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Thrills, fears over African continental free trade agreement

Thrills, fears over African continental free trade agreement

In 2012, the continent’s Heads of State and Governments resolved to establish African Continental Free Trade Agreement (AfCFTA) treaty to create a single continental market for goods and services in member nations of the African Union. The essence of the treaty is to promote free movement of businesses, persons and investments using a single currency. In this report, Joseph Onyekwere, Assistant Editor, Law & Foreign Affairs and Ngozi Egenuka examine the pros and cons of the treaty in the light of Nigeria’s procrastination in signing the deal as well as the concerns raised by stakeholders.

Three years after the first meeting, specifically on June 2015, at the African Union Summit in South Africa, Consultations and negotiations for establishing the treaty commenced with all 55 African Union states by 2017, which was the deadline for the treaty to be adopted.

However, many member nations requested for more time to continue consultations on the potential impacts on their economies, meaning that the deadline must be exceeded on account of this request.

The scope of the treaty covered agreements on trade in goods, services, investment, and rules and procedures on dispute settlement, including a range of provisions to facilitate trade, reduce transaction costs, provide exceptions, flexibilities and safeguards for vulnerable groups and countries in challenging circumstances.

The draft agreement was finally signed on March 21, 2018 during the 18th Extraordinary Session of the Assembly of AU Heads of State and Governments in Kigali, Rwanda.

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About 44 of the 55 African countries signed the treaty.

The signatories included host Rwanda, Niger, Angola, Central African Republic, Chad, Comoros, Congo, Djibouti, The Gambia, Gabon, Ghana, Kenya, Mauritania, Mozambique, Cote D’Ivoire, Seychelles, Algeria and Equatorial Guinea.

Others include Morocco, Swaziland, Benin, Burkina Faso, Cameroon, Cape Verde, Democratic Republic of Congo, Guinea, Liberia, Libya, Madagascar, Malawi, Mali, Mauritius, South Sudan, Uganda, Egypt, Ethiopia, Sao Tome and Principle, Togo, Tunisia and others.

Nine others that did not sign the agreement included Nigeria, South Africa, Zambia, Tanzania, Burundi, Eritrea, Botswana, Lesotho and Namibia. South Africa has reportedly signed the treaty few weeks ago, leaving eight others, including Nigeria still weighing the options.

Nigeria said it was delaying its signature to the agreement to widen and deepen domestic consultations, to ensure all concerns were addressed, as it would not sign any agreement that would not fairly and equitably represent the interest of Nigeria and indeed, her neighbours.

The treaty aims at taking advantage of 1.2 billion population of the continent with a combined Gross Domestic Product of more than $2 trillion to create a single continental market for goods and services.

Some argue that the treaty would impact on government revenue and social welfare, as elimination of all tariffs among African countries would erode the trading states’ treasury by up to $4.1billion annually and deepen poverty, with millions of Africans potentially exposed to starvation and death.

Others, particularly among the poorer economies are afraid the benefits in the free trade area may not be equitably distributed among economies.

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The International Monetary Fund says Nigeria is the largest economy in Africa with GDP of $405 billion, followed by Egypt ($332 billion) and South Africa ($295 billion). Nigeria, with a population of about 180 million is also Africa’s largest market.

The Nigeria Labour Congress (NLC) kicked against signing the treaty, warning that doing so was “extremely dangerous” as it would open the country’s seaports, airports and other businesses to unbridled foreign interference and domination.

Similarly, the Manufacturers’ Association of Nigeria (MAN) also rejected government’s move to sign the treaty until proper consultations and inputs of all interest groups have been received on issues concerning market access and enforcement of rules of origin were addressed.

But, a former president, Olusegun Obasanjo, has taken an opposing position as he expressed disappointment that Nigeria was not among the 44 signatories to the treaty in view of its pivotal role in promoting the vision.

President Muhammadu Buhari says Nigeria will only be signatory to the Continental Free Trade Agreement if the nation’s national interests as well as regional and international obligations are balanced.

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