Economy
Continental Free Trade Area May Cripple Nigerian Economy—Labour, Expert
By Dipo Olowookere
Federal Government has been urged to cautious of the proposed Continental Free Trade Area (CFTA) agreement it plans to sign because of the likely negative impact on private businesses and the nation’s economy.
President of the Nigerian Labour Congress (NLC), Mr Ayuba Wabba, appealed to President Muhammadu Buhari not to be cajoled into signing the proposed bill.
Mr Wabba warned that the probable outcome of the policy, if given life, may have a crippling effect on local businesses and attendant effects on jobs.
“We have no doubt this policy initiative will spell the death knell of the Nigerian economy.” the NLC President submitted.
According to some experts, the agreement, which is aimed at liberating the African economy by creating a free trade Area for all 55-member states of the African Union (AU), may end up doing more harm than good because of the sensitivity of the policy and its possible negative impact on the country’s economy and private owned industries especially.
Dr John Isemede, an international trade expert and former Director General of Nigeria Association of Chambers of Commerce Industries Mines and Agriculture (NACCIMMA), stressed that Nigeria will not really gain from the Tree Trade Area if the agreement is signed.
Mr Isemede told newsmen in Lagos that many of Nigeria’s trade agreements had even worked to its disadvantage due to poor export capacity in non-oil and low industrial capacity
“There is a need to review trade agreements and policies at this time because most of the developed countries we see today grew by closing down their borders for a while.
“Take a look at AGOA for instance, for 10 years, only very few exporters have been able to export under the platform due to poor information and lack of proper documentation.
“We have rice mills and farms that are barely functioning, except for the new intervention of the UNIDO and Bank of Industry to empower farmers and this apparently is not enough,” he said.
He advised the Federal Government to look at the critical details involved in the agreement adding that there must be a balance between import and export for a country like Nigeria to benefit from any trade agreements.
Speaking to our correspondent, Mr Emeka Nwasike Nwasike, an investment expert and CEO of Allied Trust Systems Limited said opening the borders of Nigeria will only expose local manufacturing industries in Nigeria which are struggling to survive to undue competition. He added that at a time when other countries are developing policies of protectionism for the growth and survival of its local industry, Nigeria cannot afford to jeopardize the growth of its local industries by allowing a free trade policy.
A leading Consultant and trainer in small business development, Mr Henry Agbebire, said with the high rate of importation from other regions into Africa, the region may soon become a strait for imports against local manufacturing which is a major driver of growth in any economy.
“Although the focus of the CFTA agreement is to increase Africa’s industrial and trade capacity however, nearly 85 percent of the goods traded in Africa come from outside the continent as against the 15 percent produced locally which has led to an annual food import bill of over $35 billion.
“There is therefore a very high possibility that the region would become a conduit for imports against local manufacturing if the free trade zone is allowed operation in Africa and especially in a country like Nigeria.
“No wonder developed countries and neo-liberal institutions such as UNCTAD, TRALAC, UNECA, WTO, DFID, EU USAID, World Bank etc are very enthusiastic to finance the CFTA process because they know that it would open up the African markets to their exports and at the detriment of the growth of local industries.
“According to history, all developed countries today reached their competitive position through a high import protection on agriculture and other infant industries and as a result benefited from huge subsidies and exploitation of their Southern colonial countries, particularly in Africa for centuries.
“They created the condition to do it through import protection and it is only afterwards that they opened their markets to other countries. I wonder why Africa would want to do otherwise,” he said.
Explaining further, he said, “CFTA has the tendency to reduce real income in Nigeria because, with the policy, the Federal Government will be forced to renounce to a non-negotiable source of income like tariff revenue. Also, as African countries open up, competition will be increasing on the continental market.
“This will result to trade flows such as African imports being reoriented because, partners located either on the continent or outside of the continent are being replaced by imports from African partners benefiting from better market access, thanks to tariff cuts, and potentially leading to terms of trade reduction.
“Thirdly as world prices of food products slightly increase with the liberalization reforms, net-food importing countries such as Nigeria will be hurt and their real income reduced.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.69 per cent appreciation on Monday, January 13, as investors showed renewed interests in unlisted securities.
During the trading session, the NASD Unlisted Security Index (NSI) increased by 21.07 points to wrap the session at 3,095.00 points compared with the 3,073.93 points recorded in the previous session.
In the same vein, the value of the local alternative stock exchange went up by N7.22 billion to close at N1.061 trillion compared with last Friday’s N1.051 trillion.
Yesterday, FrieslandCampina Wamco Nigeria Plc recorded a growth of N3.78 to close at N42.00 per share versus N38.22 per share, Mixta Real Estate Plc improved by 20 Kobo to end at N2.35 per unit versus the preceding closing rate of N2.15 per unit, and Industrial and General Insurance (IGI) Plc gained 1 Kobo to finish at 25 Kobo per share compared with the previous session’s 24 Kobo per share.
Conversely, Geo-Fluids Plc lost 29 Kobo to quote at N4.56 per unit compared with the preceding day’s N4.85 per unit, and Afriland Properties Plc slid by 75 kobo to end the session at N15.50 per share versus the preceding closing rate of N16.25 per share.
