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Africa free trade not for Nigeria now

Punch | 25 July 2018

Africa free trade not for Nigeria now

by Lekan Sote

At the recent “Memorial Symposium in Honour of Prof Adebayo Adedeji,” the Executive Secretary of the United Nations Economic Commission for Africa, Vera Songwe, expressed regret at Nigeria’s tardiness in signing, and ratifying the African Continental Free Trade Area Agreement.

This is informed by her opinion that the legacy of Nigeria’s Prof Adedeji, one of her predecessors in office, was to reintegrate Africa whose balkanisation was concluded at the 1884 Berlin Conference of 12 European powers, the Ottoman Empire and the United States of America.

Songwe is concerned that whereas member countries of the European Union conduct 60 per cent of their trades amongst themselves, African countries have a dismal level of trade with one another: Nigeria does only $5.5bn worth of trade with the rest of Africa. South Africa does better with $32bn trade.

Vice President Yemi Osinbajo recognises this low level of trade among African nations, and has promised that the Federal Government will address the gap. Songwe believes that Africa should diversify its trade, and convert its 1.2 billion population into an economic bloc that will speak to Europe (and the world), with one voice.

President Hage Gottfried Genghob of Namibia thinks that AfCFTA must not only unify Africa’s economy, it must also enable African nations to interfere in the internal political affairs of one another, especially when they overthrow their governments by violent coup d’etats, or when governments fail to restrain murderous herdsmen.

President Genghob agrees with former Nigerian External Affairs Minister, Prof Ibrahim Gambari, that Africans must prefer Africa to other continents, even as he worries that the Lagos Plan of Action for the Economic Development of Africa: 1980-2000, with the objective to increase Africa’s self-sufficiency, is generally observed in the breach.

Some realists think that Africa and most of its regional economic communities, save for Nigeria-led Economic Community for West African States, lack administrative and technical capacity, and therefore lack the capacity to compete globally.

Former Nigerian Head of State, Gen. Yakubu Gowon, who emphasised that future leaders of African nations must have vision, suggested that there must be a continuity of policies and programmes in government. He insists that planning is crucial to Africa’s economic development and growth.

In 1970, Gowon launched Nigeria’s post-Civil War Second Five-Year Development Plan that was supervised by Adedeji who served as his Federal Commissioner for Economic Planning and Reconstruction.

A former Liberian President, Amos Sawyer, who notes that the Monrovia Declaration provides a strategy for industrialisation and regional integration, counsels that African countries must be sensitive to global political ideologies.

The symposium’s Lead Speaker, Prof Peter Ayong Nyong’o of Kenya, who avers that Bretton Wood’s economic options are unrealistic, and alien to Africa, recommends that Africa must have a reservoir of scientific and technological manpower– maybe as bulwark against foreign goods invasion.

This will resonate with those who fear that if President Muhammadu Buhari endorses the AfCFTA Agreement now, Nigeria’s economy may become even more vulnerable to the more developed Western economies than it already is.

Ademola Oyejide, a professor of economics, conducted a study that predicts that Nigeria will experience minus 0.4 per cent change in real income, minus 16.7 per cent change in border tariff revenue, and minus 0.2 per cent change in trade, if Nigeria enters into the AfCFTA deal now.

Also, he reveals that changes in real wages of unskilled agriculture labour will be minus 0.54 per cent, that of unskilled non-agriculture labour will be 0.12 per cent, and that of other skilled labour will be 0.4 per cent. These indices are below those of better structured South African economy that will gain more from AfCFTA.

This explains the wide consultation that President Buhari is holding with stakeholders before putting pen to the AfCFTA paper. Vice President Osinbajo reveals that the consultation is informed by the need to protect Nigeria’s manufacturers.

The Chairman of NEPAD Business Group, Nike Akande, hints that Nigeria will not be ready for the agreement unless its goods and services are competitive. The Director General of National Office of Trade Negotiations, Chiedu Osakwe, points out that some longstanding economic issues must also be addressed.

Prof Nyong’o observes that the import-substitution strategy suggested by Bretton Woods advisors, and the use of foreign loans to build infrastructure, have woefully failed, and defeated Africa’s development plans. Servicing foreign loans with devalued naira is not kosher.

Those who want Nigeria to sign onto AfCFTA with a one per cent Central Bank of Nigeria minimum interest rate must remember the suicidal Latin expression, “Fiat justita, pereat mundes,” let justice be done, even if the world perish.

Nigeria’s survival must be considered. Hans J. Morgenthau, International Relations scholar, says, “There is no political morality without prudence.” Somebody must interrogate how AfCFTA will affect Nigeria’s economy.

Because Nigeria does not quite have the infrastructure and capacity to efficiently manufacture most of its consumer needs, AfCFTA may stunt Nigeria’s quest to migrate from perpetually exporting primary goods and importing manufactured products, for which labour suffers the most assault.

Adam Smith, who observes that “the great object of the political economy of every country is to increase the riches and power of the country,” also kindly advises that a country “ought, therefore, to give no preference, nor superior encouragement, to the foreign trade of consumption above the home trade.”

But he then recommends: “The surplus part of (a country’s manufactures) must be sent abroad, and exchanged for something for which there is a demand at home.” In the words of Thomas Pakenham, Europe’s Scramble for Africa was to evacuate the “mounting stocks of unsold Manchester cotton, Lyon’s silk, and Hamburg gin,” products of then nascent Industrial Revolution.

Smith didn’t envisage that a Nigeria must provide consumer goods and jobs for its population. He obviously never expected that the dynamics of political economy would make Nigeria acquire technology necessary to employ its local laour to provide its consumer goods needs.

Japanese management expert, Kenichi Ohmae, who submits that “In different countries, similar standards of living are emerging… to create the same consumption patterns and value systems” globally, regrettably doesn’t recognise that each economy must provide jobs, as well as consumer goods, for its citizens.

Nigeria’s economic nationalists fear that AfCFTA will lead to dumping of goods into Nigeria’s huge market, via South Africa, Francophone, and North African countries, and cause job losses, unfair trade barriers, economic depression, an import-dependent economy, and capital flight.

Omhae, who argues that unrestricted free trade among nations should lead to economies of large scale production, and therefore, cheaper goods, complains that “the politics of nationalism inevitably intrudes on free trade,” probably doesn’t understand the social effects of unemployment.

He thinks that economic nationalists only protect special interests, like labour. By his reckoning, only nations that bring agricultural and mining commodities to the international market can claim to have a local trade.

Well, only a Nigeria with infrastructure and macroeconomic policies that support both indigenous and international companies that operate within Nigerian borders as offshore subsidiaries, joint ventures, or franchises, to deliver economic, political, and social gains, should embrace AfCFTA.

The Africa Free Trade lobby that is lurking behind ECA must recognise that plans to use the backdoor to dump Europe’s sleek finished goods on Africa will compromise Nigeria’s economy and labour.

 source: Punch