AfCFTA: Manufacturers in Nigeria’s Fear and Hope

Business News

By Franklin Ocheneyi

“What is the agreed time frame for the gradual but progressive movement of 90% of tariff line to 0% duty? Which product lines have been agreed for liberalization, to be on exclusion and sensitive lists?”

THE business community in Nigeria, especially stakeholders in the manufacturing industry were greeted recently with a report that President Muhammadu Buhari said that he would soon sign the African Continental Free Trade Agreement, AfCFTA.

This is in spite of the manufacturers’ deep concerns and observations of the possible negative impacts of the agreement on the manufacturing sector and the economy in general.

Before now and  through their umbrella body- Manufacturers Association of Nigeria (MAN) they have been applauding President Buhari for his decision not to immediately sign -on the country to the AfCFTA without due consultation with key stakeholders in the economy.

President Buhari had on March 21, 2018, cancelled his trip to Kigali, Rwanda for the signing of the Framework Agreement for the establishment of the AfCTA at the Extra Ordinary Meeting of the African Union Heads of States and Government.

Consequently, the manufacturers and their counterpart, Labour Union, all applauded the President to have seen things from their perspectives.

‘The President took the right decision to allow time for adequate consultations among other relevant stakeholders before the country endorses the continental trade agreement,” said Frank Jacobs, President of Manufacturers Association of Nigeria (MAN) with over 3,000 member companies.

Cost and Benefit Analysis by MAN

Frank Jacobs, MAN President, fielding questions from Nigerian Journalists on AfCFTA in Lagos

At a special Press Conference in Lagos on the AfCFTA, Jacobs said: “Although MAN is not oblivious of the benefits inherent in installing a continental trade agreement like AfCFTA; as a continental free trade area could improve intra-African trade and enhance economic growth and sustainable development, yet, we are worried that specific attention has not been given to the cost and benefit analysis of the agreement.

“Consider for instance:  Which are the sectors/sub-sectors that would benefit or be worse off and strategy that government should adopt to enhance the capacity of the manufacturing sector to compete effectively.

“What are the justifications for agreeing to the proposed movement of 90% of tariff lines to zero percent duty? What would become of non-tariff charges, incentives, waivers and exemptions currently operational in Nigeria; how will non-tariff charges vis-à-vis non-African countries be treated under the AfCFTA regime? What is the agreed time frame for the gradual but progressive movement of 90 percent of tariff line to zero percent duty; which product lines have been agreed for liberalization, to be on exclusion and sensitive lists?”

Jacob said that another concern of the manufacturers in Nigeria is that the European Union –Economic Partnership Agreement, EPA, which the manufacturers have fought to a standstill, might be reintroduced through the AfCFTA’s back door.

“We are afraid that the Rules of Origin cannot be adequately enforced because goods from the EU can find their way into one of the African countries that have bilateral agreement with the EU.  When the goods get into the African country, they can repackage them; change the label from Made in Europe to that of the African country. That same goods will surely find its way to Nigeria which is the main target market for the EU,” he said

He said: “The agreement says that 90 percent of the tariff plan would be liberalised, leaving only 10 percent to protect manufacturers and that 10 percent is too low.

“That means the rest of the 90 percent is open, duty-free, people can import.

“What we are saying is that the 10 percent is too small, even at the current Common External Tariff (CET) regime, we enjoy more than 10 percent.

“How can they now expect us to accept only 10 percent as the only protected tariff line? That is an area that is of great concern to us.”

He emphasized: “As a concept and in principle, MAN is not against the AfCFTA, our original contention was that the National Office for Trade Negotiation (NOTN) did not undertake adequate consultation with relevant stakeholders.

“Although that is being done now, we still have the big issue of absence of a country-specific study to determine the possible impacts, benefits and downsides of AfCFTA on the Nigerian economy and manufacturing sector in particular,” he said.

