The African continent, made up of 55 countries, is a $3.4 trillion economy, according to the World Bank. Yet, trade between member countries of the African Union has been hampered by trade barriers, poor infrastructure and a lack of basic information about the market. Presently, intra-Africa trade accounts for only 16 percent of all trade in Africa.
This has constituted a worrisome spectacle because of its drawback effect on the growth and development of the people bogged down by poverty and disease. This unacceptable condition may have influenced the creation of the Africa Continental Free Trade Agreement (AfCFTA) which came into effect in January this year. It created a single market of 1.2 billion people, and World Bank estimates suggest that the agreement, if well implemented, will lift 30 million people out of extreme poverty and increase the incomes of 68 million others.
To achieve this expectation, African governments are already putting modalities in place to smoothen its take-off. For instance, recently, the African Union, the South African government and the Africa Export-Import Bank successfully hosted the second Intra-African Trade Fair (IATF2021) in Durban, South Africa, between November 15 and 21, 2021.
According to organisers, the goal of IATF2021 was to “provide a platform to promote trade under the AfCFTA. It will bring together continental and global buyers and sellers, and will enable stakeholders to share trade, investment and market information as well as trade finance and trade facilitation solutions designed to support intra-African trade and the economic integration of the continent.”
The first fair was held in December 2018 in Cairo, Egypt, and had in attendance 2,500 conference participants from 45 countries, ending with trade and investment deals worth $32 billion. That fair came barely eight months after a majority of countries on the continent signed on to AfCFTA. Nigeria, though one of the very last to come on board, waited for more than six months after the first continental trade fair to come on board when President Muhammadu Buhari sign the pact at the Africa Union summit held in the Niger Republic in July 2019. This time round, at the South Africa trade fair, there were 5,000 conference participants, 55 countries and $36 billion in trade and investment deals.
The increase in participants alone suggests there is great potential for intra-Africa trade. And the country that finally endorsed the idea of free trade in Africa was the United States of America. It had previously remained on the sidelines, while the European Union, China, and other developed countries provided policy guidelines, logistics, and technical advice on how to set the free trade areas.
The United States apparently feared China, its great economic rival, would exploit the agreement to dump more of its goods in Africa. Those fears appear to have diminished. Delivering the Africa policy of the Biden administration last week in Nigeria, US Secretary of State, Antony Blinken, not only endorsed the free trade agreement, but said his country would work to ensure African countries took full advantage of it.
This, in the opinion of this newspaper, is a welcome development. Even more significant is that the US is now willing to deal with Africa as a partner, help build infrastructure through the Build Back Better world initiative, rather than act as a counterweight to China’s economic policies on the continent. The U.S. policy change towards Africa could not have come at a better time. It is coming at a time when the idea of ‘Made in Africa’ as a brand is being introduced. Floated by former Nigerian president, Olusegun Obasanjo, at the just-concluded trade fair, it is a brand he believes could instill a sense of pride in each African country and maybe help improve exports beyond the goal of just increasing trade on the continent.
Beyond that, in our considered opinion, the economic goals of promoting intra-Africa trade will go a long way in breaking political barriers while creating a sense of purpose, shared vision and fostering unity on the African continent.
Besides, Nigeria is already reaping benefits from the push by Africa and African institutions to invest in the continent with the $1.04 billion deal Afreximbank signed with the Nigerian National Petroleum Corporation for oil exploration. This is coming just when funding is drying up for investment in fossil fuels. It is also coming at a time when the NNPC will begin to operate as a commercial entity. That conglomerate is very easily the most valuable brand in Nigeria. And with the trade barrier being taken down in Africa, there is no reason for it not to become a household name on the continent.
Sadly, it is perceived that a large number of manufacturers in Nigeria do not have the advantage NNPC has. We believe the Nigerian government needs to do a better job, particularly when it comes to advocacy, in preparing local businesses, farmers and manufacturers for what is to come with the influx of cheaper goods from other African countries.
It is from this perspective that we call on the government to initiate policies that will make Nigerian products more competitive instead of relying on tariffs or placing a ban on the import of rice and other farm produce.