The African Continental Free Trade Area(AfCFTA) was formed with the intention of boosting intra-African trade to accelerate growth and facilitate investment on the continent.
This was done with the pan-African vision of an integrated, peaceful, and prosperous continent. While the more established names within the trade space may very well be capable of capitalising on the potential gains from the agreement, the benefits of the AfCFTA are not confined to those at the very top of the industrial ladder. Small and medium enterprises (SMEs) and informal businesses have also been tipped as potential beneficiaries of the free trade area.
Trading under AfCFTA, which commenced on January 1, 2021, is a laudable development, building on existing initiatives for regional integration and laying the groundwork for more. The immense support from countries and leaders across the continent is merited.
The AfCFTA was established in 2018 with the sole aim of creating a single market for goods and services in Africa. The agreement ratified by 32 AU countries and Nigeria signed the agreement in Niamey, Niger on July 7, 2019 to promote intra-African trade with other African countries.
On November 11, 2020, the Federal Executive Council(FEC) approved the ratification of the agreement demonstrating Nigeria is on course to participate in trading under the AfCFTA.
The agreement has a huge potential as it would create the world’s largest single market of about 1.2 billion consumers and workers thereby increasing opportunities for African manufacturers and businesses especially those constrained by the size of their domestic markets.
The AfCFTA, if properly implemented and executed across the continent, could boost Africa’s economy to $29 trillion by 2050 from the current size of $2.6 trillion.
The national president of National Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Ide Udeagbala, recently, said: “this is a giant leap towards increasing intra-African trade and creating collective wealth. It is also a bold step to take Africans out of poverty.”
The NACCIMA president promised that the association will continue to push for the full implementation of the agreement and ensure that Nigerian businesses harness its full benefits.
Stressing the benefits of the trade deal, he said, AfCFTA will certainly be an important strategy in its quest to ensure Nigeria’s economic influence on the continent; taking note that Nigerian businesses are already strongly rooted in many African countries.
The CEO of Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf said, for the country to be relevant in the African Continental Free Trade Agreement, it needs to be competitive.
While underscoring the importance of competitiveness in AfCFTA, Yusuf stressed that, this is the very foundation of any conversation about trade because those engaging in it, whether within or outside the country, have no sentiment about it.
He argued that if what one is providing is not competitive in price, it is of no relevance because the consumer is not interested in whether it is made-in-Nigeria or not.
“What one is interested in, is how he or she can maximise what we call ‘utility’ in economics, how he can maximise or benefit from the little money he wants to spend. So, that is why the emphasis has to be on how we can make ourselves competitive,” he said.
Benefits Of AfCFTA For Businesses
African MSMEs can benefit from greater access to new markets and the possible economic transformation that competition in these markets could promote, and are regarded as key target for the AfCFTA.
The agreement offers a number of benefits to African SMEs, among which is vital because of their importance to the continent’s economy, accounting for up to 80 per cent of businesses and contributing up to 40 per cent of national income.
Other benefits include: fostering specialisation and boosting industrialisation; increasing employment and investment opportunities, as well as technological development; allowing African-owned enterprises to enter new markets, expand their customer base and create new products and services, making investing in innovation viable; reducing the manufacturing gap, creating more avenues for SMEs to create more well-paid jobs, especially, for young people; increasing investments that drive capital to domestic businesses; and easing the process of importing raw materials from other African countries and enabling SMEs to set up assembly firms in other African countries, creating cheaper means of production.
