This Day | 23 April 2020
Business leaders, others seek delay in AfCFTA’s implementation
by James Emejo in Abuja and Dike Onwuamaeze in Lagos
Some members of the organised private sector (OPS) and experts in international trade have called for the postponement of the take-off of the African Continental Free Trade Area (AfCFTA) agreement, scheduled to commence on July 1, because of the devastating effects of the COVID-19 pandemic.
The OPS also urged the federal government to design and implement an exit strategy amid the current lockdown to contain the spread of the pandemic in the country.
Among the leaders of the OPS who canvassed the extension of the commencement date of AfCFTA, while speaking in separate interviews with THISDAY, were the Directors General of the Lagos Chamber of Commerce and Industry (LCCI), Nigerian Association of Chamber of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Nigeria Employers Consultative Assembly (NECA).
Others who spoke to THISDAY included experts in international trade relations such as former Foreign Minister, Prof. Bolaji Akinyemi and a Senior Research Fellow and Head, Division of International Economics Relations, Nigeria Institute of International Affairs (NIIA), Dr. Efem N. Ubi.
According to Akinyemi, the commencement of the AfCFTA should be extended by another 12 months.
He said : “Industrial production is down. Factories are closed. Global and intra-Africa trade are suspended. All the factors underpinning the AfCFTA are in suspense. It is only rational for the operations of the AfCFTA not to be activated. I will recommend a 12 months wait.”
Ubi said the disruption of the global economy by the COVID-19 pandemic had made the take-off date for the AfCFTA impossible because of the disadvantaged porous and fragile nature of African economies that are weak in manufacturing and heavily dependent on importation.
He added that countries in Africa are more concerned about the survival of their national economies than pursuing the AfCFTA agenda.
“So, it is nearly impossible for us to be contemplating about the commencement of the continental free trade area by July 1. Currently, every member country to the agreement is working hard to bail itself from the impending recession and the catastrophic impact of COVID-19. It is only when the economies of member nations are working that they can trade among themselves.
“Therefore, the African Union (AU) should be more concerned with the economic survival of its member states for now than with the commencement of the AfCFTA on July 1,” Ubi stated.
In his contribution, the Director General of NACCIMA, Mr. Ayoola Olukanni, said the take-off date of AfCFTA might be deferred because of the pandemic.
Olukanni explained that the pandemic has forced countries back to the drawing board in an effort to devise their individual survival strategies.
“The COVID-19 is a global phenomenon that is beyond the contemplation of anybody in terms of its devastating consequences. So, it is likely that the commencement of the continental free trade area will be postponed because it is important first and foremost, to stabilise and ensure the survival of the economies of African nation-states before going ahead with the AfCFTA agreement.
“Currently, force majeure is being cited as reason for not being able to fulfill contractual obligations by many firms and entities as a result of the unforeseen impact of COVID-19, which is a fundamental challenge to the global economy that Africa is a part of,” he added.
The Director General of the LCCI, Dr. Muda Yusuf, also told THISDAY that the AfCFTA agreement might not be launched on July 1, as earlier scheduled, since most countries are now in unilateral mode and responding to the telling impact of the COVID-19 pandemic with varied individual strategies.
Yusuf said : “The COVID-19 pandemic experience may diminish the disposition of countries towards multilateralism. The imperative of building individual country’s resilience played out in COVID-19 scenario and the AfCFTA is likely to fall into abeyance for now,”
Yusuf’s counterpart in NECA, Dr. Timothy Olawale, stressed the need for the African Union to review the commencement date and make necessary adjustments in the light of the current impact of COVID-19.
Olawale said the pandemic had resulted in protracted shutdown of factories, businesses and the termination of cross-border contracts, which did not contain properly drafted force majeure provisions.
He said the take-off date for trading under the AfCFTA might be postponed or suspended until further notice if the pandemic persists by July 1 because containing the pandemic might entail a restriction on international trade contrary to the principles of the AfCFTA agreement.