During the session, the volume of securities traded decreased by 27.2 per cent to 3.1 million units from 4.3 million units, the value of securities slumped by 81.5 per cent to N3.2 million from N17.2 million, and the number of deals expanded by 57.9 per cent to 30 deals from 19 deals.
At the close of trades, FrieslandCampina Wamco Nigeria Plc remained the most active stock by value (year-to-date) with 1.9 million units worth N74.2 million, followed by 11 Plc with 12,963 units valued at N3.2 million, and IGI Plc with 10.7 million units sold for N2.1 million.
Also, IGI Plc remained the most traded stock by volume (year-to-date) with 10.6 million units sold for N2.1 million, trailed by FrieslandCampina Wamco Nigeria Plc with 1.9 million units valued at N74.2 million, and Acorn Petroleum Plc with 1.2 million units worth N1.9 million.
By Adedapo Adesanya
The Naira recorded a 0.38 per cent or N5.86 depreciation on the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEM) on Monday, January 13 to close at N1,548.89/$1, in contrast to the preceding session’s N1,543.03/$1.
The local currency weakened further in the official market yesterday as the deadline to cut off Bureaux De Change (BDC) operators from the Electronic Foreign Exchange Matching System (EFEMS) built to enhance transparency in the FX system looms.
Recall that the Central Bank of Nigeria (CBN) in December opened a 42-day window to allow BDCs to buy FX worth $25,000 per week from the spot market.
However, the domestic currency appreciated against the Pound Sterling in the official market on Monday by N11.87 to trade at N1,877.43/£1 compared with last Friday’s N1,889.29/£1 and against the Euro, it improved its value by N4.94 to close at N1,578.87/€1, in contrast to the previous trading day’s N1,583.81/€1.
A look at the parallel market indicated that the Nigerian Naira slumped against the greenback yesterday by N5 to sell at N1,655/$1 compared with the preceding session’s N1,650/$1.
In the cryptocurrency market, large positive outcomes came even as risk assets weighed the possibility of US Federal Reserve rate cuts in the wake of Friday’s hotter-than-expected US jobs report.
The biggest gainer was recorded by Dogecoin (DOGE) as it rose by 3.9 per cent to sell at $0.3422, Bitcoin (BTC) grew by 0.9 per cent to trade at $94,843.98, Binance Coin (BNB) appreciated by 0.8 per cent to sell for $687.84, and Solana (SOL) recorded a 0.8 per cent growth to quote at $185.24.
Further, Ripple (XRP) increased its value by 0.7 per cent to close at $2.53, and Cardano jumped by 0.3 per cent to settle at $0.9469.
On the flip side, Ethereum (ETH) depreciated by 1.9 per cent to finish at $3,159.52, and Litecoin (LTC) went down by 0.9 per cent to close at $98.68, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) remained unchanged at $1.00 each.
By Adedapo Adesanya
Oil prices rose on Monday as Chinese and Indian buyers sought new suppliers after the administration of President Joe Biden of the United States imposed toughest sanctions yet on Russian energy.
Last Friday, the US Treasury Department imposed sanctions on Gazprom Neft and Surgutneftegas, as well as 183 vessels that traded oil as part of Russia’s so-called “shadow fleet” of tankers. The move is expected to cost Russia billions of Dollars per month.
This pushed the price of Brent higher by $1.25 or 1.6 per cent yesterday to $81.01 per barrel and raised the US West Texas Intermediate (WTI) crude by $2.25 or 2.9 per cent to $78.82 a barrel.
As a result, Chinese and Indian refiners are seeking alternative fuel supplies as they adapt to the severe sanctions on Russian producers and tankers that are designed to curb the revenues of the world’s second-largest oil exporter.
The large sanction gives Ukraine and the US President-elect, Mr Donald Trump, leverage to reach a deal for peace in the almost three years war.
Market analysts note that these sanctions have the potential to take as much as 700,000 barrels per day of supply off the market, which would erase the surplus that we are expecting for this year.
On its part, Goldman Sachs estimated that vessels targeted by the new sanctions transported 1.7 million barrels per day of oil in 2024, or 25 per cent of Russia’s exports. The bank is increasingly expecting its projection for a Brent range of $70-$85 to trade.
The Vladimir Putin-led government said the sanctions risked destabilising global markets, and Russia would seek to counter them.
Many of the tankers named have been used to ship oil to India and China after previous Western sanctions. A price cap imposed by the Group of Seven countries in 2022 shifted trade in Russian oil from Europe to Asia. Some of the ships have also moved oil from Iran, which is also under sanctions.
Also, six European Union countries called on the European Commission to lower the price cap put on Russian oil by G7 countries, arguing it would reduce Russia’s revenue to continue the war while not causing a market shock.
However, weaker demand from major oil buyers, China, could have an impact on the tighter supply as data showed that China’s crude oil imports fell in 2024 for the first time in two decades outside of the COVID-19 pandemic.
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