Buhari has refused to sign an Africa free trade agreement that will open up Nigeria's market. It's a monumental goof.
When 44 African countries met this week to sign the CFTA (African Continental Free Trade Area), there was no Nigeria on the table. President Muhammadu Buhari pulled out of the event in Rwanda, telling the world he needed more time for consultations back home.
AFP reported that; “Nigeria, one of Africa’s largest markets, hesitated after objections from business leaders and unions — a sign that getting the deal through scores of national parliaments may face several hurdles”.
Albert Muchanga, who is the AU Commissioner for Trade and Industry said: “Some countries have reservations and have not finalised their national consultations. But we shall have another summit in Mauritania in July where we expect countries with reservations to also sign”.
Nigeria is Africa’s largest economy and most populous nation. Its decision to withdraw from an agreement that will pull down trade barriers in Africa, was always going to raise plenty of eyebrows.
If all 55 African Union member countries eventually sign up, the CFTA will create a bloc with a cumulative GDP of $2.5 trillion (2 trillion euros) and cater to a market of 1.2 billion people.
The CFTA will drastically reduce customs and duties and open up Africa for business like perhaps never before.
“If we remove customs and duties by 2022, the level of intra-African trade will increase by 60 percent, which is very, very significant,” Muchanga told AFP in an interview before the summit.
Moussa Faki Mahamat, Chairman of the AU commission, said the: “CFTA will make Africa one of the largest economies in the world and enhance its capacity to interact on equal terms with other international economic blocs.
“The world is changing, and changing at a great speed. International competition is fierce. It leaves no room for the weak.”
It is befuddling that Nigeria whose economy tanked in the last couple of years and which has been trying every trick in the book in order to bolster its weak currency and wean itself off crude oil, would pull out of a landmark, historic agreement like the CFTA.
It is striking that after preaching diversification since he assumed the reins, President Buhari would shy away from a regional agreement that could potentially open up Nigeria’s market to the rest of the continent and beyond and improve the nation’s balance of trade.
So, why did Buhari not sign the CFTA?
“We will not agree to anything that will undermine local manufacturers and entrepreneurs, or that may lead to Nigeria becoming a dumping ground for finished goods”, President Buhari said in his defense.
It is a weak defense no less. In a global and competitive market, protectionism benefits no one. No country aspires to insularity when there’s more to benefit from comparative advantages.
In any case, engaging in free trade with the rest of Africa will lead to competition back home and make local producers aspire to quality. The multiplier effect will be jobs and more jobs.
Everyone will benefit from a market that is 1.2 billion strong. And with Nigeria possessing a chunk of that market, it has more to gain than lose from partaking in the CFTA.
Intra-regional trade will probably force us to beef up decaying infrastructure around border cummunities. In the longer term, CFTA will lead to a common air transport market that could drive down airfares in Africa. There are also plans for visa-free travel for Africans across the continent as part of the deal.
We shouldn’t even be having second thoughts about this as Nigerians. If this takes off without us, we’ll be holding the short end of the stick for a while yet.
The good news for Nigeria and Buhari is that we have a second chance to make this right and append our signature on this thing when another summit on the CFTA holds in Mauritania in July.
Hopefully, Buhari would have been done with his consultations at the time. Hopefully, his advisers tell him just how daft it was not to sign the CFTA the first time around.
Africa’s big brother shouldn’t let deals like this pass it by.