It is said that the Implementation of the single continental market has been delayed for two years after the world’s largest free trade area became operational on January 1, 2021, with much fanfare. There are a number of causes for this, including the COVID-19 pandemic, a lack of agreement on the rules of origin for some product lines, and the failure of 10 out of the 54 signatories to ratify it. Despite the fact that some African countries have begun trading a small amount of goods under the African Continental Free Trade Area (AFCFTA) agreement through the pilot phase, trade is still hampered by logistical and tariff issues, with the preference still going to trading partners outside the continent.
The AFCFTA agreement stipulates that cross-border taxes on 90% of imports should be eliminated at the latest by 2030, however many tariffs will be phased out far faster. Tariffs are just one of several obstacles to trade in Africa, though. Given that three-quarters of Africa’s goods are transported on roads, which are sometimes not well-built, logistics is another significant obstacle. The African Development Bank claims that this raises the cost of logistics on the continent, which can increase the price of African commodities by up to 75%.
Nigeria and Africa’s trade in goods in about five years stood at N15.85T.
According to figures from the National Bureau of Statistics (NBS), Nigeria’s trade in goods with the rest of Africa in the last five years was N15.85 trillion. The data is for 2018 through September of current year. The amount represents 9.3% of the nation’s overall international commerce during that time, highlighting the meagre level of intra-African trade. The value of commerce between the nation and the Economic Community of West African States (ECOWAS) members averaged N1.42 trillion each year over that time, totaling N7.09 trillion or 4.2% of all trade during that time.
Nigeria’s foreign commerce during that time was estimated to be worth N170.27 trillion, with exports accounting for somewhat more, 52.6% of the nominal value. According to the historical pattern, Nigeria dominated regional commerce throughout the period under study. Exports totaled N12.76 trillion, or 80.5 percent, of the N15.85 trillion in regional commerce, while imports were a pitiful N3.09 trillion. Additionally, 7.5% of the trade value in the period came from commodities imported via official methods from other ECOWAS nations. The value was N528.6 billion, but the country’s exports to its neighbours increased by a factor of more than 12. (N6.36 trillion).
African Regional Integration Index does not push the single market.
The NBS numbers support the low intra-regional commerce, which is modest, Anaemic at best, and largely regressive. For instance, the amount increased by approximately 80% in 2019 to N5.03 trillion before declining by 44.7% the following year. The value of commerce between the largest regional economy and other African nations somewhat increased last year (6.6 per cent). The valuation was N2.28 trillion as of September, which brings the annualized projection to N3.04 trillion, or roughly 2.5% more than last year’s performance.
Foreigners are reportedly allowed to move around the continent more easily than Africans themselves, according to the African Regional Integration Index, which does not reflect past attempts to advance the single market and free movement agenda. With a score of 0.383 on average, trade integration across the African continent is ranked towards the bottom of the scale. It also notes that average import taxes and average non-tariff trade barriers are higher in Africa. The organized private sector is concerned since Nigeria has not yet finalized its tariff schedule or revealed the rules and implementation plan for the trade agreement.
Country must pay attention to trade facilitation rules and regulations.
Francis Anatogu, the secretary of the National Action Committee on the AFCFTA, had stated that all was prepared for Nigeria to start trading under the agreement. According to Anatogu, Nigeria must focus on trade facilitation, institutional coordination between the Federal Government and the private sector, policy, infrastructure, trade information, free movement of people and goods, and finance. However, he emphasized the need to increase the amount of domestic transactions while also encouraging and helping companies to tap into the African markets. In order for the nation to benefit from the AFCFTA, he also emphasized the necessity to entice foreign investment.
Related Link
AFTCA: Website
