot under his leadership to put the building blocks in place.
We put in place the economic zones, industrial council, ease of doing business and the Nigerian office for trade negotiations. We had a lot of proposals on automation and sectoral plans.
It takes more than one administration to get these things done. Which is why we have documented carefully the compendium, the reforms that are on-going, and that we hope would go on further in his second term. It was an important opportunity, but there’s a lot more to do, not just for the president but for the country. It’s not just the responsibility of the government, but the partnership between the main stakeholders in the country for the development of Nigeria.
Coming from the private, were you prepared for the rigour and behind the scene politics that came with the paraphernalia of office as minister?
It depends on your approach to government. If you understand that government is a call to service and no man is an island, it is problem solved. The president relied on us, we relied on our advisers in the civil service. The body of knowledge is extensive. My role was to provide oversight for the ministries of industry, trade and investment and the 17 agencies that reported through it to the government. To be part of cabinet, economic team and implement the policies of the government – working as a team in these roles was a great experience. Having had lengthy private sector experience and education, we had a successful partnership.
Four years down the line, do you feel a sense of fulfillment having worked in government?
I feel it was the right exposure and right contribution to give. I learnt that you need the cooperation and partnership of others to achieve the results we want. And you need more than one administration to get it done. It’s been a good experience. Being able to support the government, implement policies, programmes and projects that are good for the country.
Do you think there is something you could have done better as minister?
There is always something one can do better. Particularly in terms of this partnership we are talking about – government working with other stakeholders get results. I’ll like to see us get to the implementation more quickly and robustly. There is a sense of urgency around leadership and governance. We need to create massive employment for our people and it’s a collective responsibility.
In as much as the ideas sound great, the populace feels quite unhappy. The policies haven’t translated to a better life for the common man…
There are two sides to those questions. There’s a perception and communication side. And that’s why we are having this conversation. We need help to tell the story of what we are doing, and the bridge is communication. It’s the relationship with the media outlets and that’s why we can’t over-emphasise that partnership.
We need to speed up the implementation of our ideas. Ideas are not enough. It’s extremely important to do bring work to closure; it’s important that the work is finished.
The president is believed by his utterances, to hamper trade and investment opportunities especially with the way he speaks terribly of Nigeria and Nigerians outside the shores of Nigeria to the foreign media. There’s no better way to de- market Nigeria. Are you comfortable with that?
Presidents have different personalities. I think the important thing is to understand the president and his communication style. The president is not someone who likes to sugar-coat anything, but people prefer that. The president gives you the facts, and we should appreciate a president that is known to be serious- minded, to have integrity, mean what he says and say what he means.
At times, you have a situation where people are saying, if I were him, this is how I would have said it. But you are not him, why don’t you understand what he’s saying and give credit for it. I think we need to buckle up in our communication so that the things that are at the heart of the president get reported properly. It is our interest for the president and the Nigeria to succeed.