In 2012, African Union (AU) members agreed to establish a Continental Free Trade Area (CFTA) by 2017. The CFTA aimed at creating a single continental market for goods and services, encourage free movement of persons and investments, hence, accelerating Intra-African trade. Recently, Nigeria, Africa’s largest economy, put on hold the decision to sign the agreement, citing the need for ‘wider consultations’.
Despite its strategic positioning, Nigeria is a net importer of manufactured goods while crude oil dominates export. Economic diversification remains services (+50%) and Agric-sector (+20%) led, relative to the manufacturing sector which remains largely in its infancy. Notwithstanding the strong political backing, the economic justification for the CFTA appears weak in our view. African economies are largely exporters of primary products, mostly hydrocarbons, metals, and agricultural outputs, with thinly developed technology to transform these
products to their secondary states. Hence, a more industrialized Nigerian Economy would have benefited significantly from the agreement.
Nevertheless the above, the CFTA may serve as a means to an end for Africa. Potentially, it could trigger a regional development strategy which Nigeria can benefit from. More importantly, it is likely to strengthen “Africapitalism”, an evolving philosophy that the private sector in Africa can and
must play a leading role in the continent’s development.