Feature/OPED
Agusto Lists Challenges, Opportunities with African Continental Free Trade Agreement
By Agusto & Co
African nations have been optimistic about free trade agreements with western states such as the African Growth Opportunity Act (AGOA), however, there has been less enthusiasm with intra-continental free trade agreements. While regional blocs such as East African Community (EAC) and the Economic Community of West African States (ECOWAS) have been in the frontline in pushing for sub-regional trade integration, the results are still far from exciting.
According to the Washington Post, most regional economic communities (RECs) are underperforming, with a low level of compliance by member states, which has delayed successful integration. The RECs also create a system of silos where regions seem to only pursue trade integration within their domains thus further accentuating trade divisions across the continent. These trade divisions have been well exploited by global giants especially China which has greater footprints across the continent simply because it has been able to build complex trade infrastructure with individual nations. By operating ineffectually in the silos of RECs, African nations have not been able to tap trade opportunities amongst themselves but also left their flanks open to western nations thus further worsening the trade imbalance of the continent. According to the UN Economic Commission on Africa, intra-African trade is likely to increase by 52% under the AfCFTA and will double upon the further removal of non-tariff barriers.
Challenges – Protectionists and the arguments of the one-sided coin
Nothing typifies the resistance to AfCFTA as much as Nigeria’s initial withdrawal from the signing ceremony in Kigali, capital of Rwanda in March 2018. President Muhammadu Buhari cancelled his attendance at the signing ceremony citing the need “to allow time for broader consultations”. The main trade union in the country – the Nigerian Labour Congress (NLC) further warned on the dangers of the trade agreement describing it as a “renewed, extremely dangerous and radioactive neo-liberal policy initiative”.
These fears stem from arguments around turning Nigeria into a dumping ground for goods from the rest of the continent especially countries with more advanced manufacturing capabilities such as South Africa and Morocco. While these fears may not be entirely out of place, they are actually being amplified and probably exaggerated. And this argument is also flawed on two major premises. Firstly, despite being a member of ECOWAS for decades, Nigeria has not become a dumping ground for goods manufactured in the region. Rather, its goods that originate from outside the sub-region but imported through neighbouring countries that are being dumped in Nigeria. This dumping is also driven by structural bottlenecks such as inefficiencies in the port and poorly conceived trade and tariff policies that leave Nigeria vulnerable to smuggling. Secondly, the AfCFTA is a trade agreement that not only opens up Nigeria’s borders but also opens up the borders of the other signatory Countries. Thus, while Nigeria will be receiving more volume of goods from the other Countries, Manufacturers in Nigeria will also gain an upside as they will be able to access a wider market across the Continent on the same terms.
Another challenge that may arise could be the loss of revenue from the collection of customs’ duties to the state, though this may be moderated by the long-term gains. Estimates by UNCTAD, indicate that while the elimination of all tariffs between African Countries would take an annual $4.1 billion out of the trading states’ coffers, it would create an overall annual welfare gain of $16.1 billion in the long run.
Despite the promise of long-term gains by AfCFTA, the biggest challenge to the free trade agreement has probably received the least coverage. The real barriers to AfCFTA will be the structural bottlenecks associated with intra-continental exports. This could vary from checkpoints across borders or aggressive trade policies that frustrate the free movement of goods and services. The president of Dangote Group, a conglomerate with interests mainly in Cement across the Continent, citing the frustrations and difficulties his group often goes through in exporting products to neighbouring African Countries, recommends that these bottlenecks must be addressed if Nigeria has to emerge a winner in AfCFTA. Another germane challenge that could also cap the growth potentials of AfCFTA will be currency conversions especially in the short to medium term. The glut of soft-currencies across the Continent increases the unattractiveness of these currencies outside their home borders. The AfCFTA framework must seek to resolve these caps to ensure this initiative can genuinely place the continent on the path of long-term prosperity.
