Monday, November 16, 2020 / 7:44 AM /
NESG / Header Image Credit: NESG
The Nigerian Economic Summit Group (NESG) congratulates the Federal Executive Council (FEC) of Nigeria for taking the bold of ratifying the African Continental Free Trade Area (AfCFTA) Agreement on 11th November 2020.
After the President signed the Treaty on the 7th of July 2019, the National Action Committee (NAC) was inaugurated to examine what it would take for the country to approve and domesticate the Agreement for appropriate implementation, particularly in the following areas: (a) key institutional considerations; (b) legal framework politics and governance considerations; (c) peace and security; (d) good governance institutions; and (e) sectoral policies.
The NAC was needed because of the large economic size of Nigeria and the need to draw lessons from similar free trade engagements in the Economic Community of West African States (ECOWAS) and from other parts of the world.
The NESG argues that time taken to fully consider the initiative is not wasted, as it has allowed a greater number of stakeholders across the country to be briefed about the AfCFTA, and encourage the government to put in place institutional structures that are necessary for the effective implementation of the agreement in the country.
In the course of waiting, individual and corporate citizens have, according to the NESG, become aware that AfCFTA would: (1) encourage competition, which would consequently increase Nigeria's efficiency; (2) make Nigeria produce more goods and services it is most efficient in; (3) eliminate tariffs and quotas as well as monopolies, as more players would be brought into the market; (4) lead to lower prices of goods and services; and (5) enable consumers gain better, easier and cheaper, access to a variety of products.
Despite the mentioned benefits, Nigerians became conscious that: (1) when imports are made easier, domestic producers could access them, allowing them adapt the ideas and sell them, particularly when there are no strong intellectual property laws; (2) outsourcing of jobs can become a trend within a free trade area, if there is a lack of labour protection laws, where employees work in unhealthy and substandard work environments; and (3) since member countries in the AfCFTA are no longer able to collect import duties, Nigeria needs to think of ways to compensate for the reduction in tax revenue.
Having weighed the various options, the trade creation and diversion effects of the economic union may lead to the attraction and development of continental transnational corporations headquartered in Nigeria, with affiliates around other African countries.
However, immediately after its ratification, the NESG was of the opinion that a bill which comprises of the various policies that would be affected by AfCFTA should be forwarded to the National Assembly, to fully domesticate the Treaty across national Ministries, Departments and Agencies (MDAs). In addition, the economic think-tank has argued that competent institutional structures and necessary infrastructure must be put in place for effective implementation of the Agreement.