AfCFTA and Nigexit

Forty four African countries have signed on to the controversial African Continental Free Trade Area (AfCFTA). Nigeria, the continent’s biggest economy under the legitimate pressures of stakeholders notably Nigeria Labour Congress (NLC) and Manufacturers Association of Nigeria (MAN) pulled out on March 21, 2018. Godliness is in the details of Nigeria’s last minute volteface. Some have argued that Nigeria could have done smart diplomacy like South Africa, which attended Kigali meeting, endorsed in principle continental free trade but refused ratification of AfCFTA until further consultations with local manufacturers and trade unions.

AfCFTA is the Africa’s version of European Union’s Treaty of Rome (signed by membercountries some 60 years ago!). Paradoxically the Europeans had actually copied the vision of the great pan Africanist, late Kwame Nkrumah of Ghana, who at the founding of OAU (AU) in 1963 envisioned a common African market and indeed a United States of Africa! African trade agreement came into being at the 10th Ordinary Session of African Union Heads of State summit held in Rwandan capital, Kigali. The main objective is the promotion of continental trade liberalisation leading to a Continental Customs Union (CSU) by 2022 and the creation of an African Economic Community by 2028!

Given the last minute cancellation of Nigeria’s delegation to Kigali, Minister of Industry, Trade and Investment, Okechukwu Enelamah, owes all Nigerian stakeholders the explanations while a continental trade deal with impacts on investment, jobs, labour and human rights, was rushed through the Federal Executive Council (FEC) without the mandatory consultations with relevant stakeholders. All African leaders must show the proof that AfCFTA is not another top-down deal signed behind the legitimate aspirations of African peoples for a common wealth, not just common market. AfCFTA enthusiasts say it is the world’s largest free trade area “since the World Trade Organization which was formed in 1995”! And that is the first problem!

The uncritical membership of World Trade Organisation (WTO) of most African countries including Nigeria in the 1990s with attendant massive lowering of tariffs through wholesale trade liberalisation arrested the nascent African manufacturing and development leading to massive collapse of labour- intensive industries like textile and automobile due to unfair competition. How AfCFTA could foster African re-industrialisation process and uplift millions out of income poverty is a critical question begging for answer. There is no doubt that Africa needs intra-trade rather than external aid and loans and unfavourable trade with Europe, America and China. Relatively, trade between African countries is miserably low. It accounts for only 10% of all commerce on the continent compared with 25% in Southeast Asia. With One African Market, undoubtedly, the agreement brings together 1.2 billion people (almost population of India or China) with a combined Gross Domestic Product (GDP) of more than $2 trillion!

The host and current African Union (A.U.) president, Paul Kagame said: “This agreement is about trade in goods and services”. However, only producing nations trade in goods. The painful truth is that by and large, this is not a producing Africa that the likes of Nkrumah envisioned. On the contrary, Africa is a dumping ground for imports of all types and exporters of raw materials in the tradition of the colonial economy. Only South Africa with 25% manufacturing value added qualifies as a trading nation. Nigeria’s 20% Manufacturing value added (MVA) of the 80s has sharply fallen to less than 5%.

The development of Regional value chains should first be encouraged at the regions to first replace through import substitution and ensure linkages with all sectors. Trade, (sorry fair trade!) is the means to development, not the end itself. Therefore any genuine trade pact must necessarily foster growth, create mass decent jobs and engender development.

If Nigeria further reduces import duties to 90%, as envisaged by ACFTA, cheaper imports would be fuelled with smuggled goods that would overrun domestic markets of local products. Domestic high production costs have undermined competitiveness, perpetuating in turn deindustrialisation, unemployment and income poverty. What are the implications of the ACFTA, for existing ECOWAS treaty, and its notorious Common External tariff (CET) and the contentious new-colonial Economic Partnership for Africa (EPA)?

President Muhammadu Buhari must initiate a trade summit and its impact on job creations in Africa. Who funds the implementation of ACFTA and the Customs Union? Whatever the outcomes of such deliberation, ACFTA should allow Nigeria the domestic policy space such that the current policy objectives of job creation and industrialisation as contained in the Economic Recovery and Growth Plan (EPRG) and Nigeria Industrial Revolution Plan (NIRP) are not jeopardised. Twice beaten by WTO and bilateral trade deals of dubious values, Africa must be endlessly shy of new trade deals.

With Donald Trump’s America damning globalisation and Europe, China and America in trade wars, AU must do quality and quantity control of ACFTA’s clauses. Most African countries are neo-colonial dumping grounds. With Brexit and Britain’s desperation for new market outlets, ACFTA must show that it is not another route to European products labelled “made in Africa”. Common market must also go with common labour and human standards. EU, which ACFTA belatedly apes, operates on respect for labour and human rights.

Paul Kagame emphases trade in goods and services and partnerships between “profit” and “power”. What then about African people? What about the workers that produce the goods and services? . Are they humans with minimum pay and trade unions or slaves without voices? Will ACFTA fuel another round of jobless- growth in a continent with average open unemployment of 50% or promote real decent job-led development? ACFTA should incorporate the ILO standards and African human rights charter.

The federal Government must be wary of trade pacts, in which the domestic industry is decent-job blind. With 50% youth unemployment in Nigeria, development and growth should take precedence over controversial trade deals.

Economic development of Africa is a work in progress; it is not just an event of a televised ratification of trade deals.