Lekan Sote
Finally, the lobby that wanted President Muhammadu Buhari to sign the Africa Continental Free Trade Area agreement defeated critics, like this writer. Nigeria became the 54th signatory, leaving Eritrea as the only holdout.
Those who pushed the argument that globalisation is the “New World,” quite forgot that Brexit, Britain’s planned exit from the European Union, may be validating the choice by countries like Communist China to join the rest of the world only when they thought their economies could compete.
Remember that when the computer, telecommunications, and transport technologies brought new consumer products to the attention of the citizens of Warsaw Pact nations, jewels of the now-defunct Union of Soviet Socialist Republics, they unravelled, as the Cold War ended.
In his book, “Beyond National Borders,” Japanese management consultant, and leading expert on international competition, Kenechi Ohmae, explains that “National borders are now irrelevant to most companies and consumers, regardless of whether they are in Japan, North America, or Europe.”
He argues: “Frictions and clashes at the national level may seem serious, but they are insignificant at the microeconomic level where customers buy, and companies sell.” He must be a protagonist of international monopoly capital.
He notes: “Americans are eager to buy Sony Walkmans (made in Japan) and wear Benetton sweaters (made in Italy)… They have no compunctions about consuming imported products.” Nigerians too won’t be so patriotic and compromise the high quality they desire in the goods they buy.
It becomes more interesting when a Japanese company, say automobile manufacturer Toyota, installs a plant in America. The question now arises as to whether the production of Japanese vehicles in America can be added to Japan’s Gross Domestic Product. Ohmae thinks not.
The major objectives of the AfCFTA are: “(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 (African) Continental customs union.”
And: “(To) enhance competitiveness at the industry and enterprise level, through exploiting opportunities for scale production, continental market access and better reallocation of resources.” Other objectives derive from these two.
AfCFTA is now the largest free trade area with 1.2 billion people, though cynics argue that China, with 1.42 billion and India, with 1.35 billion, citizens respectively, are free trade zones too. To AfCFTA’s $2.5tn Gross Domestic Product, China and India have $13.407tn and $2.97tn, respectively.
President Dankwa Akufo-Addo’s acknowledgement that “the adhesion of Nigeria to the Free Trade Area has enhanced considerably its prospects of success,” after the Assembly of Heads of State and Government of the African Union voted Ghana as host of AfCFTA’s Secretariat, is nettling.
Those who advised Mr. President to travel the AfCFTA route failed to obtain the best deal for Nigeria, that should have been a shoo-in as headquarters of AfCFTA. The advisers should have made hosting the headquarters as quo for the quid of Nigeria’s joining AfCFTA.
President Buhari’s erstwhile Ministers for External Affairs, and Trade and Industry, and their permanent secretaries, failed to guide the Nigerian elephant as it lumbered – more like wandered – into the AfCFTA agreement.
Sceptics are concerned that by joining the Free Trade zone, Nigeria, with its acute infrastructure deficit, will be a victim of dumping of relatively cheaper consumer goods from China, Asian Tiger nations, and countries of the Organisation for Economic Cooperation and Development.
They add that the biggest beneficiary of AfCFTA is France, through its stranglehold on the economies of the French Western African countries, for whom the French central bank acts as bankers’ banker.
France attempted to consolidate its foothold in the Nigerian market by encouraging Mauritania, in the North African sub-region, to join the Economic Community of West African States. The arriere pensee is to dump French goods, labelled as Made-in-Mauritania, into the economy with the freest cash flow on the African continent.
The French interest in the Nigerian market dates back to the late 19th Century when it contested, and lost, the Nigerian space to Britain. Legend says that between the 1960s and 1970s, Peugeot vehicles on Nigerian roads exceeded the number in France, its home country.
That must have informed the establishment of the Peugeot assembly plant in Kaduna, Northern Nigeria, in the 1970s. Obviously, France finds that it is nice doing business in, or with, Nigeria, and will like it to stay that way.
There is so much money flowing from the international oil trade into the Nigerian financial system, whereas the manufacturing, or the real, sector lacks the capacity to absorb and effectively engage it for productive activities, because of the country’s deficient and inefficient infrastructure.
You can bet that most of the 5,000 vehicles that will be rolling out of the Volkswagen assembly plant in Rwanda, and the excessive rice import to Benin Republic, will eventually be heading towards the huge Nigerian market.
In pitching for international trade, Adam Smith suggests: “When the produce of any particular branch of industry exceeds what the demand of the country requires, the surplus must be sent abroad.”
With the removal of tariffs amongst countries of the AfCFTA zone, Nigeria will lose whatever little protection it could have guaranteed for its weak manufacturing sector. Of course, there are arguments that if Nigeria gets its act together, it could gain in two ways.
Nigeria could deploy its idle, but well-trained, manpower across the continent, to earn Diaspora revenue. (Dr. Francis Faduyile, President, Nigerian Medical Association, reveals that 40 per cent of Nigerian doctors are unemployed). And Nigeria could gear its production capacity for the entire African market, and reap economy of large scale.
Whoever thought of that might be giving too much credit to the inept and selfish state actors that currently formulate and implement economic policies for Nigeria. You probably know that South Africa’s Johannesburg Airport is the hub of air travel in Africa, though Nigeria has the highest air travel traffic in Africa, and is closer to the North American and European destinations of airlines.
Even if you think Nigeria can compete using economy of large scale production, remember that President Donald Trump is raising tariffs against Chinese goods, and raising a wall to seal Mexicans off from the world’s biggest economy. Sometimes, America devalues its currency to discourage imports.
In acknowledging the weakness of Nigeria’s economy, Timothy Olawale, Director-General of Nigeria Employers Consultative Association, observes that Nigeria lacks the infrastructure to participate in AfCFTA, which he however, thinks has immense potential benefits.
He points to “the disadvantaged environment with regard to… infrastructure, among which is the power and… road network.” Infrastructure deficiency places Made-in-Nigeria goods at a disadvantage when compared with cheaper and higher quality products that will enter its market through conniving African nations.
Mansur Ahmed, President of Manufacturers Association of Nigeria, avers that “Inferior goods do not stand a chance to compete in (the AfCFTA) market.” He therefore charged Nigerians, “We have to (raise) the quality of our products.” But you need massive investments in infrastructure, human capital, and Research and Development, to achieve this.
In the opinion of Ohmae, providing jobs for citizens within their countries is the name of the game that governments must play. But losing the AfCFTA headquarters ball to Ghana was a most unkind cut.
–Twitter @lekansote1
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