Nine months after President Mohammadu Buhari signed the AFCFTA, it seems as though Nigeria is still foot dragging with the implementation of the agreement. While the AfCFTA has great potential to support economic development on the continent and Nigeria by extension, some enterprises may not be able to take advantage of the agreement or compete with an influx of new competitors from other countries within the free trade area because of internal inefficiencies within businesses or suboptimal business environments.
These potential challenges for businesses sparked some opposition to the AfCFTA in Nigeria and led Nigeria to be one of the last countries to sign the agreement on July 9, 2019.
Worried by this development, three concerned bodies, who are players in the business of accountability for growth, and development came together in a conference where they did a breakdown-to-pieces of the AfCFTA agreement and took it from the technicalities – that are ordinarily decodable only by the professionals – to the understanding ground level for clarity and usable material for the layman in business.
It was so planned that no one will be left behind as the rest of 55 African countries move to finally save the continent from the embarrassing underdevelopment status of centuries to a final collaborative socio-economic growth and development in no distant time with implementation of the agreement.
No doubt, small and medium-sized enterprises (SMEs) are the backbone of many developed economies. They are important contributors to employment, output growth, and trade expansion and in Nigeria they remain critical constituents of the economy.
According to the National Bureau of Statistics (NBS) and the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN), SMEs in Nigeria accounts for about 96 per cent of registered Nigerian businesses, employ about 75 per cent of the national labour force and contribute 48 per cent to the country’s Gross Domestic Product (GDP).
The Nigerian government is currently at the third phase which is the implementation phase and on its part has made concerted efforts towards positioning SMEs to harness the numerous benefits of the AfCFTA on implementation through formalizations and engagements with public sector agencies to strengthen the capacity of SMEs to harness available opportunities.
Despite sensitisation and consultation campaigns in all the geo-political zones, there is a seeming lack of mass enlightenment on the AfCFTA with only 30 groups and 2317 natural persons sensitised and consulted on the AfCFTA.
A 2020 survey of 1,804 MSMEs across Nigeria by the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture (NACCIMA) showed that more than 50 per cent of those surveyed were most concerned about the threat posed by imported cheaper goods competing with local products due to the AfCFTA, while only 20 per cent were aware of the existence of the AfCFTA.
Needless to say that the above statistics formed the background of discussions at the one day stakeholders’ sensitisation and consultation forum, themed, ‘Maximizing the Benefits of the African Continental Free Trade Area Agreement’ held on Tuesday December 7, in Lagos.
The discourse jointly organised by Civil Society Legislative Advocacy Center (CISLAC), OXFAM Nigeria in conjunction with The Chartered Institute of Taxation Nigeria drew experts from the Civil Society Organisations, academic community, corporate organisations and the media.
In his opening remarks, the executive direcror of CISLAC, Auwal Musa Rafsanjani said the impact of the AfCFTA cannot be determined by government policies alone but also by how much the private sector leverages the abundant opportunities available in the free trade area.
“In Africa despite sensitisation and consultation campaigns in all the geo-political zones, there is a seeming lack of mass enlightenment on the AfCFTA with only 30 groups and 2317 natural persons sensitised and consulted on the AfCFTA.
“Without an active strategy to ensure that MSMEs are aware of the AfCFTA and put in a position to capitalise on the agreement, the AfCFTA’s positive impact on the Nigerian economy will remain minimal,”CISLAC boss said.
Also speaking the CITN President, Adesina Adedayo, noted that the AfCFTA has the potential of contributing greatly to the movement of capital and natural persons, and facilitating investments across borders by laying the foundation for the establishment of a continental customs union at a later stage.
According to him, “AfCFTA was established primarily with the objective of deepening African economic integration through a single market for goods and services and to promote industrial development through diversification and regional value chain development.
“The advantages of this agreement are quite enormous. It has the potential of contributing greatly to the movement of capital and natural persons, facilitating investments across borders by laying the foundation for the establishment of a continental customs union at a later stage.
“MSMEs remain critical constituents of the Nigerian economy as they represent 96 per cent of Nigerian businesses and contribute 75 per cent to national employment. MSMEs will benefit from access to new markets and the economic transformation that competition promotes.”
Speaking on concerns about the effect the AfCFTA would have on the Nigerian economy, Adedayo said the concerns can be addressed positively by the government putting in place safeguards to ensure vulnerable industries are protected.
According to him, these safeguards include, improving transport infrastructure and enforcing policies which would see a reduction in the cost of production with much consideration and easier access to credit facilities by the MSMEs.
