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Danger: AfCFTA to make Nigeria Africa’s major export target—UI Report

Report of a new research commissioned by the Manufacturers Association of Nigeria (MAN) and conducted by the Centre for Trade and Development Initiatives (CTDI), University of Ibadan, has been released.

According to the report, the current harsh production environment in the country will become a comparative advantage for many African economies to flood the market with goods when the African Continental Free Trade Area (AfCFTA) agreement comes into full force.

MAN said the commissioned study was designed to investigate the potential impact of the trade pact on the manufacturing sector, as well as its offensive and defensive imperatives.

The report averred that “This obviously makes the country an export target for many African countries in the AfCFTA. Nigeria is trailed by South Africa, Tanzania, Cameroun and Egypt in the same level recording about 30 per cent import penetration.”

CTDI report observed that “A three-phase liberalisation tariff rates from five per cent, 10 per cent, and 20 per cent to zero will likely generate higher surge of imported manufactured goods to the tune of about 159.5 per cent, 183 per cent and 251.4 per cent, respectively on the average during the 15-year period. The import growths would be higher if there were no room for exclusion.”

“Import will surge in all the manufacturing sectoral groups and by extension the77 subsectors in the third phase of the liberalisation. Particularly, tariff cuts would trigger increases in import for food, beverages and tobacco, 91 per cent; chemical and pharmaceutical products, 180.7 per cent; plastic and rubber products, 111.6 per cent; wood and wood products, 96.2 per cent; textile, apparel and footwear, 55.2 per cent; non-metallic, 67.2 per cent; electrical and electronics, 218.2 per cent; and motor vehicles and Assembly, 2000 per cent.”

Continuing, the report argued that based on the high cost of manufacturing and operating environment prevalent in Nigeria (well above the continental average), AfCFTA would have overwhelming negative impact on the manufacturing sector, even though in differing magnitude.

Besides, the associated trade liberalization policy on AfCFTA, would among other things, spell doom for all the sectors; output would decline in all sectors but with higher magnitude in motor vehicle and miscellaneous assembly, chemical and pharmaceutical and electrical and electronic industries compared to others.

Currently, the commissioned study noted further that “The change in domestic outputs of manufacturing sector is negative and ranges from -10.00 per cent to -0.228 per cent; thus indicating that operators in the sector may close shop.

“Investment and employment in all industries will fall in the third phase (2029-2033) implementation of AfCFTA,” the CTDI report added.