Members of the organised private sector (OPS) in Nigeria have welcomed the commencement of the African Continental Free Trade Area (AfCFTA) agreement, which took off on January 1, 2021, with excitement and expectations of enhanced business opportunities within an enlarged African continental market.
The members of the OPS, comprising the Lagos Chamber of Commerce and Industry (LCCI), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) and the Abuja Chamber of Commerce and Industry (ACCI), that spoke with THISDAY on the commencement of the free trade area agreement, said the implementation of the AfCFTA would deepen Nigeria's economic reach in Africa.
They also noted that the implementation of the free trade agreement would be a gradual process due to institutional arrangements needed to be in place across the continent and some aspects of the agreement that need to be straightened out.
Trade, according to NACCIMA, has commenced but some of the operational requirements are still work in progress. Some of these include the requisite documentation to accompany the goods, registration of eligible traders among others.
Moreover, trade liberalisation will take place over a period of 10 years so tariff will still apply until then, although it will start reducing from this year.
The Director General of the NACCIMA, Ambassador Ayo Olukanni, stated that there is excitement in the private sector on the news of the commencement of trading under the AfCFTA.
Olukanni illustrated the excitement that pervaded the Nigerian business community with the preemptive strategic repositioning by an Ogun State based coffee farmer to capture the benefits that the AfCFTA would offer.
He said: "I am aware of a Nigerian Small and Medium Enterprise (SME), which is doing profitable business by supplying coffee to the local Nigerian coffee market. When I visited its premises, the owner revealed that they have acquired about two acres of land somewhere in Ogun State to expand its production of coffee.
"The company explained that it has taken that strategic initiative with an eye on the AfCFTA in order to be able to compete, specifically with coffee from Ethiopia and Kenya. That is the spirit Nigerian private sector should have regarding the trading under the AFCFTA."
He added that NACCIMA has been emphasising that the AFCFTA will not be a 100-metre dash, but a long distance race.
"In this context, we are encouraging many of our members to take a long view of history and start getting ready for it. Some may be able to plug in the short run and it may take others a longer time," Olukanni said.
The NACCIMA boss, however, noted that naturally there are also apprehensions in the Nigerian business community regarding the AfCFTA depending on the economic sector each business is playing from.
He, however, warned that the federal government and the business community should pay attention to the implementation of AfCTA to ensure Nigeria maximises gains from it.
The Director General of the LCCI, Dr. Muda Yusuf, also said the OPS is excited about the commencement of the AfCFTA because it is something members have always wanted.
"We believe that economic integration has several benefits in terms of the market size that is about $3 trillion of 1.2 billion people. That is a huge opportunities for Nigerian businesses and investors," Yusuf said.
He, however, noted that businesses also need to be well positioned competitively in order to benefit from the opportunities since trade is all about competition.
"But unfortunately, not all of us are properly positioned yet, especially those in the manufacturing, production and agric processing and particularly those in the SMEs. The cost of production is still very high. Therefore the AfCFTA presents a significant competitiveness challenge to them," he added.
Yusuf identified five major challenges to be addressed to make Nigerian businesses ready and fully prepared for AfCFTA.
He listed them as infrastructure, institutional, regulatory, foreign exchange and policy environments.
He said: "You know that trade is about competitiveness. It is the survival of the fittest. It only underscores the need for us to scale-up our competitiveness as an economy.
"What that requires is that the government should move very quickly to support enterprises in reducing their production costs by improving the regulatory and policy environments in a way that will make enterprises competitive and give them opportunity to be able to take advantages and the opportunities of the AfCFTA.
"These challenges are issues about port operations, multiple taxation and power. When I said that we need to move quickly to address the bottlenecks in the economy, the port is one of them. Security is a major one. Transportation is a major one. Regulation is a major one. Policy is a major one. Foreign exchange environment is a major one. It is vicious circle."
According to him, strong institutional reforms are needed mostly in the customs departments across Africa for the implementation of the Rule of Origin (RoO).
He warned that failure to ensure an effective implementation of the RoO will inhibit the execution of AfCFTA and expose African markets to dumping of goods from other continents.
He expressed concern that no word has been said either by the African Union Commission or the AfCFTA Secretariat on the harmonisation of some bilateral trade agreements between some African countries and countries outside Africa and institutions like the European Union.
"Many of these trade agreements have provisions for free trade. So there is a challenge on how we are going to align them with the AfCFTA and this issue of RoO because it can tend to conflicts if we are not careful.
Nobody is telling us what they are going to do with these bilateral agreements," Yusuf said.
In his reaction, the President of ACCI, Mr. Al-Mujtaba Abubakar, said the AfCFTA would enhance Nigeria's economic influence on Africa.
Abubakar stated that as the leading economy in the continent, Nigeria has a historic opportunity with the commencement of the AfCFTA to deepen its economic reach and depth across Africa by leveraging on its affirmed strengths in services and manufacturing sectors.
In a statement to commemorate the implementation of the free trade area agreement at the weekend, Abubakar said Nigerian firms are already strongly rooted in many African countries and the take-off of the AfCFTA has presented them opportunities to accelerate trade.
He explained that ACCI is re-committing itself to continuous mobilisation of its members to tap into the various sectoral action plans to enhance their capacities to trade within the context of the AfCFTA.
"We want to note that Nigeria has been fervently preparing for this day, especially through the mobilisation and strategic activities of the national committee on readiness for the AfCFTA," Abubakar said.
According to him, the various sub-sectoral groups have worked for months collating, designing and launching various sectoral action plans to the private sector on strong footing for the continental programme.
He said the chamber would launch a Monthly AfCFTA Monitoring Review Roundtable to assess development within the free trade process, assess issues of interest and address disputation in the trading process.