Akpan Ekpo, a professor of Economics and Policy, University of Uyo and Chairman, Foundation for Economic Research and Training (FERT), says Nigerians can look forward with hope following the African Continental Free Trade Agreement’s implementation, which kicked off on January 1, 2021, but he expressed some concerns. Ekpo, who is also the immediate director general of the West African Institute for Financial and Economic Management, acknowledges that Nigeria is not ready for the AfCFTA implementation. Ekpo gives his reasons among other issues, in this interview with Bayo Akinloye
Do you think this is the right time for Nigeria to have implemented the trade agreement (the African Continental Free Trade Agreement) in the face of an economic recession, deepening poverty, and the COVID-19 pandemic?
There is nothing wrong with implementing the AfCFTA even in a recession because if properly executed, growth would increase thus assisting the economy to exit the recession. The main issue is to take advantage of the no tariffs, quotas advantages to produce and export to other African countries. Economic growth ought to help reduce poverty though it may take a very long time. I do not subscribe to trickle-down economics. Economic growth is not economic development. It depends on how the growth is distributed. The risk is that the implementation of the AfCFTA may widen inequality because the average Nigerian may not be able to benefit from the advantages of so-called free trade.
The African Continental Free Trade Agreement (AfCFTA) implementation took effect on January 1, 2021. Is there anything in it for ordinary Nigerians, especially those in the informal sector?
Yes, ordinary Nigerians would benefit in the long run from the prevalence of diverse goods and services. The informal sector would be able to buy and sell articles from other African countries and therefore enhance its contribution to employment. The formal sector through competition would improve the quality of their products. In addition, the formal sector would become innovative by producing and exporting goods to other African countries taking advantage of the free trade area arrangements.
What is your thought on the readiness of the country in the implementation of and participation in AfCFTA?
I do not think the country is ready. To benefit from any free trade arrangement, the domestic economy must be resilient to shocks, build relevant infrastructure, show signs of industrialisation, and alter the structure of the economy from consumption to production. There is a need to put in place and implement policies that would enable the economy to benefit from the global value chain. Let me say that on paper, some of the points I have raised are in place; the challenge is how to harmonize the policies and provide strategies on how best to implement the same for the benefit of the economy.
Do you see the Nigerian government’s willingness to implement the trade agreement as more of a political statement than an economic one?
The willingness to implement is both political and economic. Nigeria’s role in Africa cannot be over-emphasized. It is the largest economy in terms of GDP and market space hence any matter bordering on the unity and future of the continent, she must be part of it. Let us not forget that there have been several protocols on the political and economic future of the continent – the Lagos Plan of Action, the Abuja declaration, the recent agenda 2063, among others. However, for the AFCFTA, the delay of government in my view resulted in the loss of high-profile jobs as well as the location of the secretariat. If the headquarters is in Nigeria, there would be immense advantages. The country’s participation is also economic because there are benefits. The implementation is both political and economic.
It is said that AfCFTA will offer free trade. Will it also offer ‘fair trade’?
There is no free trade in practice. What is required is fair trade. The fear is that developed countries may take advantage of the free trade area and produce for re-export. For example, goods from developed countries may be sent to neighbouring countries for packaging and re-exporting the same to Nigeria.How are we prepared to check such a situation?
How can Nigerians (both in informal and formal sectors) benefit from AfCFTA?
For Nigeria to benefit, the domestic economy must be ready. Do we have a near 24-hour supply of electricity? How is the country’s health infrastructure? Has the country built the needed human capital? How robust is the country’s legal framework for doing business? Has the government guaranteed the patent and copyrights of Nigerians? How prepared and efficient is our Customs at the borders? How far is the country’s diversification agenda? How strong is the country’s civil and public service? If the answers to the above questions are in the affirmative, then the country is almost ready.
What specifically do you think Nigerians should look forward to in 2021 in economic terms?
For 2021, the government should aggressively implement already grafted programmes to enable the economy to exit the recession. The projects in the Sustainability Plan, for example, should be implemented like yesterday. The social investment programme is crucial in 2021. The programmes to enhance agriculture, ICT and the building of railways, roads, quality health and quality education at all levels should form priority in 2021. Above, addressing the security challenge is essential; without proper and adequate security, economic performance would remain a tall order.
Should the nation expect more foreign investments this year?
It is difficult to predict if there would be more foreign investment when there are security challenges.
Do you see the manufacturing sector rising again? If yes, why did you say so?
The manufacturing sector has over the years never contributed more than 10 percent to GDP. The sector should contribute at least 25 percent to GDP to say it is making progress. Without industrialisation, the manufacturing sub-sector cannot make progress. What the economy does is assemble, package, and bottle. This is not manufacturing in the proper sense. However, the economy has the potential to manufacture or add value.
The government needs to encourage the private sector through incentives, individuals who are innovative, fund research institutions, etc., to drive the industrialisation process. For example, take the current vaccine production, the country has qualified scientists if properly empowered can develop Nigerian vaccines. China has developed its own; Brazil has developed its own, etc.