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Whereas the services, non-oil export and manufacturing sectors of the economy have been identified as key sectors that will benefit under the African Continental Free Trade Area (AfCFTA) regime coming sooner, issues of power and multiple taxation will kill Nigeria’s comparative advantages in the continent.
In a recent presentation by Manufacturers Association of Nigeria (MAN) and RTC Advisory Services Limited, both bodies agreed that power and taxation must be addressed ahead of ratifying the AfCFTA to avoid turning Nigeria to a dumping group.
In its argument, MAN averred that if liberalisation under the AfCFTA is not checked through safeguard measures, 4301 of 4779 total manufacturing tariff lines of 5%, 10% and 20% will be moved to 0% in the first five years, thus leading to closure of virtually all manufacturing companies within the period.
The first impact of liberalization through tariff cuts, according to MAN, is the surge in imports of manufactured goods into the country, while other impacts are on the outputs, incomes, employment and investment of the manufacturing firms.
In his submission, the Managing Consultant, RTC Advisory Services Ltd, Dr. Vincent Nwani made it clear that whereas the services sector has been identified as the segment of the economy with the highest propensity to generate resources that ensure stability of the macro economy, particularly employment generation, domestic investment and foreign investment inflows and overall growth in domestic economic activities, it may be rendered helpless in the event of AfCFTA.
While calling for caution in ratifying the continental trade regime by the Nigerian government, he warned that if issues of power and taxation are not resolved, Nigerian manufacturers may not stand the continental competition.
“The services sector is an enabler of other components of domestic economic activities, the gross domestic product (GDP). The sector drives manufacturing, agriculture and agri-business, oil production and trade, mining and quarrying, retail and wholesale distributions, housing and real estate, among others.
“We believe that Nigeria has a minimum of 65% upside potential to succeed in the new AfCFTA dispensation depending on the actions or inactions relating to infrastructure provision and sectoral reforms moving forward. It is recommended that the details of AfCFTA should be well communicated to the business community including capacity building to empower businesses with skill to benefit from the agreement by the committee put in place to drive AfCFTA implementation.
“Commitment of the government to support manufacturers with necessary incentive that will reduce their cost of production and make them more competitive is germane.
“Finally, the committee should work in collaboration with the private sector in order to understand what they need from the government especially with respect to monitoring shipments into the country to prevent free entrance of goods from third countries and marketing their goods at exhibitions in various African countries”, he added.
Both MAN and Nwani raised concerns about the need for safeguard measures under the AfCFTA regime that is expected to commence sooner.
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