AfCFTA: LCCI pushes protection of industrial base

By Nduka Uzuakpundu

For the policy-makers at the Lagos Chamber of Commerce and Industry (LCCI), the informed beginning of wisdom – with effect from the second decade, of the 21st Century is, clearly, a measured form of a protectionist tendency for Nigeria’s industrial base. This is with special reference to the African Continental Free Trade Agreement (AfCFTA), which has been signed by a visible number of member-states of the African Union (AU), since it was established at a conference on March 22, 2018, in Kigali, Rwanda. Nigeria – as is South Africa – is yet to do so.

The LCCI’s president, Babatunde Ruwase, said – at the Stakeholders’ Forum on AfCFTA, held in Lagos – that, “The high point of the argument for Nigeria not signing the AfCFTA is our fear of numerous bilateral trade-related issues of some AU countries with the rest of the world and Nigeria’s under-developed industrial and infrastructural sector. It has been argued that this will potentially make Nigeria a dumping ground – of goods from other African countries – due to our uncompetitive manufacturing profile, market size and population.” These, indeed, are founded fears – not necessarily meant to drive a conservative policy of trade protectionism, in the classical sense, but aimed at addressing a plethora of dislocations in Nigeria’s political economy viewed within the clusters of a global mass.

As Ruwase rightly pointed out, Nigeria is the world’s twenty-sixth largest economy and Africa’s first, but Abuja or skippers of industry at the LCCI cannot pretend that AfCFTA bears the designed, flawless anodyne to the burning issues of growth, development and expansion in the country’s economy – especially the industrial sector.

Take, for instance, the fact that Nigeria is still, technically speaking, dogged by the unkind effects of the deep recession that started in 2015; a development that, some political economists have posited, was choreographed by the sire of the Buhari administration, to cripple, so to speak, the economy: south-bound value of the naira, far-from-encouraging access by reputable industrialists to bank loans; unfriendly monetary policy and, almost as a direct and jabbing effect, hostile consumer price index (CPI).

There has, therefore, been, in the past four years, for Nigeria, a less impressive economic growth, which makes it far from appealing for the Buhari administration to accommodate, for now, the AfCFTA. Twenty years into the Fourth Republic – and with nearly $65 billion expended, on what was conceived as an honest intent to brighten electricity supply in the country, the reality is an appalling result – so made by deep-seated corruption. Nigeria’s industrial sector can do a lot better, than is presently the case, with regular power supply from the agencies concerned. But their performance gives an impression that they are one of the weakest links in the country’s quest for sustainable industrial growth.

The LCCI knows so much that it feels visibly sad to be left out, in the interim, by internal economic distortions and barred from an economic gold mine that is the AfCFTA. As Ruwase put it: “The AFCFTA creates the largest free trade area in the world. AFCFTA creates a single continental market for goods and services, as well as the customs union with the movement of capital and business travellers. This agreement gives birth to the world’s largest free trade area since the World Trade Organization, which was formed in 1995. This is in terms of the number of countries, covering more than 1.2 billion people and about $4 billion in combined consumer and business spending if all 55 countries in Africa join the agreement.”

That President Muhammadu Buhari has not signed the AfCFTA, is informed by a need to avoid an economic development that could dislocate his plan for the diversification of the economy. The emerging small and medium enterprises (SMEs) are well deserving of protection – and the LCCI is virtually morally-bound to see them through in what is a ‘post-recession’ period, since the SMEs, too, are their partners in the country’s economic progress and development.

The Stakeholders’ Forum has underscored the leading role of the LCCI as the speaker for Nigerian industrialists – including the skippers of SMEs. But, in the month and years ahead – perhaps up to 2025 – there would be a demanding need for Commerce House to lobby the National Assembly and Nigerian Economic Summit Group (NESG) to agree on a comfortable time for Nigeria to nod at the AfCFTA.

Even so, Chinedu Osakwe, the chief negotiator, Nigerian Office for Trade Negotiation, is in support of Nigeria signing the AfCFTA. To him, the AfCFTA is akin to African countries walking fast away from the “economic inertia of the colonial era to build a united Africa; to nullify the spaghetti of disharmonious policies of Anglophone, Francophone and Lusophone Africa.”

With ACFTA, Osakwe is certain that Nigeria can dominate, for a start, the whole of West Africa: Nigerian road transporters would be augmented to compete favourably from Dakar to Mombasa, from the Cape to the Equator. Still, AfCFTA comes with some challenges: trade-related policies, structured and well co-ordinated policies that would aid businessmen and investors to maximize profit, structural reform, cost of money and an effective mechanism for the implementation of the trade and economic policies are, amongst others, needed. At the home front, the transportation sector is very much in need: the roads are far from satisfactory; the railway could be a lot better and most of the indigenous, private airlines are somewhat groaning under the burden of gargantuan debt. If it weren’t for the mismanagement of Nigeria’s economy between 2002 and 2014 – within which distance the country was awash with petro-dollar of $147 per barrel of crude oil – Kigali would have been an outstanding historic leap.

Osakwe, who was for nearly two decades a director at the World Trade Organization, in Geneva, Switzerland, observed that the LCCI – on account of its history and strategic location at the hub of Nigeria’s industrial base – is an indispensable player in the AfCFTA affair. It was probably because of past experience and performance of most African economies that he called for a healthy romance between trade and geo-politics and good governance within the context of democracy.

He also made the point that the position of the LCCI would count a lot about business, investors and industries in Lagos. “What matters to the LCCI,” he said “should be seen as significant within the matrix of the AfCFTA, to Africa and the rest of the world.” He thinks that the AfCFTA is an honest attempt to right the economic wrongs of the Berlin Conference – 1884-1885 – by offering a borderless Africa: open skies for the airlines; a trans-African road network for the transportation of persons and goods. And, so, a new chapter in tourism.

Where the Berlin Conference has failed: indeed, economic historians – including Walter Rodney, hold the European powers at Berlins, who partitioned the continent, in part, for the under-development of Africa; Osakwe reasons that the AfCFTA brims with opportunities to make the 21st Century Africa’s era of forward-looking development, including democracy, inclusiveness, dialogue, participation and transparency as indexes of good governance. Some guaranteed hope, confidence and trust are invested, to that effect, on the AfCFTA’s article on anti-dumping safeguard, special economic zones, protection of infant industries, security, balance of payment, and amongst others, trade dispute settlement – in consonance with the WTO rules.