Experts have reacted to fears expressed by the Federal Government over what it called potential negative impact of the African Continental Free Trade Area (AfCFTA).
The Minister of Finance, Budget and National Planning, Mrs. Zainab S. Ahmed, said on Tuesday during the public presentation of the medium term expenditure framework and fiscal strategy paper (MTEF/FSP) that “there could be tremendous opportunities for Nigeria in the medium term. However, the AfCFTA could also create a nightmare situation for the country unless the right policies and actions are implemented expeditiously to improve Nigeria’s economic competitiveness.”
Reacting to the minister’s alarm, Dr. Mustapha Shitu, a lecturer in the Business Management Department, Ahmadu Bello University (ABU), Zaria, said the reason Nigeria was initially reluctant to sign the agreement was because “we do not have strong policies supporting our SMEs, we do not have the necessary infrastructure – power most especially.”
“Compare this with all the countries that have signed the agreement, they have adequate electricity. So how can we compete with them? Again, because our borders are porous as compared to those others that have signed, it would be very difficult for us to monitor the flow of goods in and out of the country,” he noted.
Dr Shitu also said Nigeria might lose, if the economy doesn’t change. He however said “Nigeria can benefit if we increase our local manufacturing capabilities, and partner other countries to boost exports.”
“Competition would create alternatives, which would also make products to be cheap. Further, import and export of manpower as well, people, especially artisans, labourers etc could carry their expertise abroad,” he said.
He tasked the federal government to fix a number of issues if Nigeria must benefit from the agreement.
“Policies to look into should be on import and export (border security), support for our manufacturers (give them enough protection), also include strong and favourable financial (include favourable tax) and legal policies that support our entrepreneurs. If we give them adequate cover then we would dominate other countries with our goods and services,” he noted.
He also said ports reforms are critical. “The government should enhance the services, especially clearing time. Make our ports the hubs and the link between Africa and the rest of the world, make the ports easily accessible to bordering landlocked countries. Make export for local manufacturers and entrepreneurs cheap and hassle free,” he proffered.
He also said it is essential for the government to create economic zones in each region to tackle the issue of high production barriers.
On agriculture, he noted that it was responsible for 53 percent of Africa’s labour force in 2016. “Being a very blessed nation with fertile land, the policy should support farmers to leverage on the agricultural value chain – target exportation. Most importantly, the policy should be drawn with the vision of feeding the majority of the African populace,” he said.
Dr. Shitu also said government must stimulate the MSMEs through loans with related conditions.
He also said it should institute robust legal advisory on trade agreements/policies between Nigeria and other countries.
Also commenting, an economist who didn’t want his name mentioned because of where he works said “AfCTA has a lot of benefits in terms of improving intra-African trade as well opening more frontier markets for Nigeria, especially in the manufacturing and agro allied businesses.”
However, he said “given our porous borders with lots of undocumented trade, Nigeria may end up being a dumping ground for other African goods, especially given our huge population, relative affluence as well high appetite for consumption.”
“We need strong reforms that are currently spearheaded by a presidential committee under the Ministry of Industries to ensure that our trade, fiscal and monetary policies support growth of our manufacturing sector with capacity to compete efficiently in terms of both price and quality and hence optimize on AfCTA initiatives.”