Igho B. Oghoghorie writes that the country should be prepared to match its words with deeds
Africa is on the cusp of economic rebirth. As the African Continental Free Trade Area (AfCFTA) becomes operational, Africa is bursting with a new sense of hope and optimism in full expectation of achieving one of the African Union’s flagship 2063 Agenda projects.
The AfCFA is anchored on a framework to drive economic activities and usher a new phase of industrial boom. It seeks to redefine trade relations in Africa through the elimination of tariffs and non-tariff barriers to intra-African trade, facilitate free movement of persons and investments, establish a competitive environment and erect a structure for sustainable cross-border trade.
The AfCFTA will, no doubt, play a major role in driving Nigeria’s regional integration and development, with significant impact on its economy, Africa’s largest. The elimination of tariff and non-tariff barriers will enable Nigerian businesses access the continental market for the export of goods and services, as well as secure a balance and sustainable export base to move the economy from its largely oil and minerals base. A wider continental market will also boost Foreign Direct Investment, and help improve productivity.
Yet an enlarged single market and integrated economy is likely to create economic imbalance among member states of the AfCFTA, as investors use African countries with lower production costs as a launch pad to export to countries with higher production cost. Nigeria will, therefore, need to conduct a gap analysis on its readiness, if it is to realise the benefit of the agreement.
There is, clearly, infrastructure problem in Nigeria. The symphony of problems that greets most infrastructural project is well rehearsed. First are the thundering bass of opposition, in the form of the location, from the geo-political zone(s) that stand to lose; the litany of abandoned projects and, finally, the entrenched lack of maintenance culture.
The infrastructural base of the country would therefore need to be strengthened, with a view to reducing business costs and enhance the movement of products across borders. Such move will include, but not limited to its road infrastructure, rail connectivity into inland dry ports and hinterlands, speedy, automation, single window platforms at ports, and providing for ships and aircraft.
Nigeria’s international trade policies will equally need to be reformed, in the light of the progressive elimination of tariff barriers provisions under the AfCFTA. There are, for example, some aspects of Nigeria’s trade policy and import tariffs which are underpinned by the need to protect and stimulate domestic production; prevent balance of payment problems; boost the value of the Naira; and strengthen the revenue base. Implementation of the progressive tariff will, eventually, impact on these policies and on customs duty revenue, a major source of revenue for the government.
Yet a narrowing revenue base will reduce the ability of the government to spend on essential areas of the economy, such as bridging the country’s infrastructure deficit and reduce the poverty level in the country. Nigeria would therefore need more fingers to plug the trickles of revenue leaks that may sprout from the dike before the leaks expands with the full implementation of the AfCFTA.
Currency reforms, currently on-going, would need to be hastened and brought to fruition. The convergence of the different exchange rate should be expedited, with the Naira allowed to float freely so as to ease imbalance, boost economic activities and drive the recovery plans. Issues of market access, rules of origin, standards, SPS measures, technical regulations and conformity assessment would also need to be addressed.
In addition, the right building blocks would need to be erected to boost investor’s confidence, including adherence to the rule of law. This would include bridging the gap between ratifying the AfCFTA and complying with the measures required for its implementation.
On a check list of non-compliance, Nigeria ticks every box. For example, the ECOWAS Court of Justice, though sits in Abuja, its judgments are often not recognised and enforced contrary to the ECOWAS revised Treaty. Though the government’s approach may rest on gambling that its hard line position in disregarding the ECOWAS judgments and, by extension, the rule of law, may be worth the punt, it certainly will end its credit lines among friends. This could be seen from the 2020 Rule of Law Index by the World Justice Project, which ranked Nigeria 108 out of 128 countries surveyed.
Further, the expected volume of trade under the AfCFTA is likely to be accompanied with cross border litigations relating to trade disputes. The AfCFTA already has in place the Protocols on Rules and Procedures on Settlement of Disputes, modelled along the WTO system. It, however, only provides for disputes between member states, but silent on cross-border disputes, which are likely to arise amongst private citizens.
Nigeria would therefore need to reposition its justice system, with a view to making it attractive to foreign entrepreneurs that are more likely to engage in business activities in countries with credible, effective and efficient legal system.
The reform agenda would include the excessive delays in the resolution of business disputes, with efforts made to revamp the legal system to deal with cases in record time, and address the issue of enforcement of contract. The review of local laws, such as the Admiralty Jurisdiction Act, which confers exclusive jurisdiction over a broad spectrum on commercial matters, would also need to be carried out.
Nigeria would further need to embody the AfCFTA in its overall industrialisation and socio-economic and political agenda, and see it as going beyond the business community to embrace the general public.
Finally, the decision of the Nigerian government to ratify the AfCFTA, subject to Parliamentary approval, has clearly raised the width and depth of constructive public discussion in Nigeria, making Nigeria one of the continent’s de-facto think tanks. Nigeria should, therefore, see the AfCFTA as a significant moment, a turning point in history, and signal its commitment to implementing the agreement, and be prepared to match its words with concrete deeds
Oghoghorie is a Consultant on International Economic Law, Abuja
The infrastructural base of the country would need to be strengthened, with a view to reducing business costs and enhance the movement of products across borders