With a population that has a higher number of children and elderly, Zambia is left with not enough workers. Its dependency ratio leaves it vulnerable to taking on too much future debt, regardless of any post-default restructuring solution.
Nigeria agrees to sign up to African free trade zone
After months of consultation between stakeholders, the world’s largest trade zone is about to be signed off – with Nigeria accepting at the last minute to sign up.
The African Continental Free Trade Area (AfCFTA), according to the United Nations Economic Commission for Africa (UNECA), will comprise 1.2 billion people with a combined gross domestic product of $2.5trn.
Last March, 44 countries signed the agreement to create the AfCFTA in Kigali. But Nigeria, Africa’s second-largest economy, withheld its consent to the agreement. The trade deal is going ahead, and President Muhammadu Buhari will attend the Africa Union summit in Niamey next week.
The AfCFTA is set to constitute the largest trading bloc on earth and facilitate more trade continent-wide as well as ease movement within its borders.
Government officials and labour leaders were worried that given Nigeria’s many porous borders, it would become a dumping ground for substandard and toxic goods, as well as create an influx of workers from across the continent to take the jobs of Nigerian citizens.
- Manufacturers opposing the AfCFTA cited the ineffectiveness of the Economic Community of West African States trade liberalisation scheme, pointing out that Burkina Faso and Benin already restricted some Nigerian trade activity.
- Labour and other industry stakeholders lobbied for the Nigerian government to not sign the deal. A panel set up by Buhari in March, however, finally gave the go-ahead, despite warnings of the accompanying risk of the “incentive for traders to disguise goods imported from outside the continent as made-in-Africa goods”.
After receiving the panel’s report last Thursday, Buhari cautioned: “For AfCFTA to succeed, we must develop policies that promote African production, among other benefits. Africa, therefore, needs not only a trade policy but also a continental manufacturing agenda.”
Observers worry that the implementation of the agreement would be dragged out due to bureaucracy and grey areas. They also argue it could hamper the growth of small and medium-scale businesses. There are also concerns about the impact of the signing on Nigeria’s import exclusion list – which has 43 items that Buhari banned during his first term in office to restrict the use of foreign exchange.
- “AfCFTA isn’t a one-time ripping off of the band-aid,” tweeted popular commentator Saratu Abiola. “It’s being implemented in five-year phases, so don’t expect to see a huge change anywhere immediately.”
Bottom Line: There is work to be done in ensuring Nigeria scales up its global competitiveness. “Nigeria did the right thing by consulting extensively prior to signing the #AfCFTA,” said Amaka Anku, Eurasia group head for Africa. “Now let’s hope it actually follows up on making the necessary adjustments to make it actually work in the country and continent’s interest.”