AfCFTA and the Nigerian Capital Market – Retracing the old paths
Nigeria’s capital market is one of the oldest on the continent and quite a number of the listed Companies which are perceived as fundamental stocks by long term investors are mainly real sector multinationals. What is instructive about these fundamental stocks is that while many of these Companies enjoy strong positive perception as multinationals – a perception that is further consolidated by their big-ticket investments in local manufacturing – quite a number of these firms started off as trading posts in Nigeria.
Nigeria’s independence in the 1960s led to a new wave of promise which quickly attracted lots of global names into the country. Some of the prominent names that berthed in Nigeria around that time include Cadbury and Nestle, two global food giants. While these companies were mainly involved in trading (mainly imports) in Nigeria at the time, their operations subsequently expanded into local manufacturing. Manufacturing has a significant multiplier effect on any economy because it stimulates activities along the value chain. The likes of Nestle and Cadbury only invested in local manufacturing because their initial focus on trading clearly showed there was a strong business case to increase exposure to Nigeria. This strong business case led to the establishment of manufacturing plants.
Stretching further into history, companies such as Unilever Nigeria Plc and PZ Cussons Nigeria Plc had also started out as trading posts in the 19th Century in the pre-amalgamated Nigeria. With time, these companies also invested in local manufacturing.
By the 1970s, with greater investor confidence in the Nigerian economy following the petrodollar boom, many of these companies began to list their shares on the Nigerian Stock Exchange (NSE) thus creating new paths to wealth for Nigerian investors. The evolution of these multinationals from trading posts to manufacturing companies that eventually listed on the stock exchange offers germane lessons to today’s generation of policymakers and other advocates of protectionism.
And the lessons are clear. Firstly, AfCFTA will open up Nigeria’s market to the rest of the continent. And quite a number of Companies from across the continent may be attracted to Nigeria initially, but simply as trading posts. However, with time, as the promise of Nigeria unfolds for these Companies, many like the global multinationals ahead of them will evolve into manufacturing Companies that will lead to greater multipliers for the economy. And then, as long as the capital market continues to fulfil its capital formation roles, these companies may be inclined to list on the exchange, thus offering a new generation of investors increased access to wealth.
Positioning the Capital Market to tap into AfCFTA
The Nigerian capital market especially the Stock Market has long been derided by institutional investors as a shallow market with only a few fundamental Stocks. Nevertheless, it still remains one of the top five markets on the Continent by market capitalisation and the second in Sub-Saharan Africa. This throws up some significant upsides for the Nigerian Capital Market.
As the real sector and trading sector go continental, the financial sector especially the capital market must also begin to think continental. The Nigerian capital market must begin to position itself for cross border listings of some of the biggest companies across the continent whose home countries do not have developed capital markets. Part of the ways of stimulating these listings is by ensuring the capital market can fulfil its role of long-term capital formation. Other measures that will help stimulate investor confidence such as corporate governance and disclosure standards for listed corporations and protection of minority shareholders must also be put in place to attract these foreign listings.
Overall, as President Buhari leads Nigeria into AfCFTA at the Extra-Ordinary Summit of the African Union in Niamey, Niger Republic, Agusto & Co believes the country stands to gain significantly in the long run by being a signatory to the free trade agreement. And to policymakers, activists and businesses that may be worried about the prospects of increased trade and competition arising from AfCFTA, Nollywood – which has benefitted immensely from trade and competition across the continent – may just be the inspiration to clear the doubts that may arise.
By Luke Kyohere
The global payments landscape is undergoing a rapid transformation. New technologies coupled with the rising demand for seamless, secure, and efficient transactions has spurred on an exciting new era of innovation and growth. With 2025 fast approaching, here are important trends that will shape the future of payments:
1. The rise of real-time payments
Until recently, real-time payments have been used in Africa for cross-border mobile money payments, but less so for traditional payments. We are seeing companies like Mastercard investing in this area, as well as central banks in Africa putting focus on this.
2. Cashless payments will increase
In 2025, we will see the continued acceleration of cashless payments across Africa. B2B payments in particular will also increase. Digital payments began between individuals but are now becoming commonplace for larger corporate transactions.
