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African Continental Free Trade Area (AfCFTA): Nigeria Lag behind after Trade commenced 6 Months Earlier.

Six months after trading officially commenced under the African Continental Free Trade Area (AfCFTA), Nigeria and some other countries continue to lag behind, having stalled the process to domesticate trade protocols in line with the implementation of the new trade regime.
With the rules of origin yet to be defined, Nigerian exporters and manufacturers are left in the dark on the next line of action as other countries take national positions in safeguarding local industries and expanding regional agenda.
AfCFTA took off on January 1, 2021, but some nations are yet to fashion out the rules of origin, which is the major aspect of the trade framework.
Though the Nigerian Office for Trade Negotiations (NOTN), in February, unveiled trading requirements for Nigerian traders under the AfCFTA, while also identifying 89 items that qualify for preferential trade under the deal, the delay in domesticating the treaty remains a challenge for its operationalization.

With the details of tariff lines yet to be unveiled, manufacturers, traders and other exporters are awaiting a comprehensive list of the products that would be liberalised and restricted under the trade deal.

Specifically, some of the products identified as eligible for preferential treatment under the Protocol on Trade in Goods include live animals, dairy produce, cocoa and cocoa preparations, sugars, and sugar confectionery, beverages, spirits and vinegar, tobacco, wood, and articles of wood, photographic and cinematographic goods, pulp of wood, paper and paperboard, footwear, basic metals, arms and ammunition among others.

For travellers within the continent, goods for personal use of the recipient not exceeding $500 or $1200 in the case of products forming personal luggage, as well as goods sent as small packages between private persons among State Parties would be exempted from submission of proof of origin.

Industry experts believe that while negotiations are ongoing on product-specific rules, the identified products will likely reflect the 7 per cent of tariff lines deemed sensitive by Nigeria.

Under the AfCFTA, countries had agreed that 90 per cent of tariffs on trade in goods will be eliminated. Of the remaining 10 per cent for Nigeria, 7 per cent are designated as sensitive and 3 per cent of the tariff lines are excluded from liberalisation.

The Guardian had exclusively reported on some of the products being protected by the Federal Government under the exclusive trade list.

Currently, only seven per cent of sensitive products (427 tariff lines) and three per cent (184 tariff lines) of exclusive products were negotiated, while over 4,300 tariff lines are under the liberalised list.

Though the commencement of the AfCFTA portends advantages to Nigeria’s trade balance as it opens a wider market space for the country’s exports and opportunity to get cheaper imports of goods and services, its protectionist stance on some commodities that the nation’s local capacity cannot be met, raises concerns.

Secretary-General of AfCFTA Secretariat, Mr. Wamkele Mene, said that the target of the trade agreement is to achieve zero duty on 97 per cent of all products traded in the continent in the next 15 years.

In defence of the pace of progress for the trade treaty, Mene said: “I think Africans should be patient and understand that we are in the initial stages of significance to go together under a single set of rules.”

He further stated: “We will learn from the experience of European Union (EU) that it has taken the EU 72 years to get to this point of market interventions that it enjoys today.

“What we are doing is not an easy task, it is time-consuming, and it requires patience to see results in years to come. I am not worried about the slowness because typically, negotiations and implementation of trade agreement is not something that happens overnight.”

The Nigerian Customs Service (NCS) told The Guardian that AFCFTA will commence in Nigeria after the crucial criteria are completed.
Public Relations Officer, NSC, Deputy Controller, Joseph Attah, said the process is “currently at 81 per cent” completion.

Attah, in a response to media inquiries about AfCFTA, said the list of Nigeria tariff offers has been communicated to NCS from the national office for trade negotiation and the Economic Community of West African States (ECOWAS).

He said: “We have started the reconfiguration of the system to capture the AFCFTA procedures. The senior trade officials comprising of trade leaders in all African countries are still meeting to finalise the rules of origin criteria. Trade in AfCFTA will start after the crucial criteria are completed. Currently it is at 81percent,” he stated.

Principal Consultant, International Trade Advisory Services Ltd, Okey Ibeke, said there is wide variation in the practice of governments with regard to the rules of origin.

“While the requirement of substantial transformation is universally recognised, some governments apply the criterion of change of tariff classification, others the ad valorem percentage criterion and yet others the criterion of manufacturing or processing operation.

“In a globalising world, it has become even more important that a degree of harmonisation is achieved in these practices of members in implementing such a requirement,” he stated.

Former President of Ship Owners Association of Nigeria (SOAN), Greg Ogbeifun advocated for measurable strategies to be put in place to monitor the level of progress made by Nigeria in its quest to fully participate in AfCFTA.

