Buhari gets overwhelming support to sign AfCFTA
Buhari gets overwhelming support to sign AFCFTA
There are indications that President Muhammadu Buhari will any moment from now proceed to sign the Africa Continental Free Trade Agreements.
A report on a recent study initiated by the Federal government on the benefits or otherwise of Nigeria signing the AfCFTA showed that 78% of the businesses polled from a total of 512 companies across the six geopolitical zones believe that AfCFTA will make a positive impact on local businesses.
This was contained in the report currently being studied by government officials in the Presidency, placed on its Twitter handle of the Presidency, recently.
According to the Twitter handle on Tuesday, an independent study on the potential benefits of the Africa Continental Free Trade Area (AfCFTA) on Nigeria was released.
The lead authors were; Dr Bell Ihua of NOIPolls, Prof. Martin Ike-Muonso, Dr Olumide Taiwo and Mr Sand Mba-Kalu.
The researchers polled 512 companies of different sizes, sectors, outputs, export destinations and profitability drivers.
One of their findings was this; 69% of business believe AfCFTA would be advantageous to Nigeria, 22% believe the opposite while 11% are unsure.
Recall that the study had followed the decline by President Muhammadu Buhari to travel to Kigali, the Rwandan capital to join other African leaders at an Extraordinary Summit of the African Union in March to sign the framework agreement for establishing the African Continental Free Trade Area.
The President had advanced the need not to be in a hurry to enter into any agreement “ to prevent the country from becoming a dumping ground and jeopardise the security of the nation”.
Buhari thereafter inaugurated the committee to move around the country to review the Continental Free Trade Area (CFTA) framework agreement, sampling opinion of all the stakeholders.
Forty-four African countries had gone ahead to agree to form a $3 trillion continental free-trade zone encompassing 1.2 billion people, even as the continent’s biggest economies, Nigeria withheld its signature.
But the report shows that 56% of the poll respondents believe the country does not have the infrastructure necessary to reap those benefits and gains. However, there is an understanding among business leaders that the country should not wait until the infrastructure gap is fully closed before participating in the AfCFTA.
On the impact on businesses, 65% of businesses expect AfCFTA to help them overcome their top challenges while 22% expect it to accentuate them, 34% of large companies expect AfCFTA to accentuate their challenges, compared to 25% of medium companies and 18% of small companies.
But also among the “majority who expect AfCFTA to ease their business challenges, the most cited rationales are: improvement in the ease of doing business that they expect to accompany the trade agreement (32%); expected improvement in infrastructure (24%); and enlargement of markets for Nigerian producers 17%)”.
The report indicated that Businesses expect AfCFTA to affect their profitability through the strengthening of local businesses (19%) increasing demand for local goods (17%) ahead of its impact through enhancing international trade (10%). Potential negative impacts of competition especially the fear that price competition will destroy local production are given very little considerations.
A total of 512 companies were polled from all geopolitical zones of the country, comprising 70% small businesses, with 10-49 employees, 20% medium-size businesses (50-199 employees) and 10 are large businesses (200 or more employees).
On sectoral indices, 40% of the study respondents are manufacturers, 25% in services businesses and 15% engage in wholesale and retail trade.
BusinessDay also gathered that 10% of them are in agriculture and 9% in the export sector, 68% produce final goods, 30% produce intermediate goods while 28% produce primary goods.
25% of companies are exporters that participate in international trade; ranging from 19% of small companies to 55% of large companies.
On the overall, the rate of exporting among manufacturing companies is very low at 24%.
BusinessDay also gathered that 84% of the exporting companies expect AfCFTA to increase their volume of exports; the enthusiasm is shared by 91% of small companies and 100% of agriculture and trade businesses.
“Importantly, exporters of agricultural commodities view Nigeria as competitive within the continent and believe that CFTA will give them access to do business in African countries that are otherwise not easily accessible.
According to the report, 55% of sampled businesses expect AfCFTA to provide opportunities for them to export more goods and services, 38% expect local production to face more intense competition, 16% expect job losses arising from local firms losing out in the competition while 5% expect more trade to reduce the influence of monopolies.
The study was conducted using a mixed methodology that involving opinion polling of Nigerian businesses of all sizes from all sectors to harness their perspectives on AFCFTA.
The study also used in-depth face-to-face interviews with key stakeholders such as business leaders, policy experts and leaders of organized labour about the agreement; while other include simulation of trade and monetary effects, and finally meta-analysis of welfare and job effects of the agreement.
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