I will soon sign it– Buhari

However, in spite of the stern C-Caution from the manufacturers, President Buhari said: “I am a slow reader, maybe because I was an ex-soldier. I didn’t read it fast enough before my officials saw that it was all right for signature. I kept it on my table. I will soon sign it.”

President Muhammadu Buhari

Addressing a news conference in Abuja this month (July) during a visit by South African President Cyril Ramaphosa, he said: “I am trying to guarantee employment, goods and services in our country; we have to be careful with agreements that will compete, maybe successfully, against our upcoming industries.”

Earlier, Ramaphosa said that South Africa saw huge benefits from the continental free trade deal and that a draft agreement relating to the movement of people was being reviewed. The continental free-trade zone, which encompasses 1.2 billion people, was initially joined by 44 countries in March. South Africa signed up earlier this month.

Africa must sell to Africa first –Governor Ambode

Earlier, Lagos State Governor Akinwunmi Ambode, voiced out his support for Nigeria to endorse the AfCTFA.

Hear him: “Nigeria is one of the few countries left to sign the African Continental Free Trade Agreement; typical us, we were going round the country sensitising and to know whether we should join. We should have joined since yesterday. We should show leadership. The whole of Africa is waiting for Nigeria to show leadership.”

Speaking during the second National Committee on Export Promotion Meeting in Lagos on the Federal Government’s Zero-Oil Policy, he said: “If we have the largest GDP and have overtaken South-Africa, what are we waiting for? The fact is that if we want to begin to export, we must be the champion of Africa. We must be the Germany of Africa. If we do not drive the economy of Africa it would not drive itself. Africa must sell to Africa first, that should be the cornerstone of our export policy.”

 “We should have joined since yesterday. We should show leadership. The whole of Africa is waiting for Nigeria to show leadership”

Amb. Chiedu Osakwe, Nigeria’s Chief Trade Negotiator and Director-General, Nigerian Office for Trade Negotiations (NOTIN) has calmed the manufacturers fear and said “Necessary steps are being taken to protect the economy under AfcFTA.”
He assured that the agreement has provisions for remedies against dumping and other unfair trade practices to protect economies of member countries.
“Let me say this at the level of facts, in the agreement establishing the AfCFTA which Nigeria has not signed, we have a provision on trade remedies. We have a provision against dumping, we have a provision that is on the basis of which a party can apply for certain duties for products that have been sold below market price from a producer or importer into Nigeria. “So, we have anti-dumping clause as a trade remedy in AfCFTA,” he said.

The countries that have not signed yet, most of them will sign by July, when the next continental meeting convenes. They are still in consultations and when they finish they will come on board

Ruwandan President Paul Kagame, who is the current Chairperson of the African Union, said: “The wish is to see all African Countries adopts the free trade area agreement and ratify it so that it enters into force before the end of 2018.”

While speaking at the opening ceremony of the 10th Extraordinary Summit of African Union, President Kagame noted that the signing of these agreements, expresses unity in moving the continent forward.

“Taken together, these are surely to be counted among the most consequential actions that this Assembly has ever taken.

“The promise of free trade and free movement is prosperity for all Africans, because we are prioritising the production of value-added goods and services that are “Made in Africa,” he said.

Also, Ambassador Albert Muchanga, AU Commissioner for Trade and Industry, affirms that the countries that have not signed yet, most of them will sign by July, when the next continental meeting convenes. They are still in consultations and when they finish they will come on board,” he said.

46 Countries Sign, 8 Pending 

So far, out of the 54 African countries, at least 46 have endorsed the continental trade agreement while 8 countries namely, Nigeria, Burundi, Lesotho, Namibia, Eritrea, Benin, Sierra Leone and Guinea Bissau abstained from the free trade area agreement.

African Union officials said countries that have signed the agreement will need to submit a schedule of tariffs by December, adding that they expect intra-African trade to double over the next four years once tariffs are reduced.

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