Mr Rasheed Adegbenro, former acting Director-General of the Manufacturers Association of Nigeria (MAN), has described the soon-to-commence Africa Continent Free Trade Agreement (AfCFTA) as one major eye-opener that would expose the very poor state of Nigeria’s manufacturing sector.
Adegbenro who is also a former Vice-Chairman of the Centre for Value and Leadership (CVL) expressed fear that Nigerian manufacturers because of lack of basic infrastructure like steady power, which has plagued the sector, would find it hard to produce and compete with other African countries when the trade deal becomes effective by the second quarter of 2020.
In this interview, Adegbenro highlighted areas where he believes Nigeria would flourish in the trade agreements, and why the AfCFTA would not trigger the dumping of goods into Nigeria as speculated by many. Excepts:
The AfCFTA raised a lot of discordance tunes in March 2018 when the deal was brought to be signed at Kigali. Which side of the divide are you on the trade agreement?
I was worried. Because the AfCFTA is quite similar to what we went through with the EPA (Economic Partnership Agreement) proposed by the European Union (EU) in 2014. Nigeria was almost about to concede its signature, which they’ve ceded to ECOWAS (Economic Community West African States). The EU was quite smart, they looked at dealing with the ACP (Africa, Caribbean, and Pacific) countries about 78 of them, but thought it would be tortuous dealing with each of the countries. So, they moved to negotiate the deal via the regional economic community of the countries – SADC (Southern Africa Development Community) in South Africa, CEMAC (Central African Economic and Monetary Community) in Central Africa and EAC (East African Community) is East Africa. So, unfortunately for Nigeria, at the ECOWAS meeting, where the decision was taken for each country to cede their signature to ECOWAS to negotiate on their behalf, Nigeria didn’t attend those meetings. And by ECOWAS protocols, your absence does not nullify decisions taken, it’s binding. So, ECOWAS was about to sign the agreement until Nigeria joined after an error in a trade document. ECOWAS did a report on manufacturing in the sub-region, which was submitted at the Council of Ministers known as the Ministerial Monitoring Committee (MMC) in Abuja. And on the report, we noticed right on the opening paragraph where they wrote that there are no manufacturing companies in the entire West Africa. Many ministers took that in bad taste. That’s when we concluded that ECOWAS didn’t talk to the right people like MAN in Nigeria, and DGI in Ghana. The decision report was brought to MAN to examine at a meeting in Ouagadougou, and I was nominated to go and represent MAN at that meeting. It was there we started reshaping the entire process. ECOWAS wasn’t happy, because it was like putting the entire process in reverse gear. We found out that a lot of errors have been made because ECOWAS didn’t make deep and adequate consultations. We found that the content of the EPA agreement would be very injurious to our manufacturing sector, and it would be suicidal for our agricultural sector. Because the EU, we learnt would bring in poultry products at a quarter of the price of production into West Africa, ditto other commodities. So, we said ‘no’ to that agreement. And that was how the deal was left hanging till date. We know Nigeria is the market EU was targeting. And if Nigeria doesn’t go along with them, it would have far-reaching implications on ECOWAS, and cross-border security. So, on the AfCFTA, I think the document was a bit rushed into signing by countries. When it came to Nigeria, Buhari was away and the VP Osinbajo chaired the meeting. As a lawyer and technocrats, ordinarily, if I were him, I would have stepped down the document because it was brought late for signing without much time for the content to be digested critically to choose where to go. So, I suspect the whole rush to be from some nations that wanted to exploit Africa via the free trade agreements.
Some Nigerian critics fear that AfCFTA would encourage the dumping of goods from developed countries like China and France via smaller countries that share common boundaries with Nigeria. Do you foresee this happening?
