Integrated Africa: Manufacturers’ apathy over marriage of convenience

While the pursuit of closer integration by the African Union (AU) through the launch of a common passport may have received support, there are growing concerns on the proposed benefits of the marriage considering the non-implementation of extant rules, protocols and economic agreements. FEMI ADEKOYA examines the effects of the integration on the manufacturing industry in Nigeria.

For different schools of thought and stakeholders, towing the path of closer integration through the launch of a common passport that will grant visa-free access to all 54-member states by the AU, poses several questions on the benefits vis-à-vis the challenges such an integrated union offer.

To the African Union, the flagship project has the specific aim of facilitating free movement of persons, goods and services around the continent – in order to foster intra-Africa trade, integration and socio-economic development.

However, stakeholders in Nigeria noted that while the initiative remains laudable, it poses a great threat and challenge to the country due to the high infrastructural gap and huge cost of doing business.

According to the stakeholders, the nation’s productive sector will be at risk of invasion by products from other economies that encourage heavy importation from some developed countries and those who operate in a more effective operating environment.

Currently, only 13 African states are open to all African citizens without advance visas, with many placing severe restrictions on travel as a recent report from the African Development Bank advised that easing entrance requirements would support economic growth.

The electronic passports which will be unveiled at the AU summit in Kigali, Rwanda, later this month, where they will be issued to heads of state and senior officials represent a key plank of the Agenda 2063 action plan, which emphasizes the need for greater continental integration, drawing on the popular vision of Pan-African unity.

Indeed, freedom of movement has been a longstanding priority among member states, as enshrined in previous agreements such as the 1991 Abuja Treaty. Common passports have already been adopted for several regions, such as the Economic Community of West African States (ECOWAS). Hitherto, President of Dangote Group, Aliko Dangote expressed worry on the slow-paced growth recorded in achieving real economic integration in Africa, while urging African leaders to review visa restriction rules in the continent in a bit to remove barriers to intra-African trade.

According to Dangote, there is a need for African countries to relax their visa policies to achieve true economic integration.Indeed, he stated that conscious efforts must be made to break down the barriers and borders between countries so as to allow free flow of goods, services and people.

He however expressed caution on the type of investments needed across the continent saying: “Above all, there is the need to encourage the private sector to collaborate with governments across Africa, to address the issue of infrastructure deficit, which has plagued the continent for decades. I believe that manufacturing, and not trading, is the best way to grow an economy”.

President, Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs noted that the AU decision is commendable, adding that “the more, the merrier”.
According to him, the Nigerian business environment may suffer the consequences in the long term, as many industrial firms may have to move their production units to countries that have basic infrastructure needed by the manufacturers.

“The deal is good for the productive sector that is presently troubled due to various challenges in the operating environment.“The absence of conducive manufacturing environment and basic infrastructure would continue to draw back the sector, except something urgent is done to reverse the situation. Power is a major cost for manufacturers and they will explore opportunities where it is cheaper to produce their goods”, he added. Director-General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf observed that the private sector needs to be involved in the scheme of things in order to aid implementation.

“As private sector operators, we need to bring this on the front burner, we need to set agenda to the ECOWAS commission and there is need to focus more on the economic integration. Challenges of non-tariff barriers need to be addressed, infrastructure needs to be appraised, while policy frameworks need to be appraised because a lot of policies have been initiated without being implemented.

“The ECOWAS trade protocol is a major step towards integration but there are still a lot of compliance issues with the policy. We have pockets of policy issues across the sub-region. With the high cost of doing business in Nigeria, the moment you allow some full integration, Nigerian manufacturers will suffer, as they are not competitive in terms of production.

“Low competitiveness will make businesses shift the cost of production to other regions and that will create more opportunities for other countries because the way to create value from an economic framework is for you to be competitive. These are the issues in the minds of private owned sector”, he added.

Industry observers note that the inability of countries to give up their sovereignty for a united state is why in economic integration, the processes of deepening and widening of aspects of sectoral areas of crucial policies such as approximation/harmonization of monetary, fiscal and social policies that
give impetus to the sub-regional economic integration process are moving in a snail pace.

The fear is due to the fact that the liberalization of barriers to trade especially between the integrating countries encourage trade and remove barriers that would impede growth in trade between member states of an economic grouping.

The World Bank had in its latest report on the ease of doing business ranked Nigeria low among other countries. Nigeria, the World Bank observed, presently ranks 169 out of 189 countries examined for trade index for the year 2015.

Similarly, a recent United States Department of Agriculture (USDA) review of the agricultural situation in Benin, showed that: “Benin serves as a delivery corridor for West Africa, reaching more than 100 million people in the landlocked countries of Niger, Mali, Burkina Faso, Chad and the Northern states of Nigeria.”

USDA observed “Benin’s relatively efficient port services and liberal trade policies mean it is an important cog in the regional trade flows to nearby countries.”

The report noted that improvements in the country’s port operations as well as some small improvements in the ease of doing business over the past years aided the flow of imports in the country.