BD INVESTIGATIVE SERIES: Inside story of how Nigeria pulled out of AfCTA

by | May 14, 2018 1:10 am

There are forces in the Nigerian Presidency who do not want the country to be part of the African Continental Free Trade Area (AfCFTA) due to their morbid fear that the deal will deal a big blow on the business interests of Northern Nigeria, international sources told BusinessDay.
Southern industrialists who do not want to compete are also culpable, convincing the Presidency cabal that the deal would not favour Nigeria, even when the country stands to gain more from it than many African countries, sources said over the weekend.
Multiple international sources told BusinessDay that the major consideration for President Buhari’s withdrawal from the deal was how much impact the AfCFTA would have on the de-industrialised North, rather than the touted pressure mounted by the Organised Private Sector, notably the Manufacturers Association of Nigeria (MAN) and the Nigeria Labour Congress (NLC).
One of the sources said the leader of the cabal convinced Buhari to pull out at the eleventh hour, pending when experts would have studied and weighed the impact of the deal on the North.
The source also said that the Nigerian government might pull out of the deal completely once the cabal is convinced that doing so will not worsen smuggling of goods into Nigeria from other African countries.
“If they are sure that not signing the deal will not cause smuggling, Buhari will not sign,” the source said.
“This is not the first time this has happened in this government and other previous governments. It is all about ethnocentric, primordial and selfish interests; it has nothing to do with your Nigeria or nationalism,” the source said.
MAN and the Lagos Chamber of Commerce argue that the treaty would hurt the un-competitive manufacturing sector, which is under the heavy yoke of high production cost, caused by the harsh operating environment.
However, trade experts counter the argument, saying that Nigeria ‘s manufacturing sector is the biggest in West Africa and can compete effectively over and above more than 40 countries on the continent.
On March 21, 44 out of 55 African leaders gathered in Rwanda to ratify the AfCFTA, which is easily the largest trade agreement since the World Trade Organisation (WTO) in 1994.
The AfCFTA is a trade treaty among African countries targeted at opening up the continent to business and exposing its firms to a potential $3.4 trillion opportunity.
It is meant to create a single market for goods and services on the continent, including a customs union with free movement of capital and persons as the focus.
The AfCFTA is expected to raise Africa’s nominal GDP to $6.7 trillion by 2030 if all the countries sign up.
The treaty will liberalise 90 percent of products manufactured in Africa.
South Africa’s new president Cyril Ramaphosa did not sign the AfCFTA and the Free Movement Protocol, but he penned the Kigali Declaration and pledged more time to ratify the two others during the Rwanda meeting.
Nigeria’s federal cabinet had, one week before the signing of the treaty, approved the deal, saying that it would boost export, growth and job creation, while eliminating barriers against locally made products. The cabinet had said that it would provide a dispute settlement mechanism for stopping the hostile and discriminatory treatment directed against the country’s natural and corporate business persons in other African countries.
Few days to D-day, however, Buhari backtracked.
“Nigeria’s refusal to sign the AfCFTA agreement is extremely embarrassing,” said Olu Fasan, a visiting fellow at the International Relations Department of the London School of Economics (LSE) and trade expert.
“Nigeria has, at least symbolically or rhetorically, been at the forefront of efforts to integrate Africa economically. Think of the 1980 Lagos Action Plan for an African common market or the 1991 Abuja Treaty establishing the African Economic Community. What’s more, a Nigerian was the chairman of the Negotiating Forum for AfCFTA and Nigeria’s trade minister was responsible for the AfCFTA negotiations at the ministerial level. Nigeria was even bidding to host the AfCFTA Secretariat. Yet, when it came to the underlying trade-liberalising agreement, Nigeria retreated.”
“There is a strong protectionist sentiment in Nigeria, so strong that even if there was proactive public outreach, it probably wouldn’t have mattered,” Fasan said.
“There is lack of political will. President Buhari is a Marxist, who instinctively believes that capitalism and free markets are a conspiracy against the poor. So, it’s not surprising that he impetuously ducked out of attending the AfCFTA signing event in Kigali. As The Economist rightly said, ‘Free trade runs counter to political currents in Nigeria’, and Buhari provides political cover for the anti-free trade sentiments,” Fasan added.
Rafiq Raji, chief economist at Macroafricaintel, explained that a market of more than 1.2 billion people with a combined GDP of over $2.2 trillion is a far stronger bulwark against limiting external trade forces than the tiny ones that inevitably get overwhelmed in negotiations with humongous countries such as America, Britain and China.
“When compared with intra-regional trade in other continents – 67 percent in Europe, 58 percent in Asia and 48 percent in North America – intra-African trade is quite low,” Raji says.