AfCFTA: Where Is Africa’s Dumpsite
Africa’s historic milestone to boost its regional trade with the African Continental Free Trade Area (AfCFTA) has taken effect, even as it leads to Nigeria’s doomsday as the treaty is implemented with the nation at a disadvantageous stage.
The implementation of the African trade treaty has commenced despite Nigeria in a state of emergency with shaky industrialisation and manufacturing activities.
With the prevailing micro and macroeconomic variables in the polity, AfCFTA has been labeled as a failure for Nigeria and the nation is set to be the biggest loser under such the treaty which has been tipped to falter like the Economic Community of West African States, ECOWAS, Trade Liberalization Scheme (ETLS), Common External Tariff (CET), African Growth and Opportunity Act (AGOA), among others.
Under AfCFTA trading, tariffs on various commodities where rules of origin have been agreed will be drastically reduced and traders of all sizes will have access to a much bigger market than they used to before. Non-tariff barriers (NTBs) to trade will also be addressed and a mechanism for speedy reporting and resolution of NTBs has been put in place.
In Nigeria however, forex challenges, increase in electricity tariff, numerous taxation, complex bureaucratic processes, among other factors increase the cost of production of goods that should compete in the region.
The nation’s logistics performance index is also in shambles with dilapidated roads, non functional rail, inaccessible port access and congestion at ports.
Given these variables, neighbouring countries have better investment environment for production of competitive goods and Nigeria is tipped to become the dumb site for products from other countries in the region.
Currently, the percentage of trade that African countries do with each other is a mere 16 – 18%. The bulk of the continent’s trade is with the rest of the world, and most African exports are in raw materials including extractive commodities like oil, gas and minerals which are vulnerable to market volatility.
Nigeria is the most populous country with over 200 million citizens and this demography makes it the biggest market. Nevertheless, the nation doesn’t seem to have an area of competitive advantage.
Speaking with our correspondent from the standpoint of freight forwarder, the President of African Association of Professional Freight Forwarders and Logistics in Nigeria (APFFLON) Mr. Frank Ogunojemite reiterated that Nigeria wasn’t ready for AfCFTA.
He argued that there was no aspect of the nation’s economy that indicated competence or preparedness for the new trade regime.
“The way the government has been handling port operations in Nigeria has been pathetic. They says charity begins at home but looking at our port operations and economic regulations in the country; APFFLON does not see any benefits for Nigerians from the regional agreements.”
“It is so sad that the gridlock in Tin Can and Apapa ports remain unresolved till this moment. In fact, one can argue that this bottleneck is deliberately created to punish Nigerian citizens as terminals, shipping companies and some government officials benefit. This logistic challenge has caused collateral damages for corporate and individual importers,” he said.
Ogunojemite lamented that Nigeria hadn’t addressed the major issues limiting port business which were identified by the International Monetary Fund (IMF) in the first quarter of 2020, as dilapidated port access roads, extortion and absence of a national Single Window.
With AfCFTA, the bigger regional market will spur producers to upscale and support increased industrialization and value-addition in the continent. Indeed, more employment opportunities will be generated for Africa’s burgeoning youth population. How much of these opportunities would be taken up by the continent’s most populous nation? Would Nigeria be content to be Africa’s dumpsite for goods and services produced elsewhere?