Covenant University experts speak….
It is no doubt that Nigeria is a country plagued with multiple socio-political and economic challenges that require urgent and sincere attention. As a result, the country strives to ensure a moderated and long-run sustainable economy, which prompts the need to drive economic growth through trade, among others.
Nigeria, thus, finds herself amidst member countries of many global and regional trade integrations, the latest of which is the Continental Free Trade Area (CFTA).
Although Nigeria’s intended agreement to the CFTA has raised a lot of eyebrows, from some labour unions (NLC and NUPENG) and eminent Nigerians, economy experts from Covenant University have disclosed reasons why caution should be exercised before the agreement is signed and ratified.
On the 1st March 2018, Covenant University’s Faculty, Staff, and Post Graduate students in the Department of Economics and Development Studies, College of Business and Social Sciences,, launched her Centre for Economic Policy & Development Research (CEPDeR). The launch progressed with a Workshop & Roundtable session moderated by Dr. Obindah Gershon to discuss ‘Trending Issues in Trade Negotiations”.
The theme of the Roundtable was timely, coming at a time when the African Continental Free Trade Area (AfCFTA) was three weeks away to be signed by all African Heads of State and Government.
Professor Jonathan Aremu, a Professor of International Economic Relations of the Covenant University kick-started the Roundtable when he observed that 51 Heads of State and Government signed the Abuja Treaty of the Africa Economic Community (AEC) in 1991 as the continental economic integration agenda; and it entered in force in 1994, with a roadmap of six phases as follows: Phase I,Creation of regional blocs (that is, the Regional Economic Communities or RECs);Phase II Strengthening of intra-regional integration and the harmonisationbetween the blocs; Phase III Establishment of free trade areas and customs unions in each the RECs; Phase IV Creation of a continental free trade area and customs union; Phase V Creation of an African common market; and Phase VIEstablishment of an African economic monetary union and a parliament. The CFTA is in phase 4 of this continental economic integration agenda (AEC Treaty), which was expected to be completed by December 2017.
As a mandate of the African Union (AU) Summit of Heads of States and Government, Professor Aremu (the Former Acting Vice Chancellor of Covenant University) said that the CFTA negotiations are to be conducted in two stages: (a) Stage I would establish the Single Market for Trade in Goods, Services and Settlement of Disputes; Stage II would establish rules for continental Investment, Intellectual Property, as well as, Competition Policy. However, on the 4th of July, 2017, after a Progress Report on the AfCFTA was presented by H.E. Mr. Mahamadou Issoufou, President of the Republic of Niger and champion of the CFTA Process, all the Heads of State and Government called upon the AU Member States “to undertake nationwide stakeholders’ sensitisation activities so that citizens of African countries are fully aware and own the process of establishing the Continental Free Trade Area.” The sensitisation opportunity was expected to provide an open public type of engagements that will allow the participation of a wide spectrum of stakeholders, as well as, guarantee a more direct interaction with them so they can complement each other in such discussions and consequently own the CFTA initiative.
Discussants at the Roundtable doubted whether the stakeholders’ sensitisation has been carried out in Nigeria. While there have been discussions and negotiations on CFTA by the various Technical Working Groups (TWGs), little efforts have been made to give Nigerian stakeholders the opportunity to discuss these dynamics in the development and future implementation of CFTA. In addition, the panelists regretted that Nigeria has no ideal trade policy (since 2002) as of now to be used in negotiations at regional, continental or global levels of integration. The question that emerged from the discussion is: ‘with what domestic Trade Policy is Nigerian government using to negotiate CFTA?’ Also, ECOWAS Trade Policy which should have been used as a proxy is yet to be concluded. The discussants, therefore, advised the Nigerian government to first and foremost formulate a coherent trade policy to capture the government’s development policy objectives as documented in the Economic Recovery and Growth Plan (ERGP). The policy objectives of such trade policy should be based on Nigeria’s national development strategies, which will lead to the creation of detailed internal and external trade policies that will, in turn, inform the basis for any trade negotiation strategy at regional and multilateral levels.
Recently, the NLC called for the non-signage of the CFTA because the above processes are lacked. Prof. Alege, Dean of the College of Business and Social Sciences (CBSS) said that there are some pertinent questions to be addressed if we are to achieve the objectives of policies. ‘How do we benefit from competitive advantage if nearly all our imports are mainly finished consumer goods? How do we survive in a world economy where we export raw agricultural and mineral resources little value addition?’ According to Prof. Osabuohien, Head of Department of Economics and Development Studies of the University, the CFTA is not without challenges. He said, that with goods and services moving freely across the continent if Nigerian firms are not fully equipped to maximise their positions, there is every possibility of some of the firms being negatively affected. He said such firms may be forced to close down and the workers will be worse off, contributing to the already high level of unemployment in Nigeria. However, CFTA becomes an opportunity if the local firms embrace the capacity to expand their production and employ more workers.
He said this hinges on how well Nigeria can align itself with the process of integration by improving physical and social infrastructure, such as boosting the rail lines, fixing the power situation and most importantly engaging indigenous trade lawyers that will enhance the trade negotiations.
Sounding a note of caution, a Senior Lecturer, also in the Department, Dr. Henry Okodua, said available statistics show that the trade performance of Nigeria is very weak. He noted that 97 percent of Nigeria’s export to European countries as at today comprises majorly of crude oil export as against 3 percent that is non-oil. According to him, this weak trade performance would unduly expose the country’s manufacturing companies to threats from competitive products of other countries which may be relatively cheaper due to high production cost in Nigeria and the eventual eradication of tariffs across the continent.
Examining trade integration within West Africa (ECOWAS), Dr. John Odebiyi said formal trade by the Member States within ECOWAS, since inception in 1975, is less than 15 percent. According to Dr. Odebiyi, products currently produced within the region do not complement each other. Dr. Odebiyi advised that the critical question of ‘What should form the basis of trade between the African Member States should be addressed, perhaps through a study, before Nigeria proceeds with the accession to CFTA.
Meanwhile, as leaders of African countries signed the Continental Free Trade Agreement (CFTA), March 2018 in Kigali discordant voices have risen in Nigeria, refraining President Buhari from immediately signing the continental document. This is, however, not without consequences. Giving that Nigeria is the largest market in the continent, the benefits of the CFTA are as enormous and so are the risks. CEPDeR has thus pledged a sequel to this piece, to highlight the consequences and implications of Nigeria’s pullout from the CFTA, hinting that a more industrialized Nigerian Economy would have benefited significantly from the agreement. Whilst the CFTA could be the launch of a new era of productivity and a platform to showcase the country’s unique creative skills, it could conversely portend some socio-economic challenges without a coherent trade policy in place.