By HENRY Boyo

THE African Continental Free Trade Area (AfCFTA) agreement was endorsed on Wednesday 21stMarch 2018, by forty four African countries in Kigali Rwanda; nine other African Union member countries, including Nigeria and South Africa have delayed assent to the treaty.

Hereafter, matters arising from the African Union’s vision of establishing free trade and a single currency amongst member nations, will be examined in the following interrogative prose. Please read on.

What is the objective of the AfCFTA?

African Heads of government agreed in 2012, to establish a Continental Free Trade Area and negotiations to this end, started in 2015. The agreement signed in March 2018 commits countries to removing tariffs on 90% of all goods, while the balance 10% of identified “sensitive items” would also be later phased in as tariff free.

Furthermore the agreement will liberalize commercial services and also tackle so called “non-tariff barriers” which include extended delays and harassment at border posts. Ultimately, free movement of people and a common currency is expected to evolve in a free trade area, which is branded as only second in size to the World Trade Organization.

What is the advantage of a single market?

Intra-Africa trade is notably, relatively, modest at barely 10% of the total trade in the continent by 2010; thus, by creating a single continental market for goods and services, the African Union, brings together 1.2 billion people with a combined Gross Domestic Product of more than $2Tn. Notably, however, before the 2015 devaluation, Nigeria’s GDP, was reported to be close to $450bn (over 20% of Africa’s total GDP). Nonetheless, The United Nation’s Economic Commission for Africa (UNECA) has estimated that, by 2022 full implementation of the agreement could increase the 2010 Intra-Africa trade value by up to 52%.

If by 2022, Intra-African trade increases by about 52% of the continent’s 2010 total trade value of $2Tn, what would be the impact on government revenue and social welfare?

A research paper by UNCTAD concedes that the elimination of all tariffs between African Countries, would reduce the trading States’ Treasury by up to $4.1bn annually, but would also create an annual welfare gain of $16.1bn in the long run.

Instructively, however, with deepening poverty, if care is not taken, millions of Africans would have needlessly died before salvation comes, if it ever comes!

Conversely, the $4bn projected yearly loss to African governments, from the Free Trade Agreement, could arguably also multiply in the long run, to yield more than $16.1bn annually, if properly managed!

Notwithstanding, there are still fears, particularly among the poorer economies that the benefits in the free trade area may not be evenly distributed.

Why did Nigeria wait till the last minute before it backed out of the agreement, especially when the Federal Executive Council on Wednesday 14th March, had announced that President Buhari would sign the framework Agreement in Kigali on 21st March 2018?

That was rather unfortunate; why the FEC, with Vice President Osibanjo, presiding, announced a decision that was, obviously, diametrically opposed to Buhari’s wish is still unclear. The Ministry of Trade and Investment was clearly not on the same page with the Presidency and other major stakeholders on this issue, as the decision was already announced that Buhari would sign the agreement on behalf of Nigeria in Kigali, but would lobby that Nigeria should host the new Secretariat of the CFTA.

So was President Buhari wrong for the unexpected flip-flop at such an high-octane International Forum?

The evident contradiction between the FEC’s announcement and Buhari’s cancellation is a massive cock-up in diplomatic terms, especially with Nigeria’s role, as a major continental player. Nonetheless, President Buhari deserves commendation