By Florence Adidi


Fifty-four African countries officially began trading on First January 2021, following the launching of the African Continental Free Trade Area (AfCFTA).

AfCFTA brings together 1.3 billion people in a 3.4 trillion dollar economic bloc that will be the largest free trade area in the world after the World Trade Organization (WTO). It is expected to boost trade and investment among African countries, create a unified customs union to streamline trade on the continent while allowing the continent to develop its own value chain.

The AfCFTA initiative has clear objectives to create Africa’s most ambitious integration, with a single continental market aimed at expanding intra-African trade across the continent thereby enhancing competitiveness and supporting economic transformation in Africa.

With such determined focus, AfCFTA is expected to turn around Africa’s fortunes by increasing intra-Africa trade from the present level of 13 per cent to 25 per cent or more, that could only be achieved through the harmonization and coordination of trade liberalization policies.

It’s also projected that in implementing the AfCFTA protocols, Africa will witness a push of about 60 per cent in intra-African trade by 2022 by the creation of a borderless market for African products. The World Bank estimates that the economic bloc could lift tens of millions of Africans out of poverty.

With AfCFTA, trade and investment relations are expected to be encouraged in Africa by removing tariffs for over 90 per cent of goods traded between member countries. It is also expected to lead to the free movement of people within the continent, thereby enabling a single market for air and road transportation.

The AfCFTA is a market access mechanism that will deliver several benefits to the continent. Nigeria as the biggest economy in Africa has many advantages it can derive from the investment and trade opportunities that AfCFTA offers.

The new economic bloc will expand market access for Nigeria’s exporters of goods and services, spur growth and boost job creation. AfCFTA will also eliminate barriers against Nigeria’s products.

Enormous benefits also await Medium, Small and Micro Enterprises (MSMEs) from AfCFTA. MSMEs remain critical constituents of the Nigerian economy as they represent 96 per cent of Nigerian businesses and contribute 75 per cent to national employment. MSMEs will benefit from access to new markets and the economic transformation that competition promotes.

AfCFTA has the potentials of improving Nigeria’s infrastructure such as transportation, electricity among others needed to facilitate smooth trading with member countries.

Already, Nigeria is in the process of constructing a standard rail line to link the neighbouring Niger Republic. Nigeria has also committed enormous resources to road construction and improvement in electricity generation and distribution.

Also, as AfCFTA takes off, Nigeria has commenced an electronic-customs platform aimed at improving the efficiency of cargo and raising the government’s revenue. E-customs will improve the operational methodology of the agency when fully operational.

Although Nigeria is putting in place the infrastructure and processes needed for the take-off of AfCFTA, a lot still needs to be done to fully get the trade bloc off the ground.

The challenges that require immediate action by the African Union Commission (AUC) and regional blocs include classified goods status, electricity to power the industries for optimal capacity utilization upgrade, poor logistics landscape and ways to manage uncertainties in business returns by manufacturers under the AfCFTA.

Also, pre-existing issues that are peculiar to African markets in terms of alignment with Western powers, language, entrenched protectionism of some members, insecurity, existing trade agreements in regions, political unrest, customs union among others raise concerns about the immediate future of the market.

At the regional level, the ECOWAS Trade Liberalization Scheme that allows commodities from non-ECOWAS countries flood the markets of member nations under products country of origin should be avoided to enable ECOWAS to play a significant role in making AfCFTA work for all Africans.

The Federal Government of Nigeria should reorganize Nigerian ports to make them fully operational to discourage smuggling, bunkering and other forms of corruption, especially the nation’s foremost ports, Apapa and Tin Can Island Ports in Lagos. Other ports in Warri, Port Harcourt, Onne and Calabar should be developed and modernized to improve their competitive status for AfCFTA.

Nigerian manufacturers must also heed the advice of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) to improve the standards and quality of their products and services for comparative advantage in the new economic bloc.

There is also the need to protect the protocols on Rules of Origin (RoO) as it affects labelling, bottling, bagging etc, to maintain standards. These can be achieved through monitoring, enforcement and technical competence of the regulating agencies under the African Union Commission.

Despite the challenges, it is significant that AfCFTA eventually took off. Its full implementation will take years. Like the European Union experience, economic integration is not an event, it is a process. With time, commitment and the political will AfCFTA will come of age.

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