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AfCFTA: Does Nigeria run a significant risk with structural issues?

AfCFTA: Does Nigeria run a significant risk with structural issues?
March 14
07:03 2022

BY EMMANUEL AKIN-ADEMOLA

In an interview published by Vanguard on February 7, the general manager and chief executive officer, Vitafoam Nigeria Plc, Taiwo Adeniyi, identified major structural concerns with Nigeria harnessing the African Continental Free Trade Area (AfCFTA) open economy benefits. He said that the influx of similar products would stimulate price war with the Nigerian market due to her structural inadequacy.

Considering the intensified competition that an open economy would demand, he also warned that the competition for Nigerian companies is at a loose end because of the high costs of production compared to other international companies. He corroborated his argument by highlighting Nigeria’s seemingly eternal problem of an epileptic power supply.

Even after January 1, 2021, which had seen all African countries except Eritrea ratify the African Continental Free Trade Area (AfCFTA) agreement and submit their tariff offers; still, the African giant stands to lose a lot for a plan meant to benefit its citizens first.

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However, there are more underlying problems to post-COVID Nigeria; Business Day identified other problems as foreign exchange, poor transportation, raw material availability, rigorous port operations, continued fall in naira, and increase in energy cost causing the high cost of production.

These complexities are also responsible for the current high costs and low living standards for the citizens of Nigeria.

Nonetheless, in Ghana, the news agency’s separate interviews with trade unionist, Joseph Obeng, and Emmanuel Doni-Kwame, secretary-general of the International Chamber of Commerce-Ghana (ICC Ghana), Africa heads of state have been urged to address structural issues regarding the continental harness of AfCFTA’s long-run prosperity prospects.

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Doni-Kwame and Obeng commented on the importance of an “enabling” environment on production and transportation.

It is important to note that no advanced country or continent faces these current difficulties bogging down Nigeria and some African countries.

Nigeria local manufacturers have consistently complained about the stressed issues in the preceding paragraphs. If they aren’t addressed sooner, foreign investors take advantage of the Nigerian government’s laxities. Capitalist economies allow competition, but there has to be a fairground for everyone to compete healthily.

Although these problems can be minimised and solved, Nigerian leaders first have to admit that there’s a problem and go on the right track to addressing them. In the past, the Nigerian government owned the power supply, and the service wasn’t good enough; then, the President Goodluck Jonathan-led administration privatised it by emphasising the need for “revolution in the power sector,” yet this vision failed.

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Regarding the power supply issue, a research paper in The Guardian explained how well Nigeria could stop relying on the limited Kanji Dam’s capacity and focus on renewable energies like solar, wind energy, biomass energy, and hydropower. Nigeria’s government should, however, redirect and reform its energy policies.

On transportation, the government can encourage private individuals to own rail corporations of the defunct rail industry it has been trying to resurrect. The federal government should also rebuild its roads to accommodate better transportation.

It would be erroneous to say that these can be solved with the drop of a hat. It is a gradual process with the initiatives and drives in optimising Nigeria’s economy for prosperity.

The most important thing in solving problems is not all about the futile funding conventions of the Nigerian government. It’s not just about talks and conferences. It’s about prioritising the necessities and avoiding the usual perfunctory approaches.

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Open market means more overall production in the economy and increased GDP employment opportunities. But how will these happen when there are so many holes for rats to poke into and cause unintended havoc to the citizens who should be the primary beneficiaries of AfCFTA’s objectives in the country?

Emmanuel Akin-Ademola is a writing fellow at African Liberty

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Views expressed by contributors are strictly personal and not of TheCable.

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