Recently, the Federal Executive Council (FEC) ratified Nigeria’s membership of the African Continental Free Trade Agreement (AfCFTA) less than a month to the deadline.
The deal which takes effect tentatively on 1 January 2021, was pushed back from July 2020 to allow governments to concentrate on fighting the pandemic. Nigeria’s decision to ratify the trade deal is a major win for the AFCFTA. Nigeria accounts for c.17% of the continent’s GDP. The agreement is set to create the largest trading bloc since the World Trade Organisation (WTO) in 1995.
It promises to improve trade and promote intra-regional investment in Africa by removing 90.0% tariffs on goods and services. When fully operational by 2030, AfCFTA is expected to cover a market of 1.2bn people, with a combined GDP of $2.5trn.
Despite the promise of the AfCFTA and the obvious commitment displayed by African nations, historical precedents and an unwillingness to match words with deeds suggest noncommitment and cast a shadow on the optimistic outlook.
To name a few, closed land borders as observed in Nigeria and regional tensions between Kenya and Somalia are indications of potential constraints. Additionally, failure to address infrastructure deficits and security challenges are significant threats to the long-term efficacy of the agreement.
For the AfCFTA to achieve its goal of unlocking economic growth and enhancing competitiveness on the continent. There has to be sustained political will to bolster competitiveness through structural reforms and investment in infrastructure and human capital.