AfCFTA as Nigeria’s economic tsunami – Part 2

And now AfCFTA seeks to increase “internal” trade in a continent with structural problems of low complementarity of tradable natural commodities, poor socio-economic infrastructure and a stagnant 10% contribution of manufacturing industry to its GDP. While the Maghreb economies benefitted from several centuries of economic relationship with Europe and economic sanctions against apartheid provided South Africa the catalyst for technological innovation and industrial development, the rest of Africa has substantially remained economically undeveloped.

Since South-Africa became a “trans-shipment” economy to Nigeria after 1997, she has a vested interest in AfCFTA just as Rwanda and the Maghreb countries are craftily seeking to become since the EU’s economy appears to be floundering. With the emerging replacement of “globalism” with “patriotism” through nationalistic import-tariff hikes by some countries, AfCFTA is really being promoted to create import-duty havens for the losers in the world trade crisis in the undeveloped continent to further trap Nigeria’s economy into a regionalised trade liberalisation sinkhole.

This is why technology-driven manufacturing and small-scale production rather than AfCFTA is what Africa needs for economic success in the new world economic order. Nigeria exported cocoa while she imported Ovaltine in the 50s/60s just as she now exports crude oil while importing petroleum products! Solving this intertwined fiscal and growth-crippling problem should be Nigeria’s urgent primary concern through massive investments in the manufacturing sector that is less than 10% of GDP. She is making a heady start at re-building socio-economic infrastructure with multi-billion dollar loans and a generous single-digit interest loan support for manufacturing and agricultural sectors in her belated pursuit of economic diversification towards achieving drastic reduction in unemployment level.

But she cannot pay off these debts from the mandatorily effective use of this infrastructure if she approves AfCFTA. Also, she cannot recover her massive investments through aggressive stimulation of development in agriculture by CBN and growth in the small/medium-scale enterprises through BOI with an inevitable dumping of cheaper-priced commodities from the developed economies through AfCFTA, using the several available trans-shipment countries. Moreover, with increased economic nationalism and xenophobia as evidenced by the recurrent attacks on Nigerians (individuals and businesses) in South Africa for several years and more recently in Ghana), she cannot cater for the employment needs of her ever-growing population with AfCFTA as SAP and NEEDS destroyed job hopes for at least a generation of Nigerian youths.

Although Britain has a good socio-economic infrastructure, the contentious Brexit option arose partly because her economy’s structure, like Nigeria’s, that is low on manufacturing and high on trading, failed to cope with the German manufacturing economic power for over fifty years. Similarly, Nigeria’s economy with even a poorer socio-economic infrastructure cannot survive with AfCFTA that will stranglehold it to South Africa and other trans-shipment countries and sharply reduce the revenues from import duties required for maintaining the being-built socio-economic infrastructure.

Is it not an unrepeatable tragedy that government is now being held responsible for everything under the sun, including “putting food on the table”, after the disastrous consequences of the economy’s vandalisation through the unwholesome application of globalization’s “government-has-no-business-in-business” paradigm? Indeed, the post-Brexit economic strategy of seeking global partnership with countries relevant for her economic goals at her own pace rather than being locked down by AfCFTA in a continent whose economy is structurally prostrate, is Nigeria’s appropriate model.

Moreover, the new world economic order of economic protectionism in which such agreements are being vitiated makes AfCFTA dead-on-arrival. President Trump’s pro-America NAFTA re-negotiation and the logic for Senator Elizabeth Warren’s opposition to the canceled North-American-Pacific Trade Area Agreement are more reasons why Nigeria should not sign it as it will entrench economic hedonism at the expense of long-term development for sustainable growth required for creating employment opportunities for her fast-growing population.

Therefore, AfCFTA will certainly become the final crushing tsunamic blow on the economy after the-yet incandescent boulders and flaming lavas from both SAP and NEEDS earthquakes. But if, despite these reasons, the President allows international political pressure to goad him to sign AfCFTA, he may lead Nigeria into a regrettably and devastatingly self-destructive economic tsunami from which she may never recover especially in this her critically best potential opportunity, though painful investment gestation period, of hope for long-term recovery and growth with the new momentum of extensive and intensive economic re-development. Economists and historians may not forgive and forget him in a hurry if he does so as they have not done with the protagonists of the very catastrophic SAP and NEEDS policies.