After months of wrangling, Nigeria has finally agreed to join the African Continental Free Trade Agreement, a pivotal pan-African effort that plans to expand regional trade by 54% by removing tariffs on 90% of goods traded across the continent.
In a huge boost to the fledgling agreement, the Nigerian Presidency said that the country would sign up to the deal for the duty-free flow of goods throughout the continent at a meeting of AU heads of state in Niger’s capital Niamey on July 7.
In an announcement on Tuesday the Nigerian Presidency said:
“Nigeria is signing the AfCFTA Agreement after extensive domestic consultations, and is focused on taking advantage of ongoing negotiations to secure the necessary safeguards against smuggling, dumping and other risks/threats,” they tweeted.
While 44 of the African Union’s 55 member states signed up to the deal in March 2018, Nigeria’s President Muhammadu Buhari held back, fearing backlash from local unions and businesses who said they would be unable to compete with regional rivals in a common market.
As Africa’s largest economy with over 200 million consumers, the West African powerhouse is poised to be a major link connecting the world’s largest trade area, with a combined GDP of $3.4 trillion.
Days before announcing the country was onboard, Nigerian President Muhammadu Buhari declared on Twitter: “We support free trade as long as it is fair and conducted on an equitable basis.”
Making it work
In the days leading up to Nigeria’s decision, Buhari stressed the need to step up manufacturing activity on the continent to promote the free flow of locally produced goods in a common market, as opposed to those imported from China and the West.
“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,” he tweeted on June 27.
“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,” he added.
The deal could take at least 3 years to be fully implemented as leaders fine-tune legislation in their individual countries to reflect new inter-state agreements, Carlos Lopes, one of the agreement’s architects, believes.
Yet while the AfCFTA offers an ambitious vision of intra-African free trade, experts say that among its other caveats are that it requires billions of dollars in cross border infrastructure investment to become a reality.
From decrepit roads to non-existent power networks and patchy airline connections, many countries are ill-equipped to enable trade flows, even if governments tear down tariffs and legal barriers.
This prompted the African Development Bank to launch a new multi-billion-dollar regional integration strategy to boost infrastructure and allow countries to pursue cross-border integration.