africa

Before AfCFTA begins


After 16 months of border closure, the Federal Government recently authorised with immediate effect the reopening of the nation’s four land borders. The order to reopen the borders came a few weeks to the takeoff of the African Continental Free Trade Agreement (AfCFTA) on January 1, 2021. According to the Minister of Finance, Budget and National Planning, Zainab Ahmed, the affected borders include Seme and Mfun in the South West and Ilela and Maigatari in the North West. However, the government also explained that the other borders would be reopened in due course. The nation’s land borders were shut on August 20, 2019 to curb smuggling of rice and petroleum products from neighbouring West African countries into Nigeria.

The Federal Government recently ratified Nigeria’s membership of the AfCFTA preparatory to the January 1, 2021 inauguration date. When AfCFTA becomes operational, it will eliminate tariffs on 90 per cent of goods produced on the continent and tackle non-tariff barriers to trade as well as guarantee the free movement of persons. Prior to the reopening of some land borders, many stakeholders had predicted that continued closure of the nation’s land borders would not augur well for the implementation of AfCFTA. They also blamed the rift between Nigeria and Ghana on the border closure. With the reopening of some of the land borders, they now believe that it will boost movement of goods and services in the sub-region as well as in Africa generally. We commend the government for ordering the reopening of the four land borders and urge it to think of reopening others as the Africa free trade agreement takes off.  There is no doubt that the nation has lost so much on account of the long border closure. The Manufacturers Association of Nigeria (MAN) has argued that the continued border closure negates AfCFTA’s liberalisation agenda. In fact, from rising food inflation, which is currently over 14 per cent, to higher costs of logistics and loss of business to other suppliers in the global value-chain, the closure of the borders has done more harm than good to the nation’s economy.

Figures from the NBS showed that in second quarter (Q2’2020), Nigeria’s trade with ECOWAS member states was in decline, with import dropping from N215.79 billion in 2019 to N59.41 billion as at Q2’ 2020. Also, export dropped from N2.24 trillion in 2019 to N445.6 billion this year.  Regardless of the gains from the border closure, the nation lost so much, especially its capacity to earn the much-needed foreign exchange amid the current dollar scarcity. For instance, Nigeria earned $82.3 million (N296.3billion) from export to ECOWAS countries and $2.72billion (N978.21billion) from shipping out products to Africa countries in the Q1’2020. In the Q2’2020, export to the rest of Africa was estimated at B401.4 ban, while goods worth N149.3billion were exported to ECOWAS countries. This represents 82 per cent decline. What this means is that Nigeria is fast losing its foothold in the West African market due to the border closure, especially the Nigeria/Benin Republic border post. Also, manufacturing companies in Nigeria have reported huge losses in their 2020 financial statements with year-on-year decline in revenue of between 65 per cent and 80 per cent, a development largely attributed to sharp decline in export volumes.                          

From the huge losses suffered by the economy since the border closure took effect, it is clear that the strategy is unsustainable. Therefore, to gain much from AfCFTA, Nigeria should take steps to reduce the costs of production for its products and make them competitive in the global market. Otherwise, Nigeria will lose so much in the implementation of the African trade agreement, and perhaps become a dumping ground for goods from other African countries.          

Though agriculture accounts for more than 20 per cent of Nigeria’s GDP, only a small percentage of those involved in the sector has access to market.                                              

Without doubt, the intra African trade will boost Nigeria’s earnings for traders, strengthen our competitiveness in the international market and foster our export diversification. With AfCFTA, Africa’s manufacturing output is expected to double to $1trillion, creating about 14 million jobs by 2025. It will complement agricultural production and agro-processing plants, which will provide the food and energy to meet growing national demand.                            

Above all, there is need to avoid any trade abuse that may undermine the borders of African countries and affect the markets. Therefore, observing the rules will help build confidence and trust in the intra-Africa trade. Nigeria has much to gain and little to lose, if we do the right thing ahead of the takeoff date of the continental free trade pact.




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