President Muhammadu Buhari being clapped for shortly after signing the AfCFTA in Niamey, Niger Republic recently
No doubt, since the beginning of all African economic policies, the African Continental Free Trade Area (AfCFTA) remains one of the most significant trade agreements since the establishment of the World Trade Organisation. The over 54 countries that are a part of it are home to over 1.3 billion people and generate over $3tn in annual GDP.
According to the UN Economic Commission for Africa, if the agreement is well implemented, intra-African trade could expand by 52 per cent by 2022 compared to 2010 levels, narrowing the gap with the intraregional trade quotas currently characterising Asia (51 per cent), North America (54 per cent), and Europe (67 per cent).
The AfCFTA is structured to serve as a pivot in achieving the goals of poverty alleviation, enhanced company competitiveness, and increased intra-African trade and investment. Small and medium-sized businesses, which make up 80 per cent of Africa’s GDP, stand to gain the most from this deal.
It would assist in accelerating the industrialisation of the African economy, which would benefit these business owners, young people and others by providing them with more job opportunities.
One of the key drivers of the African policy is that AfCFTA drops 90 per cent of tariffs and includes policies aimed at eliminating nontariff barriers such as customs delays. So, the long-term benefits of AfCFTA are likely to be substantial and larger than the potential losses.
Currently, some countries and sectors would likely be impacted negatively in the short term. Despite widespread excitement over AfCFTA’s potential benefits, some people would certainly be at the losing end. The local costs of conducting business and the capability of infrastructure are two examples of many factors that could contribute to this uneven distributional impact.
Business Hilights recalls that on July 7, 2019, Nigeria, Africa’s most populous country and economic powerhouse, became the 34th member of the AfCFTA by signing the agreement. The Federal Executive Council ratified the country’s membership of the AfCFTA on November 11, 2020.
No doubt, Nigeria stands to benefit greatly from the trade and investment opportunities that would arise as a result of the AfCFTA. In terms of population and human resources, Nigeria has everything it needs to make the most of the deal. The country is home to around 206 million people. Although there have been some apprehensions about increased international competition and the dumping of low-quality goods, Nigeria’s small and medium-sized enterprises are generally positive about the potential presented by the AfCFTA.
Statistics show that about 1,804 small and medium-sized enterprises in Nigeria were surveyed in 2020 by the Nigerian Association of Chambers of Commerce, Industry, Mines, and Agriculture, and six in 10 companies said that they anticipate the AfCFTA would result in lower prices, larger markets, greater customer demand, and increased production capacity. Although only 20 per cent of the surveyed SMEs were aware of the existence of the AfCFTA, more than half of the enterprises surveyed were worried about the competitiveness of local products.
