Nigeria Absent As 44 African Nations Sign Free Trade Area Agreement

The African Heads of States and Governments pose during African Union (AU) Summit for the agreement to establish the African Continental Free Trade Area in Kigali, Rwanda, on March 21, 2018.
STR / AFP

 

 

Forty-four African countries have signed an agreement establishing a free trade area seen as vital to the continent’s economic development, the head of the African Union said Wednesday.

The creation of a free trade area — billed as the world’s largest in terms of participating countries — comes after two years of negotiations and is one of the AU’s flagship projects for greater African integration.

“The agreement establishing the CFTA (African Continental Free Trade Area) was signed by 44 countries,” said Moussa Faki Mahamat, chairman of the AU commission.

However, the agreement will still have to be ratified at a national level and is only due to come into force in 180 days.

Nigeria is notably absent from the signatories after President Muhammadu Buhari pulled out of this week’s launch in Rwanda saying he needed more time for consultations at home.

One of Africa’s largest markets, Nigeria hesitated after objections from business leaders and unions — a sign that getting the deal through scores of national parliaments may face several hurdles.

“Some countries have reservations and have not finalised their national consultations. But we shall have another summit in Mauritania in July where we expect countries with reservations to also sign,” said Albert Muchanga, the AU Commissioner for Trade and Industry.

However other economic powerhouses South Africa, Kenya, Morocco, Egypt, Ethiopia and Algeria — known for strict protectionist policies restricting imports and exports — did sign the deal.

If all 55 African Union members eventually sign up, it will create a bloc with a cumulative GDP of $2.5 trillion (2 trillion euros) and cover a market of 1.2 billion people.

Currently, African countries only do about 16 percent of their business with each other, the smallest amount of intra-regional trade compared to Latin America, Asia, North America and Europe.

And with average tariffs of 6.1 percent, businesses currently pay higher tariffs when they export within Africa than when they export outside it, according to the AU.

“If we remove customs and duties by 2022, the level of intra-African trade will increase by 60 percent, which is very, very significant,” Muchanga told AFP in an interview before the summit.

 ‘No room for the weak’ 

Proponents of the deal argue that African economies on their own are too small to support economic diversification and industrialisation on their own and will benefit from having a unified platform to negotiate trade deals with wealthier nations.

The “CFTA will make Africa one of the largest economies in the world and enhance its capacity to interact on equal terms with other international economic blocs,” said Faki in a speech before the signing ceremony.

“The world is changing, and changing at a great speed. International competition is fierce. It leaves no room for the weak.”

However, critics highlight a dearth of roads and other infrastructure linking different African nations, as well as the fact that many countries do not manufacture goods their neighbours may want to import, as challenges to the deal.

Sola Afolabi, a Nigeria-based international trade consultant, told AFP the fact already-existing regional trade blocs were not working, should be a red flag.

“If there is no reward for compliance and there is no punishment for non-compliance, then it is going to be a very nice agreement without any teeth or any legs,” he said.

 Breaking the trend 

Faki acknowledged that Africans “have seen so many proclamations remain a dead letter, so many commitments without practical execution that they have come to doubt the strength of our commitment.”

He urged for a break in this trend, calling for a deal that “must confound those who, outside Africa, continue to think — with barely-concealed condescension — that our decisions will never materialise.”

The CFTA is a key part of the AU’s long-term development plan Agenda 2063, which calls for easing trade and travel across the continent.

At its most recent summit in Ethiopia in January, AU member states agreed to a common air transport market that could drive down airfares, as well as plans for visa-free travel for Africans across the continent.

Also on Wednesday, 27 countries signed the protocol agreeing to the free movement of persons across the continent.

AFP

FEC Approves Trade Agreements Between Nigeria, Singapore

fecThe Federal Executive Council (FEC), has approved an agreement for the avoidance of double taxation and the prevention of evasion of taxes on income and capital benefits, between Nigeria and Singapore.

Also on Wednesday, the FEC approved bilateral air service agreement with the State of Qatar and Singapore.

The Minister Of Finance, Mrs Kemi Adeosun, told State House Correspondents at the 22nd FEC meeting, that the agreement is aimed at encouraging “more direct foreign investments into Nigeria.

Furthermore, it is aimed at “letting investors know what their tax obligations will be and ensuring sustainable tax regime for each country.”

According to her, the agreement was because Singapore is a major trading partner with Nigeria.

Also in attendance were Information and Culture Minister, Lai Mohammed and the Minister of State for Aviation, Hadi Sirika.

The agreement seems to be an indication that Singapore’s rejection of clemency appeal by a Nigerian man accused of drug possession, has not affected its bilateral relations with Nigeria.

Mr Sirika said that Singapore was fast becoming the most efficient and biggest hub around the far-eastern part of the globe, serving New Zealand, Australia, Japan, China, Singapore, Indonesia and others.

“We thought that in our efforts to also create a hub within Nigeria, the centre of Africa, we can leverage on the opportunity to create air services between the two countries.

While praising Qatar’s robust aviation and ability to move goods and services in a very efficient manner, he said: “We saw the need to sign some agreements so that it will define how we are going to do businesses between Nigeria, Qatar and Singapore.”

 

Buhari Visits Benin Republic

Benin RepublicThe Nigerian President is not relenting in his efforts towards building the required coalition to effectively tackle the challenge of insurgency in Nigeria’s north-east.

Barely days after holding talks with his Cameroonian counterpart on areas of cooperation in the fight against the insurgents, including strengthening border security, President Muhammadu Buhari on Saturday paid a one-day visit to Benin Republic in continuation of the effort.

During his meeting with President Boni Yayi, coinciding with the anniversary of the country’s independence, President Buhari pledged to build on the success already achieved in creating a synergy among the Lake Chad Basin Commission members.