March 10, 2018/CFO Associates
The Federal Government has been told to tread cautiously about signing the proposed Continental Free Trade Area (CFTA) agreement because of the likely negative impact on private businesses and the country’s economy.
Also recently, the Nigerian Labour Congress (NLC) called on President Muhammadu Buhari not to be cajoled into signing the proposed bill.
According to the President of the NLC, Mr. Ayuba Wabba, the probable outcome of the policy if given life may have a crippling effect on local businesses and attendant effects on jobs.
“We have no doubt this policy initiative will spell the death knell of the Nigerian economy.” the NLC President submitted.
They expressed concern that the agreement which is aimed at liberating the African economy by creating a free trade Area for all 55-member states of the African Union (AU) may end up doing more harm than good because of the sensitivity of the policy and its possible negative impact on the country’s economy and private owned industries especially.
Dr John Isemede, an international trade expert and former Director General of Nigeria Association of Chambers of Commerce Industries Mines and Agriculture (NACCIMMA) says Nigeria will not really gain from the Tree Trade Area if the agreement is signed.
Isemede told newsmen in Lagos that many of Nigeria’s trade agreements had even worked to its disadvantage due to poor export capacity in non-oil and low industrial capacity
“There is a need to review trade agreements and policies at this time because most of the developed countries we see today grew by closing down their borders for a while.
“Take a look at AGOA for instance, for 10 years, only very few exporters have been able to export under the platform due to poor information and lack of proper documentation.
“We have rice mills and farms that are barely functioning, except for the new intervention of the UNIDO and Bank of Industry to empower farmers and this apparently is not enough.
He advised the Federal Government to look at the critical details involved in the agreement adding that there must be a balance between import and export for a country like Nigeria to benefit from any trade agreements.
Speaking to our correspondent, Mr. Emeka Nwasike Nwasike, an investment expert and CEO of Allied Trust Systems Limited said opening the borders of Nigeria will only expose local manufacturing industries in Nigeria which are struggling to survive to undue competition. He added that at a time when other countries are developing policies of protectionism for the growth and survival of its local industry, Nigeria cannot afford to jeopardize the growth of its local industries by allowing a free trade policy.
A leading Consultant and trainer in small business development, Mr. Henry Agbebire, said with the high rate of importation from other regions into Africa, the region may soon become a strait for imports against local manufacturing which is a major driver of growth in any economy.
“Although the the focus of the CFTA agreement is to increase Africa’s industrial and trade capacity however, nearly 85% of the goods traded in Africa come from outside the continent as against the 15% produced locally which has led to an annual food import bill of over $35 billion.
“There is therefore a very high possibility that the region would become a conduit for imports against local manufacturing if the free trade zone is allowed operation in Africa and especially in a country like Nigeria. No wonder developed countries and neo-liberal institutions such as UNCTAD, TRALAC, UNECA, WTO, DFID, EU USAID, World Bank etc are very enthusiatic to finance the CFTA process because they know that it would open up the African markets to their exports and at the detriment of the growth of local industries.
“According to history, all developed countries today reached their competitive position through a high import protection on agriculture and other infant industries and as a result benefited from huge subsidies and exploitation of their Southern colonial countries, particularly in Africa for centuries. They created the condition to do it through import protection and it is only afterwards that they opened their markets to other countries. I wonder why Africa would want to do otherwise” he said.
Explaining further he said “CFTA has the tendency to reduce real income in Nigeria because, with the policy, the Federal Government will be forced to renounce to a non-negotiable source of income like tafiff revenue. Also, as African countries open up, competition will be increasing on the continental market. This will result to trade flows such as African imports being reoriented because, partners located either on the continent or outside of the continent are being replaced by imports from African partners benefiting from better market access, thanks to tariff cuts, and potentially leading to terms of trade reduction. Thirdly as world prices of food products slightly increase with the liberalization reforms, net-food importating countries such as Nigeria will be hurt and their real income reduced.