AfCFTA January Take-off Suffers Setback

By Adedapo Adesanya

The implementation of the African Continental Free Trade Agreement (AfCFTA) has suffered a setback, the Secretary-General of the AfCFTA Secretariat, Mr Wamkele Mene, has hinted.

Mr Mene told the Financial Times that the African countries are not prepared to enforce the terms of the continental free trade at the moment.

According to him, member states lack customs procedures and facilities to make tariff-free trade feasible this month when the treaty was meant to become effective.

In his words, “It’s going to take us a very long time. If you don’t have the roads, if you don’t have the right equipment for customs authorities at the border to facilitate the fast and efficient transit of goods . . . if you don’t have the infrastructure, both hard and soft, it reduces the meaningfulness of this agreement.”

“We want to move Africa away from this colonial economic model of perpetually being an exporter of primary commodities for processing elsewhere,” he said. “We want to stop approaching tariffs as a tool for revenue. We want tariffs to be a tool for industrial development.”

This can be seen as a setback to Africa’s largest economy as the agreement had been touted to positively impact Nigeria’s exports especially in the areas of manufacturing and for the private sector.

However, a recent survey had estimated that Nigeria’s government revenue would decline by 0.21 per cent with the implementation of the continental pact. It was revealed that the reduction in government revenue would come on the decrease in tariff revenue, a major source of the government’s non-oil revenue.

AfCFTA within 2021 and 2025 would have increased expected revenue by 0.42 per cent before declining by 0.13 per cent if the government could increase its investment by 10 per cent.

Nigeria had ratified its AfCFTA membership in November 2020 and had gone on to open four of its landed borders in anticipation of the agreement, but it however unsure what the latest development will bring.

According to the Minister of Finance, Budget, and National Planning, Mrs Zainab Ahmed, “There’s a need for Nigeria as members of the ECOWAS Trade Liberalisation Scheme and signatory to the recently signed African Continental Free Trade Area (AfCFTA) agreement to dismantle all barriers to ensure free movement of goods across the continent and work towards opening the land borders before the commencement of the treaty on 1st January 2021,”

The journey towards AfCFTA gained momentum in March 2018 when 44 nations signed up during the African Union Extra-Ordinary Session in Kigali, Rwanda.

The free trade area was supposed to take effect last July but the AfCFTA secretariat delayed it to this month.

So far, 54 out of the 55 African Union member states have signed the AfCFTA. The body creates the single largest trade bloc in the world.

Once in effect, the treaty will allow free movement of goods and services from one country to another in the continent. It also allows citizens of different countries to work in any of the African nations without restrictions where an individual requires a work permit.

Its implementation will form a $3.4 trillion economic bloc with 1.3 billion people across the continent which is expected to double intra-Africa trade through better harmonization and coordination of trade liberalization.