Nigeria: The key to African economic prosperity?

Nigeria sent shockwaves through the continent of Africa when it withheld approval for AFCFTA in March 2018. Nigeria’s decision surprised many as the country was one of the initial drivers of the single African market idea. The African Confidential Free Trade Area (AFCFTA) could be a massive economic step forward for the continent as it attempts to create a large single market for goods and services, including free movement of labour and capital. Ultimately, it could pave the way for an African customs union similar to the one formed by the EU. The creation of this agreement could be a critical move as it constitutes a significant vote of confidence in the continent’s economic potential even as other regions and nations are having issues with their trade agreements such as the United Kingdom with Brexit. 44 countries initially signed the agreement on the 21st of March 2018 but as of the 30th of May 2019 the AFCFTA has come into force with a surprise boost coming from Nigeria, who possess the largest economy in Africa. They signed the agreement at the summit of the African Union creating a free trade area of about 1.2 billion people and a combined GDP of around $2.5 trillion USD, making it the largest trading bloc in the world. This also leaves Eritrea as the lone African country not to have joined the agreement.

For Nigeria this is of great importance especially to President Muhammadu Buhari who stated himself that ‘trade is important for us as a nation and to all nations…’ However, one thing President Buhari is worried about – and unsurprisingly – is how fair this agreement will be. This is one of the reasons Nigeria initially refused to be part of the agreement along with concerns over the exposure of its manufacturers to greater competition. They believed the deal could force many manufacturers out of business and cause unemployment to rise as a result, which would be detrimental for a nation that is already being forced to deal with high unemployment. However, after reviewing the impact assessment, President Buhari decided to sign on – despite his initial concerns being valid. The Nigerian government took its time evaluating and consulting before signing the agreement, taking this step very seriously, which bodes well for the agreement itself. The government also had to consult with the country’s biggest manufacturers and producer groups in agriculture. They had to make sure the majority, if not all, of these groups were on board and ready to take on the challenge. The fact that the biggest African economy has decided to sign on may signal a prosperous future for the agreement. Besides that, the government sees huge potential for Nigeria in the agreement. Not only do they see the potential to expand market access for Nigeria’s goods and services – which has been a major aim since the country began shifting its focus away from oil and on to agriculture – but they also believe it will boost economic growth and job creation countering the high unemployment in the country. The agreement will also improve competitiveness and the ease of doing business in Nigeria. It may also encourage freelance enterprise while simultaneously providing a platform for the country’s continued leadership role in Africa.

All in all, it’s obvious why Nigeria’s participation and endorsement matters. It’s not just Africa’s most populous country with some 200 million people, but it’s also the continent’s largest economy with a GDP of approximately $400 billion USD. Based on that and its international stature, Nigeria’s support is indispensable for the success of the AFCFTA. For Nigeria, the pros outweigh the cons and joining this agreement can only spark optimism and excitement for the future of Africa’s multitude of economies. The AFCFTA itself could be a game-changer as the continent of Africa strives to achieve a level of socio-economic development never seen before. Watch this space…

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s