“This would in turn make goods export competitive and promote rapid growth in industrialization which in return boost our nation’s economy.”
In his keynote address, on benefits of AfCFTA to MSMEs and Nigeria, the key speaker, Professorial Chairman, Babcock University and Tax Commissioner at the Tax Appeal Tribunal, Professor Ishola Akintoye said took a cursory look at the continent, the prevailing situation on the ground in Nigeria and called on the federal government to get serious with its implementation because, according to him, if it took the Africa’s most populous country that long to carefully check and study the AfCFTA before it signed, it will not be in good place to find Nigeria wanting among 55 other countries at implementation.
Prof. Akintoye, also a teacher, carried the task to fulfillment when he practically downloaded facts from nooks and crannies of intellectuality to enable the participants, selected from across the sectors including the transparency and accountability civil societies, taxation institutions and the media, who are expected to further engage in the implementation process through public sensitisation, takeaways to do so.
Speaking on the reason behind it he said , “AfCFTA is simply an idea to have a single plan for all African countries to come together under an African integration developmental authority that will make all the member countries to grow together,” he said noting, however, that some members will lose because “when you open your doors, you will lose some fiscal benefits” but, he assured, the percentage of loss will be insignificant compared to what will be continentally benefited when the agreement becomes fully operational
Enumerating the benefits, the scholar from Babcock University said the AfCFTA will allow African-owned companies to enter new markets, facilitate economic growth, encourage foreign direct investment, reduce input cost, and also increase efficiency and sales, minimise the threats and improve her competitive advantages under the AfCFTA,
Akintoye thereby said there was need for critical evaluation and concerted, continuous measures in key areas. According to him, the government must “carry out an impact assessment to determine likely effects of AfCFTA implementation on government revenue, identify required changes to existing laws and regulations including local content rules, and areas of competitive and comparative advantages.
“Build institutional capacity to lead the implementation of AfCFTA and identify key stakeholders and agencies with key responsibilities, expected outcomes and performance indicators.
“Using the provisions of AfCFTA, systematically improve the capacity of the Nigeria Customs Service to secure and enforce Nigerian borders to prevent dumping, transshipment, smuggling and other detrimental cross border activities.
“Systematically address infrastructural gaps and improve the general ease of doing business in Nigeria especially through a concerted focus on power and access to affordable finance.
“Protect and strengthen business sectors and infant industries that could be endangered by AfCFTA in line with Article 24 (under Protocol on Trade in Goods).
“Isolate, support and stimulate sectors and businesses with identified capabilities to increase export volume and create jobs locally through coordinated governmental efforts at all levels
He added that, as a matter of urgency, the government must address regulatory and policy impediments and promote small scale industries in local machine tool manufacturing, fishing and crop production, livestock, forestry, audio visual and financial services through extension of focused Venture Capital and skills enhancement under AfCFTA.
“The FIRS and the JTB should leverage technology and the new TIN system to improve the quality and integrity of taxpayers’ data, enhance tax intelligence gathering and initiate reforms to ensure appropriate taxation of nonresident individuals and businesses with sufficient connections to Nigeria.
“Ensure policy coordination and alignment between monetary, trade and fiscal policies. “Most importantly, conduct regular, extensive and robust scientific studies on different aspects of AfCFTA as it affects Nigeria both in terms of potential benefits and probable losses to inform policy decisions on future withdrawal, review and modifications of the AfCFTA treaty.”
Corroborating Akintoye, former Director General Lagos Chamber of Commerce and Industry (LCCI), Dr. Muda Yusuf noted that countries with strong productivity and competitiveness will benefit more.
According to him,“ Benefits and costs would vary from country to country. Countries with a quality investment environment would emerge as key destinations for investment; countries with weak investment environments will be market destinations.”
He however highlighted multiplicity of membership, slow ratification of protocols and reluctant implementation of agreed plans, lack of complementarities of African economies, socio-economic policy divergence, inadequate infrastructure, limited national and regional capacities, and lack of full private sector involvement at both planning and implementation stage, as part of challenges of the AfCFTA.
As Nigeria finally rises to begin the implementation of Africa Continental Free Trade Area Agreement (AfCFTA) after taking much times to consider the pros and cons months ago, the discussants noted that there is need to wake up the consciousness of citizens, particularly those in Micro, Small and Media Enterprises (MSMEs), of their respective duties to, rights from the agreement, and how they can leverage on the inherent opportunities to maximize the benefits of it has necessitated. While the participants were also exposed to the inherent benefits of the AfCFTA for value addition and improved export trade revenue derivation. Above all, Nigeria must address issues raised by local manufacturers to show readiness.