President Muhammadu Buhari will in January 2019, receive the report of the Presidential Steering Committee on the African Continental Free Trade Area (AfCFTA) Impact and Readiness Assessment.
The committee was set up on October 22, 2018 at the Presidential Villa, with a charge to assess the extent to which Nigeria is ready to join AfCFTA as well as the likely effects of such move.
A statement by Malam Garba Shehu, Senior Special Assistant to the President on Media and Publicity, said the committee, which was given 12 weeks to conclude its assignment, had held wide consultations with industry groups and stakeholders, including the Manufacturers Association of Nigeria (MAN).
On March 21, 2018, when 44 of the 54 African countries signed the AfCFTA agreement in Kigali, Rwanda, Nigeria withdrew at the last minute, saying it needed to carry out more extensive consultations particularly with the country’s business community.
The agreement, according to Shehu, seeks to remove all forms of restrictions to trade and investment flows within the African continent.
The statement which also said no fewer than 49 countries had signed the AfCFTA agreement as at December 2018, added that 13 other countries had already ratified it.
It also said once 22 states ratify the agreement, it would formally become binding and implementation would begin.
The statement further said whereas opinion was still divided in Nigeria on both the merits and demerits of the agreement as well as the proper time for Nigeria to join the AfCFTA, the committee had commissioned a study to give further insight into the public debate on the issue following the recent report of MAN.
Giving insight into the report, the presidential spokesman said MAN reported that if Nigeria ratified the agreement, import would rise from 27.6 percent for textile, apparel and footwear sub-sector to 180.7 per cent for chemical and pharmaceutical products during the three phases of liberalising tariff lines with 5 per cent tariff rates.
He added, “According to MAN, in contrast, the import surge will be as high as over 2000 per cent in motor vehicle assembly sub-sector over 15 years when 10 per cent tariff rates are liberalised. This will instantly spell doom for the automotive aspect of Nigeria’s National Industrial Revolution Plan (NIRP).
“The MAN study also shows differing output, employment and investment effects across manufacturing sub-sectors. For instance, four sub-sectors (Food, beverages and tobacco; wood and wood products; textile, apparel and footwear; and non-metallic) will likely see substantially high rates of increase in imports and import competition coupled with a substantial decrease in output.
“Similarly, major changes in employment can be found in three manufacturing sub-sectors: chemical and pharmaceutical products; textile, apparel and footwear; and non-metallic sub-sectors. Some sectors such as electrical and electronics and wood and wood products will lay off workers.
“The MAN study goes further to show that huge investments are required in chemical and pharmaceutical products and textile, apparel and footwear sectors, while moderate investments are required in electrical and electronics.
“The key message from the MAN study is that despite challenges, Nigeria should go ahead and sign the AfCFTA agreement with an informed mindset, committing itself to engage in negotiations of the AfCFTA, embed itself in the process and ensure that the AfCFTA delivers good results for its manufacturers, especially as it relates to taking benefits of the market access opportunities on the rest of the continent.
“It also offered recommendations on how expected losses can be defrayed for the manufacturers and how policies can be used to deal with expected losses.
“It is noteworthy that the MAN study focuses mainly on ‘defensive’ dimension of trade in goods (i.e. import penetration). It has not given adequate attention to “market access” opportunities (i.e. export penetration) and does not include the analysis of trade in services.”
Shehu explained that it was against the background of these findings that another study was recently commissioned to address the gaps found in the study conducted by MAN which he said would be completed at the end of this month.
According to him, upon completion, the study will shed more light on public debate and add value to the work of the Presidential Steering Committee on the AfCFTA Impact and Readiness Assessment.
“AfCFTA is designed to be a pan-African free trade area that will create a single market for goods and services. It also aims to liberalise and facilitate the movement of investment and business people across the continent,” Shehu explained.