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Friday, November 13, 2020/ 02:00PM / United Capital Research /
Header Image Credit: Pan African Visions
Recently, the Federal
Executive Council (FEC) ratified Nigeria's membership of the African
Continental Free Trade Agreement (AfCFTA) less than a month to the deadline.
The deal which takes effect tentatively on 1 January 2021, was pushed back from
July 2020 to allow governments to concentrate on fighting the pandemic.
Nigeria's decision to ratify the trade deal is a major win for the ACFTA.
Nigeria accounts for c.17% of the continent's GDP. The agreement is set to
create the largest trading bloc since the World Trade Organisation (WTO) in
1995. It promises to improve trade and promote intra-regional investment in
Africa by removing 90.0% tariffs on goods and services. When fully operational
by 2030, AfCFTA is expected to cover a market of 1.2bn people, with a combined
GDP of $2.5trn.
Despite the promise of the
AfCFTA and the obvious commitment displayed by African nations, historical
precedents and an unwillingness to match words with deeds suggest noncommitment
and cast a shadow on the optimistic outlook. To name a few, closed land borders
as observed in Nigeria and regional tensions between Kenya and Somalia are
indications of potential constraints. Additionally, failure to address
infrastructure deficits and security challenges are significant threats to the
long-term efficacy of the agreement.
For the AfCFTA to achieve
its goal of unlocking economic growth and enhancing competitiveness on the
continent. There has to be sustained political will to bolster competitiveness
through structural reforms and investment in infrastructure and human capital.
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