NAC-AFCFTA Prepares to Sign onto AFCFTA Protocol on Digital Trade

On 7 March 2024, the National Action Committee on African Continental Free Trade Area (NAC – AFCFTA) organised a stakeholder’s workshop in Abuja in preparation to sign onto the AFCFTA protocol on digital trade. The Executive Secretary of NAC-AFCFTA, Mr Olusegun Awolowo, stated that Nigeria was already signed onto the protocol on goods and services. He highlighted that the country was yet to start trading under the AFCFTA agreement but expressed optimism that by the end of April, Nigeria would start exporting officially through the Guided Trade Initiative (GTI) of the AFCFTA. He noted that the process involved for commercially meaningful trade to kick start under the AFCFTA agreement is long and laborious as all member countries must sign and agree on all protocols. The NAC – AFCFTA is a committee that was set up in December 2019 by the president Buhari led government to implement interventions needed to prepare Nigerian businesses to benefit from the AFCFTA agreement.

Recall that in March 2018, Africa reached a landmark agreement to create a free trade area in the continent. This was done through the signing of the African Continental Free Trade Agreement (AFCFTA) which was later ratified in May 2019. Meanwhile, Nigeria joined the pact on 7 July 2019 after initially pulling out of the agreement. Notably, the agreement which entered its operational phase on 7 July 2019 was expected to kick start in July 2020. As a result of the COVID-19 global pandemic however, the commencement date was postponed to 1 January 2021. According to the Africa Union (AU), AFCFTA is the world’s largest free trade area bringing together 55 countries of the AU and eight Regional Economic Communities (RECS). The overall aim of AFCFTA is to create a single continental market with a population of 1.3bn people and a combined GDP of approximately Us$3.4trn by 2063. The practical implementation of the AFCFTA has the potential to foster industrialisation, job creation and attract foreign investments into the continent.

Protocols are an integral part of the AFCFTA agreement. They represent rules and procedures on the various sections of the agreement. Given that commercially meaningful trade has not commenced under the AFCFTA because of the length of time needed for all member countries to agree and sign all the protocols, the GTI was launched by the Africa Union on 7 October 2022. The Guided Trade Initiative is a vehicle through which countries that have met the minimum requirements for trade under the AFCFTA can engage in export and import activities among themselves.

According to the foreign trade in goods statistics report for that last quarter of 2023, Nigeria’s imports from Africa accounted for 1.71% of total imports while its exports to Africa amounted to 9.93% for the same period. We expect that in the medium- long term, these statistics will improve if Nigeria takes advantage of the AFCFTA platform. Given the current economic challenges, low foreign investment and over reliance on oil export proceeds, the AFCFTA is an opportunity for the nation to enhance productivity and improve employment opportunities. We however reiterate that Nigeria does not appear to be in a strong position to benefit from the agreement. Key infrastructure such as power, transportation, storage systems etc. needed for businesses to enhance output remain largely underdeveloped.