At a recent event in Lagos, The Bullion Lecture, organized by the Centre for Financial Journalism, the President and Chief Executive of the African Export-Import Bank (Afreximbank), Professor Benedict Okey Oramah, made a moving presentation in favour of the African Continental Free Trade Area (AfCFTA).
So detailed and persuasive was Oramah’s treatise that virtually all who were present joined him in urging Nigeria to sign and ratify the AfCFTA agreement without further delay.
According to the initiators of AfCFTA, it is intended to create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union.
It also aims to expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across Regional Economic Communities (RECs) and across Africa in general.
AfCFTA also aims to resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration process, among others.
After reeling out these objectives, Oramah went to great lengths to explore and expatiate on benefits that could accrue to Africaand its component states, when AfCFTA is in place.
According to him, the Continental Free Trade Area will bring together fifty-four African countries with a combined population of more than one billion people and a combined gross domestic product (GDP) of more than US$3.4 trillion. He said the continental body would offer a platform for (united) trade negotiations with other regions of the world, as against individual African countries negotiating alone.
Professor Oramah was also of the view that the existence of AfCFTA would address the problem of multiplicity of currencies on the African continent, a situation that currently poses a constraint to smooth intra-continental trade.
As promising and alluring as these potential benefits of the AfCFTA are, it is still irresistible to interrogate the viability of the continental body (as proposed), given the structure and coloration of subsisting relations and interactions among the disparate African countries and regions. Is the coming into existence of AfCFTA evolutionary or revolutionary?
In other words, is the Continental Free Trade Area a natural destination to be arrived at, due to a harmonious existence and relations among African countries?
Have the individual countries been fully weaned off the apron strings of their colonial overlords? Or, would they continue (as in the Africa Union, ECOWAS, COMESA, etc.) to pander to the whims and caprices of their colonial masters, and keep acting as centrifugal forces within the continental body?
Will each of the member states of AfCFTA accept to trade more with its fellow African countries rather than their ‘traditional colonial trading partners?’
Is the pursuit of AfCFTA in tune with the wind of crass nationalism, protectionism and “unilateralism” that is currently blowing in many parts of the globe?
Trade wars (no more mere threats) are ongoing between hitherto major trading partners; high tariff barriers and other trade restrictions are being re-introduced.
In the past one year or so, the Sino-U. S. economic and trade friction has assumed worrisome dimensions, including the U. S. filing a request for consultation to the World Trade Organization (WTO) ‘in regard to concerns that China was violating intellectual property rights’.
The slogan: “America for Americans” is becoming real to the extent of the United States making ‘serious efforts’ to build walls between it and its neighbours (Mexico, for example).
President Donald Trump of the U. S. has even publicly threatened pulling his country out of the North Atlantic Treaty Organization (NATO), the military alliance among the U. S, Europe and Canada, formed in 1949.
The U. S. has actually withdrawn from the Trans-Pacific Partnership (TPP) that involved Australia, Canada and the South-East Asian Nations (ASEAN).
The Association of South East Asian Nations—ASEAN Economic Community (AEC) formed just in 2015 istottering, with numerous crises within and among its members.
The United Kingdom, sequel to a referendum in June 2016, has been struggling to pull out of the European Union (EU) under what is now popularly called ‘Brexit’.
But for the complexity of issues involved and divergence of interests in the UK-EU separation process, the ‘Brexit’ would have been concluded last March (It is now extended to end-October 2019).
At the core of the ‘Brexit’ is UK’s pulling out from permanent membership of the European Single Market and EU Customs Union.
The UK has been a member of the European Community (later, European Union) since 1973.
Should the UK succeed in pulling out of the EU, there is growing fear and speculation that ‘Brexit’ could trigger a bandwagon effect: some other EU members might opt to go the way of the UK.
It is beyond doubt that the economies of a number of EU states had in recent times practically constituted a drag on the wholesome growth and development of the rest of the members.
If all these are currently happening in the UK, US, EU and ASEAN which have served as models in economic and trade policies and practices to Africa, then the Africa Free Trade Area ‘experiment’ could be a ‘disaster waiting to happen’.
Already, the rising wave of nationalism and separatism across the African continent is manifesting in widespread xenophobic attacks, killings and looting of properties belonging to fellow Africans. Black Africans no longer want blacks from African countries on their soil.
In South Africa, blacks from other countries of the continent are being killed in large numbers or pursued out of the country by ‘indigenous blacks’.
In Ghana, on several occasions, Nigerians are being chased out of the country, and having their businesses destroyed by indigenous Ghanaians.
In other countries such as Libya, Morocco, Sudan, etc., nationals of other African countries are being ‘bought and sold’ as slaves. Hardly is there a week that hordes of these Nigerian ‘slaves’ will not be repatriated and dumped at our major airports.
It is also apposite to ask: has the existing sub-regional bodies on the African continent fared so well to warrant the current railroading to continental single market and ultimate customs union?
Specifically, have the Economic Community of West African States (ECOWAS) and the Common Market for Eastern and Southern Africa (COMESA), for instance, impacted meaningfully on the disparate economies of their member states?
From Nigerian perspective, ECOWAS (founded in 1975) has made little positive impact on the economic progress of the country.
Indeed, even the most basic of the objectives of the sub-regional body namely, free movement of goods, services and persons, is yet to be achieved. Smuggling and other informal trading as well as cross-border crimes are the order of the day.
The much-flaunted ECOWAS Common Currency (Eco) project, for instance, which is part of the sub-regional monetary union expected to be in place by 2020, has made little progress in the past two decades. Its take-off has been postponed for the umpteenth time.
The basic convergence criteria have hardly been met by a good number of the members.
For instance, Nigeria, a key member of ECOWAS and the proposed monetary union, has not attained a single-digit inflation in recent years, nor the appropriate level of public debt-to-GDP ratio, among others.
Records of many other member countries are even worse than Nigeria’s. The rigid divide between the Anglophone and Francophone monetary zones in the sub-region is yet to give way.
Yet, the Afreximbank boss believes that the coming into existence of AfCFTA would be the magic wand to wipe away these stifling challenges of the Eco and others like it in other sub-regions of the continent.
For Nigeria, the effectuation of the continental free trade area would at first, lead to a sudden loss of public revenue (Customs collections): tariffs, excise duties and sundry levies.
By the intendments of AfCFTA, the existing tariffs would be hugely slashed; and many levies and restrictions could be totally collapsed.
But more serious for Nigeria is the uncompetitive business environment; one that is dominated by weak infrastructure, frustrating judicial/legal process, fragile democracy and deadly separatist tendencies: banditry, insurgency, brigandage, terrorism, skirmishes, etc.
Thus, given the country’s large population, with AfCFTA, Nigeria could end up unwittingly being the market for virtually all goods and services from the rest of the continent, where it is cheaper to produce them in a convivial setting.
In other words, Nigeria could only serve as an unmitigated dumping ground.
In all, Nigeria and indeed, the entire African continent needs to make haste slowly as regards birthing AfCFTA.
All precautionary measures must be taken; and so many unresolved ‘domestic issues’ must be handled expeditiously. No one says the (CFTA) idea should be jettisoned. None. But would Africa not be swimming against the heavy tide of renascent nationalism, separatism and xenophobia that is blowing across the globe?
If long-existing regional and continental single markets, monetary or customs unions and other ties among developed economies are crashing, is this the time to rush AfCFTA into existence? In whose best interest, ultimately?