3. Digital currency will hit mainstream
In the cryptocurrency space, we will see an increase in the use of stablecoins like United States Digital Currency (USDC) and Tether (USDT) which are linked to US dollars. These will come to replace traditional cryptocurrencies as their price point is more stable. This year, many countries will begin preparing for Central Bank Digital Currencies (CBDCs), government-backed digital currencies which use blockchain.
The increased uptake of digital currencies reflects the maturity of distributed ledger technology and improved API availability.
4. Increased government oversight
As adoption of digital currencies will increase, governments will also put more focus into monitoring these flows. In particular, this will centre on companies and banks rather than individuals. The goal of this will be to control and occasionally curb runaway foreign exchange (FX) rates.
5. Business leaders buy into AI technology
In 2025, we will see many business leaders buying into AI through respected providers relying on well-researched platforms and huge data sets. Most companies don’t have the budget to invest in their own research and development in AI, so many are now opting to ‘buy’ into the technology rather than ‘build’ it themselves. Moreover, many businesses are concerned about the risks associated with data ownership and accuracy so buying software is another way to avoid this risk.
6. Continued AI Adoption in Payments
In payments, the proliferation of AI will continue to improve user experience and increase security. To detect fraud, AI is used to track patterns and payment flows in real-time. If unusual activity is detected, the technology can be used to flag or even block payments which may be fraudulent.
When it comes to user experience, we will also see AI being used to improve the interface design of payment platforms. The technology will also increasingly be used for translation for international payment platforms.
7. Rise of Super Apps
To get more from their platforms, mobile network operators are building comprehensive service platforms, integrating multiple payment experiences into a single app. This reflects the shift of many users moving from text-based services to mobile apps. Rather than offering a single service, super apps are packing many other services into a single app. For example, apps which may have previously been used primarily for lending, now have options for saving and paying bills.
8. Business strategy shift
Recent major technological changes will force business leaders to focus on much shorter prediction and reaction cycles. Because the rate of change has been unprecedented in the past year, this will force decision-makers to adapt quickly, be decisive and nimble.
As the payments space evolves, businesses, banks, and governments must continually embrace innovation, collaboration, and prioritise customer needs. These efforts build a more inclusive, secure, and efficient payment system that supports local to global economic growth – enabling true financial inclusion across borders.
Luke Kyohere is the Group Chief Product and Innovation Officer at Onafriq
In a heartfelt statement released today, the Conference of Nigeria Political Parties (CNPP) has extended its warmest congratulations to Ghana’s President-Elect, emphasizing the importance of learning from Ghana’s recent electoral success as Nigeria gears up for its 2027 general elections.
In a statement signed by its Deputy National Publicity Secretary, Comrade James Ezema, the CNPP highlighted the need for Nigeria to reclaim its status as a leader in democratic governance in Africa.
“The recent victory of Ghana’s President-Elect is a testament to the maturity and resilience of Ghana’s democracy,” the CNPP stated. “As we celebrate this achievement, we must reflect on the lessons that Nigeria can learn from our West African neighbour.”
The CNPP’s message underscored the significance of free, fair, and credible elections, a standard that Ghana has set and one that Nigeria has previously achieved under former President Goodluck Jonathan in 2015. “It is high time for Nigeria to reclaim its position as a beacon of democracy in Africa,” the CNPP asserted, calling for a renewed commitment to the electoral process.
Central to CNPP’s message is the insistence that “the will of the people must be supreme in Nigeria’s electoral processes.” The umbrella body of all registered political parties and political associations in Nigeria CNPP emphasized the necessity of an electoral system that genuinely reflects the wishes of the Nigerian populace. “We must strive to create an environment where elections are free from manipulation, violence, and intimidation,” the CNPP urged, calling on the Independent National Electoral Commission (INEC) to take decisive action to ensure the integrity of the electoral process.
The CNPP also expressed concern over premature declarations regarding the 2027 elections, stating, “It is disheartening to note that some individuals are already announcing that there is no vacancy in Aso Rock in 2027. This kind of statement not only undermines the democratic principles that our nation holds dear but also distracts from the pressing need for the current administration to earn the trust of the electorate.”