I don’t nurse that fear because it has happened before. So, I want to believe that these neighbouring countries have learnt their lessons. All we need to show from here is purposeful leadership. At a time, Asian countries used to take goods to Benin Republic, including vegetable oil, they almost killed local vegetable oil companies in Nigeria, because these oils flooded the local markets in Nigeria. So, Obasanjo, who was president at that time, set up a technical committee to go and inspect the oil mills in Benin. And the committee found out that most of those oils brought into Nigeria were not produced in Benin. So, Obasanjo told them that he would shut the border permanently, and they understood the implication of that. So, immediately they put everything in reverse gear. That is why I said it won’t happen again because whatever is brought into Nigeria via those borders can be evaluated whether it’s genuine. Because when you’re doing continental free trade, based on our experience on the EPA two things are important. One, the schedule of tariff liberalization must be made available before you conclude the negotiations. And in the AfCFTA, these weren’t spelt out clearly. Then the second element is what we call ‘Rules of Origin,’ that is what guides you and protects the territory. The Rules of Origin must state clearly what percentage of local content should qualify a commodity to be duty-free. You can’t bring a commodity with 90 per cent of its materials imported outside the continent, and then expect duty-free importation into the country. Those two elements were not available in Kigali, and countries went ahead and signed. South Africa went there, but refused to sign right there because they didn’t see those components. So, they issued a statement that they’ll need to deliberate on it at their country to know if they would sign. But Nigeria went there with no clear-cut plan. PMB wasn’t there, and no statement on Nigeria’s position on the trade deal was issued. That was why many people kept bashing PMB’s reluctance in signing that agreement without knowing he actually saved the economy.
So, now that the AfCFTA deal has been signed and would kick off by the middle of the year, what does it portend for Nigeria?
For Nigeria, it’s going to be a hard lesson because we have left so many things undone for too long, which makes us totally uncompetitive in many areas, food production, and manufacturing. But the service sector would flourish, we have internationally experienced lawyers, bankers, telecom operators, etc. But that’s just a small part because the service sector doesn’t usually employ many people. For the volume of business MTN is doing in this country if it were in the manufacturing, they would have 10 times the labour MTN currently has. So, our manufacturing sector can’t compete with Kenya and South Africa. Our manufacturers over the years have been advocating for our government to fix infrastructure particularly energy. So, AfCFTA would force us to do the right thing because it’s no more going to be competition with advanced countries like China and India, it will now be competition with our fellow African countries. So, if you can compete with other African countries, that means your economy is gone.
Aren’t there gains in the AfCTFA for Nigeria?
There are gains, but the challenges outweigh the gains. Those challenges are self-inflicted. What we needed to have done 15-20 years ago was not done, so we are going to pay the prices today. For more than 15 years, Nigeria did not invest a dime in power, until Obasanjo came to power in 1999. So, the damage is too deep. By the end of 2020, Nigeria needs 69,000 megawatts to excel. So, until we fix power we are just toying with our future, these are my concerns. Nigeria would benefit immensely in the area of intermediate product, that is raw material supply because we have developed producers that can service other African markets. Also in the service sector, we’re going to be winners. But the challenges are going to be widespread especially in the manufacturing sector and our biggest problem is graduate unemployment and it’s only the manufacturing sector that can provide that employment.
Many say that Nigeria’s stance to maintain border closure goes against the AfCFTA agreement. What is your view?
The AfCFTA’s operational date has not come up, it would be effective July 1, 2020. But by closing the borders, Nigeria is giving the signal that the AfCFTA will not work. That we’re not disciplined enough to obey the rules. I’ll not be surprised when this AfCFTA begins; many nations would revisit this border closure and also shut their gates against made in Nigeria products. If you don’t have a disciplined society, it would reflect in your international relations. Nigeria as a country is quick to sign laws, but is also notorious for not obeying what was signed. So, come July 1, we don’t know where we’ll end. The way power supply is going, if it dips further it would drastically affect our domestic production. And because we don’t have stable power supply cost of production would be high, hence Asian countries would establish companies in other parts of Africa, produce and then ship it free of charge into Nigeria.