The ship carrying the first container exported under the Guided Trade Initiative (GTI) sailed off the coast of Nigeria’s busiest seaport, Apapa, yesterday, giving life to the country’s commitment to the African Continental Free Trade Area (AfCFTA) agreement. This comes two years after the GTI was launched in Ghana as a pilot project to stimulate trade between interested states that have met the minimum requirements for the operationalisation of the AfCFTA, and to test the readiness of the private sector and the institutional environment under the AfCFTA.
While the GTI is not synonymous with the arrival of the long-awaited African Single Market, it is a solutions-based approach to maintaining momentum. The eight countries spearheading the GTI were Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia. Of course, the five regions of Africa that signed the trade agreement were represented, but the pioneer programme inadvertently excluded the five largest economies in Africa apart from Egypt – South Africa, Algeria, Nigeria and Ethiopia.
Because it was in its infancy, the big countries held back while others began to test the waters. The seven pilot countries were selected by the AfCFTA secretariat because “their tariff offers on goods had been fully approved and officially published”. And that was almost two years after the official start of the agreement’s implementation – 1 January 2021.
Significance of Nigeria’s move
Yesterday, Nigeria joined the league of countries that have kept faith with the agreement, which is expected to boost growth across Africa by developing value chains across sectors. It joined the club of countries that have demonstrated their willingness and readiness to move forward with the AfCFTA despite the hesitation of the majority. But more than that, Nigeria is staking the will of some 220 million people, almost one-fifth of the continent’s population, on the success of the pan-African agreement. Nigeria’s decision could have a knock-on effect on the adoption rate in the coming months, as it signals a determination to move forward with the African Single Market agenda.
Firstly, it is a latecomer to the trade agreement. Not only did it miss out on the pioneer list of signatories, it also signed after all the other 53 member countries, and its holdout, along with South Africa, almost scuttled the pact. For several months, there were concerns about Nigeria’s commitment to the discussion on increasing the value of intra-African trade, which accounted for 15 per cent of Africa’s total trade last year. This was the lowest level of intra-regional trade in the world. In Asia, intra-regional trade is over 55 per cent, while intra-European trade accounts for 70 per cent of the value of the zone’s trade. Nigeria is also almost synonymous with the West African market. According to the distribution of the region’s population, Nigeria’s share of the market’s size is 49.6 per cent. The remaining 16 countries account for less than half of the market. Moreover, the rest of the region is a mere appendage in terms of influence and trade patterns. This means that a country wishing to penetrate West Africa must first capture Nigeria, the gateway to the market.
Nigeria’s recent actions, shortly after signing the treaty – the country closed its land borders to neighbouring countries – raised questions about its sincerity and whether it would indeed withdraw from the African free trade agenda. From 2021 to April 2022, land borders were closed to trade with the rest of the continent on the orders of former President Mohammadu Buhari, who had earlier said that under the AfCFTA, African countries could double trade among themselves by 2030, reduce dependence on imports and increase job creation.
GTI, the symbolic adoption
But yesterday’s launch of the GTI put to rest any doubts about Nigeria’s commitment to the agreement. Under the scheme, Dangote and nine other companies agreed to start exporting bags, smart cards and bricks to Kenya, Cameroon and other countries in East, Central and North Africa at the flag-off by the Secretary to the Government of the Federation, George Akume, who represented President Bola Tinubu. The frontline products are high value-added goods, in line with the idea of value addition as the most sustainable option for growing intra-African trade. Furthermore, the pilot companies led by Dangote cannot be dismissed as insignificant. However, the presence of top government officials and credible representation from the presidency means that the government has given its full support.
The President, who was represented at the event, commended the pioneering companies involved in the initiative for their belief in the potential of made-in-Nigeria products and the vast opportunities presented by the AfCFTA. “These pioneering companies have made history by taking this bold step and have set a precedent for others to follow. Their success is our success; their journey is our journey,” he told the excited crowd of entrepreneurs and exporters who witnessed the event.
He assured them that the government would continue to support Nigerian businesses to fully participate in the $50 billion AfCFTA. “The pursuit of key elements will be laser-focused to ensure that every Nigerian business, from small and medium enterprises to large corporations, benefits from this agreement. The government will continue to provide the necessary support to facilitate the effective implementation of the AfCFTA at the national, sub-regional and continental levels,” Tinubu said.
“Today, having fully fulfilled all the requirements for accession to the Guided Trade Initiative we stand as witnesses to the official flag-off of trade under this preferential trading arrangement with this symbolic shipment of a container from Apapa ports,” the National Coordinator of AfCFTA, Olusegun Awolowo, said.
A fully operational AfCFTA promises broader and deeper economic integration and would attract investment, boost trade, create better jobs, reduce poverty and increase shared prosperity in Africa. Other benefits include:
– Foreign direct investment (FDI) could increase by between 111 per cent and 159 per cent under the AfCFTA.
– Wages would increase by 11.2 per cent for women and 9.8 per cent for men by 2035, with regional variations depending on which industries expand the most in particular countries.
– 50 million people could be lifted out of extreme poverty by 2035 and real incomes could rise by nine per cent.
– Africa’s exports to the rest of the world would increase by 32 per cent by 2035 and intra-African exports, led by manufactured goods, would grow by 109 per cent.
Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania, and Tunisia had long since set the ball rolling to achieve these lofty goals. Now Nigeria, the continent’s largest single market, has thrown its hat into the ring.