“A key factor to aid the success of the AfCFTA is free movement of goods and people. But the pandemic has constrained its implementation as national borders had been closed and movement of people limited. It is doubtful if the AfCFTA can be implemented before the total containment of the spread of COVID-19, a scenario not possible till the successful launch of a vaccine in 2021.
“The AU Commission, therefore, must revisit its work plan to determine which programmes in the light of COVID-19 are critical to continue over the coming months and those that can be temporarily suspended so that funds and staff can be re-allocated to COVID-19-related programming. This means the commission will need to make tough decisions to suspend some activities and to re-organise its activities around a smaller portfolio of strategically important and mission critical priorities,” Olawale said.
However, a Partner with the Aelex Legal Practictioners and Arbitrators, Mr. Soji Awogbade, told THISDAY that there should be no reason for the AU to postpone the commencement date of the AfCFTA.
Awogbade, who is also the Head, Trade Practice Group of Aelex and an adviser to the National Action Committee that advise the federal government on the implementation of AfCFTA, said any postponement of the commencement date would signal to the international business community that Africa was not serious about integration.
According to him, since COVID-19 has not terminated regional trade among the regional bodies like ECOWAS, “it should not hinder the commencement of the AfCFTA.”
He said the agreement should take off because “there is no prescribed minimum quantity of trade that is required for it to commence. So, we will not wait till every participant is ready and every obstacle is removed. Otherwise, we will be prepared to wait forever and never start.”
He added that the significance of July 1 is to enable the continent to launch the structure for intra-African trade that would accommodate participants as they get on board and the volume of trade would be growing to the benefits of the African economies.
“Let us accelerate the growth of intra-African trade. We are not talking of the manufacturing of sophisticated products. We are talking about exporting maize to countries in Africa that can turn it into cornflakes rather than exporting raw maize to Kellogg and importing packaged flakes that will give Kellogg 98 percent of the entire trade transactions.”
However, efforts to get the reaction of the African Union (AU) were unsuccessful as Mr. Patient Atcho, Department of Trade and Industry, did not respond to an email sent to him on the subject.
OPS Seeks Review of Lockdown, Exit Strategy
The OPS has called on the federal government to design and implement an exit strategy amid the current lockdown to contain the spread of the pandemic in the country.
It added that such strategy is necessary towards the reopening of the economy.
The OPS, in a proposal signed by the President, Abuja Chamber of Commerce and Industry, Prince Adetokunbo Kayode, noted that the lockdown should be reviewed urgently.
The recommendations, which are now before the Presidential Taskforce on COVID-19 and other top officials of the federal government, drew the attention of the government to the urgent need to commence an immediate plan for an exit strategy by reviewing the lockdown as a prelude to reopening the economy while battling the pandemic.
The OPS stated that the situation report from the grassroots, city suburbs and inner city areas, indicated increasing restlessness among those whose livelihood depend on daily pay or trading.
“It is agreed that the lockdown was occasioned by the dire need to contain the pandemic. But by now, the conclusion of the third week of the lockdown, there are urgent calls for the designing of an exit strategy”, the OPS noted in its proposal obtained by THISDAY.
It added that the exit strategy is expected to “combine the continuation of procedures to contain and reduce further spread of the pandemic as well as reducing the present serious socio-economic problems facing the populace.”
Among other recommendations, the private sector group said the mandate of the presidential task force on the pandemic should include designing smart and phased opening and relaxation of the lockdown from April 27, and announcing smart exit strategies as quickly as possible.
It called for the acceleration of the determination of curative drugs by NAFDAC for the treatment of the virus, adding that “COVID-19 may end up being with us for a long time, like malaria. So the earlier we approve a curative drug, the better.”
The group also described the stimulus and palliatives being provided by the federal and state governments as a great initiative and called for an equitable distribution of the palliatives.
The OPS said :”We suggest that the federal government engages with the governors’ forum to immediately review the casual way the distribution of palliatives and stimulus for the general populace is currently being handled everywhere, by both levels of government.
“We suggest the adoption of household distribution through the polling units of all the wards in our LGAs. This must now be the basis for a verifiable and transparent method for social distance.