The Afreximbank 2018 report has predicted that African economies would grow by 4.1 per cent in 2018 if the African Continental Free Trade Area (AfCFTA) agreement is implemented.
This is just as the federal government has explained reasons why Nigeria cannot speedily sign the agreement, saying stakeholders in the six geopolitical zones of the country were apprehensive of its possible negative consequences to the nation's socio-economic development.
The Afreximbank report, which was launched by South African President, Cyril Ramaphosa; the Commissioner for Trade and Industry of the African Union Commission, Ambassador Albert Muchanga; and the President of Afreximbank, Dr. Benedict Oramah, during Afreximbank's Annual Meetings and 25th anniversary celebrations in Abuja recently, states that the implementation of the AfCFTA will create opportunities for Intra-African market access and will significantly increase trade flows.
According to the report, tariff removal and cost reduction under the pact would reduce production costs and induce economies of scale, spurring higher domestic production and investment into different sectors of the economy. This is also expected to boost value addition in production and enhance export growth across sectors.
According to the report, the AfCFTA arrangement needs to go beyond a 100 per cent tariff reduction in all goods, noting that non-tariff barriers are also major constraints on intra-African trade.
Such non-tariff barriers include standards, custom procedures, technical barriers, licences, prohibitions, distribution restrictions, procurement restrictions, competition measures and rules of origin.
Oramah said: "Intra-African trade is only 15 per cent of Africa's total trade, compared to Europe's 67 per cent and we need a sustained strategic shift to industrialisation, increased intra-African trade, and de-commoditisation through increased value addition and export diversification.
"The AfCFTA agreement and Afreximbank's Fifth Strategic Plan both emphasise the need for this structural transformation of African economies.
"Afreximbank is committed to weaning the continent from overdependence on commodities and our programmes, notably the Africa Commodities Initiative, contribute to higher value addition by supporting processing and industrial capacities in various commodity sectors."
The report noted that the African continent relies on the rest of the world for more than 80 per cent of its trade whereas its share of global trade remains at less than three per cent, in part, due to the small size of many African economies which limits their individual global bargaining strength.
It further notes that 16 of the 55 African countries are landlocked and rely on their coastal neighbours for extra-African trade and development, using ports and shipping lines.
But trade among the landlocked countries and their neighbours has remained low, with much of what goes across the borders being destined for, or being inward bound, from other continents.
Meanwhile, despite pleas and diplomatic pressure that was put on Nigeria by other African countries at the just concluded 2018 Annual General Meeting of Afreximbank, the country has maintained that it was still carrying out consultations.
Responding to question, the Chief Trade Negotiator for Nigeria and Director General, Nigerian office for trade negotiations, Amb. Chiedu Osakwe, pointed out that feelers from stakeholders contacted at the six geopolitical zones of the country, indicated that there were fears about Nigeria being trans-shipment and dumping ground of various goods and services.
According to him, the stakeholders further cited the dearth of infrastructure and power in Nigeria which the government had been battling to fix as some of their concerns.
"It is not an ideological thing that Nigeria is against any trade free trade agreement kind of thing, it has never been."
Furthermore, he pointed out that the African Growth and Opportunity Act (AGOA) had been there which the beneficiaries had not been able to fully take advantage of.
Osakwe particularly pointed out that another major concern was what the beneficiaries of the AfCFTA would give in return.
"So, for the AfCFTA, the government asked before the signing of the agreement in Kigali, that consultations should be deferred. That is the precise word, that different types of discussions and consultations with the stakeholders, businesses who will take advantage of this opportunity.
"And we have consulted, and one or two things we discovered in the process of that consultations include that in all the consultations, we didn't hear anyone ideologically saying to be part of the AfCFTA is not good for Nigeria.
"What we did hear however was this, yes the AfCFTA is good, but you know it has always been around liberalisation, productivity, competitiveness, pressure for cultural reform to be able to modernise and create jobs," he added.