Nigerian President Muhammadu Buhari has agreed to sign a $3-trillion African free trade agreement, Africa’s signature policy reform of 2018.
Initially, Nigeria refused the agreement for a continental free trade area (CFTA), saying that they wish to defend their own businesses and industry. However, President Buhari has changed his mind after consulting with business leaders and seeing the benefits of the agreement.
“In trying to guarantee employment, goods and services in our country, we have to be careful with agreements that will compete, maybe successfully, against our upcoming industries,” Buhari told a news conference during a visit by South African President Cyril Ramaphosa.
Nigeria has Africa’s second biggest economy after South Africa. Along with Angola, they make up about three-fifths of sub-Saharan Africa’s annual economic output.
About the CFTA:
The free trade agreement aims to create a single market for goods and services in Africa. The goal is to:
- Create a single continental market for goods and services, with free movement of business persons and investments, and thus pave the way for accelerating the establishment of the Continental Customs Union and the African customs union.
- Expand intra-African trade through better harmonization and coordination of trade liberalization and facilitation regimes and instruments across RECs and across Africa in general.
- Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.
- Enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources.
“The CFTA is a singular policy move that will actually help your business, help the continent create more jobs and ensure that we create enough value on the continent and increase intra-African trade,” says Economic Commission for Africa‘s (ECA) Executive Secretary, Vera Songwe. “When African countries trade with African countries more value is created and therefore we believe we can do more than that with the CFTA.”
The continental free trade zone, which encompasses 1.2 billion people, was initially joined by 44 countries in March. South Africa signed up earlier this month. Six countries, including Nigeria, are yet to sign the free trade agreement.
African Union officials said countries that have signed the free trade agreement will need to submit a schedule of tariffs by December, adding that they expect intra-African trade to double over the next four years once tariffs are reduced.
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