Ogbeifun, recalled that the limitations of the Cabotage Act in Nigeria was a result of the inability of the Federal Government to adhere to the provisions of the Act, which provided for five-year performance evaluation of the Cabotage, which was never done.

He, therefore, warned that AfCFTA should not be allowed to go the way of the Cabotage regime in Nigeria by ensuring a yearly performance evaluation to measure the level of progress being made by the country to achieve her dream of becoming a big-time player in AfCFTA.

A maritime lawyer, Emmanuel Nwagbara, called for a law to regulate the retail sector in Nigeria, arguing that a sector that contributed 16.4 per cent to the nation’s Gross Domestic Product (GDP) should not be left at the mercy of foreigners. He regretted that non-Nigerians were now playing big in the retail sector, which according to him, employed most Nigerians of all ages.

His words: “We must up our game if we are ready to play big in AfCFTA. The interest is not just playing big but the impact it will have on our economy. How much will AfCFTA improve the living standards of an average Nigerian? How much can it contribute to the growth of Nigeria’s GDP? What are we doing about our investment laws? Are we looking at our investment laws to make them bring in the FOREX that we need to develop? Ghana is doing a lot about investment laws”.

The Senior Special Assistant to the President on Public Sector Matters and Secretary, National Action Committee on AfCFTA, Francis Anatogu argued that the regional trade agreement represents a golden era for chambers of commerce and industry associations and the businesspersons in the region.

He harped on the need to contact persons that are reachable across frontiers protecting the interests of shippers. On his part, a Consultant at ECOWAS (Economic Community of West Africa States) on Common Investment Market (ECIM), Abuja, Prof. Jonathan Aremu, called on businesses in Nigeria to mount pressure on the lawmakers to do the needful.

Aremu noted that Nigeria is yet to benefit from Phase 1 of AfCFTA implementation, which started in January because of some hiccups it needed to address.

The starting point to benefit from the protocol, he said, should be the domestication of the protocol. Aremu, a professor of International Economic Relations at the Covenant University, said in phase two, AfCFTA, would aim to deepen economic relations between African countries by negotiating investments, intellectual property as well as competition protocol.

He noted Nigeria stands to benefit from the protocol because it would trigger industrialisation, which will transform Nigeria’s economy and help her to obtain a fairer share of the value derived from her tradable commodities.

Other benefits, Aremu said, include; allowing Nigerian investors to gain as a result of specialisation in their production capacities, since each country would concentrate where it has comparative and competitive advantage.

Beyond domestication of the protocol, Aremu, who delivered the Post-AGM Talk on the theme: “AfCFTA Investment Protocol: A Tool for Economic Growth,” said, the potential benefits of AfCFTA protocol, rely on complementary enabling policies in Nigeria to ensure goods and people can indeed cross borders.x

He further called for the reduction of the infrastructural deficits, notable in roads, ports and cargoes handling, customs and administration requirements that directly affect the capacity of the economy to move traded merchandise within and outside the country’s borders.
On his part, boardroom guru and Chairman Emeritus of the International Chambers of Commerce Nigeria (ICCN), Chief Olusegun Osunkeye, stressed the need for more sensitisation among Nigerian businesses on the AfCFTA protocol, stressing that a lot of works are needed to ensure that businesses in Nigeria do not lose out from the accruable benefits of AfCFTA protocol.

He wondered why a country that is a signatory to the protocol could expel businesses from other member countries without due compliance with the embedded protocol.
Osunkeye also expressed worries about the dispute settlement protocol as disagreements between private businesses among member countries  are seen as a disagreement between state parties.
He stressed that Nigerian businesses under AfCFTA, should identify and take account of winners and losers in specific sectors to see where there are political attractions and where blockages may lie in implementing national AfCFTA strategies.

Also, Chairman, ICC Nigeria and Regional Coordinator, sub-Saharan Africa, Babatunde Savage, called on Nigerian businesses and chambers of commerce to come forward to present a common front to ensure maximum benefits of AfCFTA.

According to him, the events of 2020 have tested the world in ways few anticipated.

“It has tested the resilience of businesses, people, processes, technologies, cultures, etc. Though the year had been anything but easy, nonetheless, it has made trade, commerce and businesses generally stronger, better, more agile and prepared for a fast-changing world deploring the digital channels.”

Savage said to rebuild post-COVID-19, global supply chains and trade lines must be open and free of encumbrances; encourage ease of doing business and tax incentives to aid foreign direct investment, especially in the face of AFCFTA. 

According to him, there is a need to take immediate steps to legally recognise the use of electronic trading documentation in lieu of paper-based documentation to ensure the continued shipment and release of goods.