The CNPP viewed the upcoming elections as a pivotal moment for Nigeria. “The 2027 general elections present a unique opportunity for Nigeria to reclaim its position as a leader in democratic governance in Africa,” it remarked. The body called on all stakeholders — including the executive, legislature, judiciary, the Independent National Electoral Commission (INEC), and civil society organisations — to collaborate in ensuring that elections are transparent, credible, and reflective of the will of the Nigerian people.
As the most populous African country prepares for the 2027 elections, the CNPP urged all Nigerians to remain vigilant and committed to democratic principles. “We must work together to ensure that our elections are free from violence, intimidation, and manipulation,” the statement stated, reaffirming the CNPP’s commitment to promoting a peaceful and credible electoral process.
In conclusion, the CNPP congratulated the President-Elect of Ghana and the Ghanaian people on their remarkable achievements.
“We look forward to learning from their experience and working together to strengthen democracy in our region,” the CNPP concluded.
By Kenechukwu Aguolu
The proposed tax reform, involving four tax bills introduced by the Federal Government, has received significant criticism. Notably, it was rejected by the Governors’ Forum but was still forwarded to the National Assembly. Unlike the various bold economic decisions made by this government, concessions will likely need to be made on these tax reforms, which involve legislative amendments and therefore cannot be imposed by the executive. This article highlights the purposes of taxation, the qualities of a good tax system, and some of the implications of the proposed tax reforms.
One of the major purposes of taxation is to generate revenue for the government to finance its activities. A good tax system should raise sufficient revenue for the government to fund its operations, and support economic and infrastructural development. For any country to achieve meaningful progress, its tax-to-GDP ratio should be at least 15%. Currently, Nigeria’s tax-to-GDP ratio is less than 11%. The proposed tax reforms aim to increase this ratio to 18% within the next three years.
A good tax system should also promote income redistribution and equality by implementing progressive tax policies. In line with this, the proposed tax reforms favour low-income earners. For example, individuals earning less than one million naira annually are exempted from personal income tax. Additionally, essential goods and services such as food, accommodation, and transportation, which constitute a significant portion of household consumption for low- and middle-income groups, are to be exempted from VAT.
In addition to equality, a good tax system should ensure equity and fairness, a key area of contention surrounding the proposed reforms. If implemented, the amendments to the Value Added Tax could lead to a significant reduction in the federal allocation for some states; impairing their ability to finance government operations and development projects. The VAT amendments should be holistically revisited to promote fairness and national unity.
The establishment of a single agency to collect government taxes, the Nigeria Revenue Service, could reduce loopholes that have previously resulted in revenue losses, provided proper controls are put in place. It is logically easier to monitor revenue collection by one agency than by multiple agencies. However, this is not a magical solution. With automation, revenue collection can be seamless whether it is managed by one agency or several, as long as monitoring and accountability measures are implemented effectively.
The proposed tax reforms by the Federal Government are well-intentioned. However, all concerns raised by Nigerians should be looked into, and concessions should be made where necessary. Policies are more effective when they are adapted to suit the unique characteristics of a nation, rather than adopted wholesale. A good tax system should aim to raise sufficient revenue, ensure equitable income distribution, and promote equality, equity, and fairness.
-
Feature/OPED5 years agoDavos was Different this year
-
Travel/Tourism8 years ago
Lagos Seals Western Lodge Hotel In Ikorodu
-
Showbiz2 years agoEstranged Lover Releases Videos of Empress Njamah Bathing
-
Banking6 years agoSort Codes of GTBank Branches in Nigeria
-
Economy2 years agoSubsidy Removal: CNG at N130 Per Litre Cheaper Than Petrol—IPMAN
-
Banking2 years agoFirst Bank Announces Planned Downtime
-
Sports2 years agoHighest Paid Nigerian Footballer – How Much Do Nigerian Footballers Earn
-
Technology4 years agoHow To Link Your MTN, Airtel, Glo, 9mobile Lines to NIN