At a recent
event in Lagos, The Bullion Lecture, organised by the Centre for Financial
Journalism, the President and Chief Executive of the African Export-Import Bank
(Afreximbank), Professor Benedict Okey Oramah, made a moving presentation in
favour of the African Continental Free Trade Area (AfCFTA). So detailed and
persuasive was Oramah’s treatise that virtually all that were present joined
him in urging Nigeria to sign and ratify the AfCFTA agreement without further
delay. According to the initiators of AfCFTA, it is intended to create a single
continental market for goods and services, with free movement of business
persons and investments, and thus pave the way for accelerating the
establishment of the Continental Customs Union. It also aims to expand intra-African
trade through better harmonisation and co-ordination of trade liberalisation
and facilitation regimes and instruments across Regional Economic Communities
(RECs) and across Africa in general. AfCFTA also aims to resolve the challenges
of multiple and overlapping memberships and expedite the regional and
continental integration process, among others.
After
reeling out these objectives, Oramah went to great lengths to explore and
expatiate on benefits that could accrue to Africaand its component states, when
AfCFTA is in place. According to him, the Continental Free Trade Area will
bring together fifty-four African countries with a combined population of more
than one billion people and a combined gross domestic product (GDP) of more
than US$3.4 trillion. He said the continental body would offer a platform for
(united) trade negotiations with other regions of the world, as against
individual African countries negotiating alone. Professor Oramah was also of
the view that the existence of AfCFTA would address the problem of multiplicity
of currencies on the African continent, a situation that currently poses a
constraint to smooth intra-continental trade.
The United
Kingdom, sequel to a referendum in June 2016, had been struggling to pull out
of the European Union (EU) under what is now popularly called ‘Brexit.’ But for
the complexity of issues involved and divergence of interests in the UK-EU
separation process, the ‘Brexit’ would have been concluded last March (It is
now extended to end-October 2019). At the core of the ‘Brexit’ is UK’s pulling
out from permanent membership of the European Single Market and EU Customs
Union. The UK has been a member of the European Community (later, European
Union) since 1973. Should the UK succeed in pulling out of the EU, there is
growing fear and speculation that ‘Brexit’ could trigger a bandwagon effect:
some other EU members might opt to go the way of the UK. It is beyond doubt
that the economies of a number of EU states had in recent times practically
constituted a drag on the wholesome growth and development of the rest of the
members.
If all these
are currently happening in the UK, US, EU and ASEAN which have served as models
in economic and trade policies and practices to Africa, then the Africa Free
Trade Area ‘experiment’ could be a ‘disaster waiting to happen’. Already, the
rising wave of nationalism and separatism across the African continent is
manifesting in widespread xenophobic attacks, killings and looting of
properties belonging to fellow Africans. Black Africans no longer want blacks
from African countries on their soil. In South Africa, blacks from other
countries of the continent are being killed in large numbers or pursued out of
the country by ‘indigenous blacks’. In Ghana, on several occasions, Nigerians
are being chased out of the country, and having their businesses destroyed by
indigenous Ghanaians. In other countries such as Libya, Morocco, Sudan, etc.,
nationals of other African countries are being ‘bought and sold’ as slaves.
Hardly is there a week that hordes of these Nigerian ‘slaves’ will not be
repatriated and dumped at our major airports.
It is also
apposite to ask, has the existing sub-regional bodies on the African continent
fared so well to warrant the current railroading to continental single market
and ultimate customs union? Specifically, have the Economic Community of West
African States (ECOWAS) and the Common Market for Eastern and Southern Africa
(COMESA), for instance, impacted meaningfully on the disparate economies of their
member states? From Nigerian perspective, ECOWAS (founded in 1975) has made
little positive impact on the economic progress of the country. Indeed, even
the most basic of the objectives of the sub-regional body namely, free movement
of goods, services and persons, is yet to be achieved. Smuggling and other
informal trading as well as cross-border crimes are the order of the day.
The
much-flaunted ECOWAS Common Currency (Eco) project, for instance, which is part
of the sub-regional monetary union expected to be in place by 2020, has made
little progress in the past two decades. Its take-off has been postponed for
the umpteenth time. The basic convergence criteria have hardly been met by a
good number of the members. For instance, Nigeria, a key member of ECOWAS and
the proposed monetary union, has not attained single-digit inflation in recent
years, nor the appropriate level of public debt-to-GDP ratio, among others.
Records of many other member countries are even worse than Nigeria’s. The rigid
divide between the Anglophone and Francophone monetary zones in the sub-region
is yet to give way. Yet, the Afreximbank boss believes that the coming into
existence of AfCFTA would be the magic wand to wipe away these stifling
challenges of the Eco and others like it in other sub-regions of the continent.
For Nigeria,
the effectuation of the continental free trade area would at first, lead to a
suddenloss of public revenue (Customs collections): tariffs, excise duties and
sundry levies. By the intendments of AfCFTA, the existing tariffs would be
hugely slashed; and many levies and restrictions could be totally collapsed.
But more serious for Nigeria is the uncompetitive business environment; one
that is dominated by weak infrastructure, frustrating judicial/legal process,
fragile democracy and deadly separatist tendencies: banditry, insurgency,
brigandage, terrorism, skirmishes, etc. Thus, given the country’s large
population, with AfCFTA, Nigeria could end up unwittingly being the market for
virtually all goods and services from the rest of the continent, where it is
cheaper to produce them in a convivial setting. In other words, Nigeria could
only serve as an unmitigated dumping ground.
In all,
Nigeria and indeed, the entire African continent needs to make haste slowly as
regards birthing AfCFTA. All precautionary measures must be taken; and so many
unresolved ‘domestic issues’ must be handled expeditiously. No one says the
(CFTA) idea should be jettisoned. None! But would Africa not be swimming
against the heavy tide of renascent nationalism, separatism and xenophobia that
is blowing across the globe? If long-existing regional and continental single
markets, monetary or customs unions and other ties among developed economies
are crashing, is this the time to rush AfCFTA into existence; in whose best
interest, ultimately?
Okeke,
economist and consultant, writes from Lagos
