In this feature, ONYEKORMAKA ASABOR looks at what consumers stand to gain, if AfCFTA is implemented
Since the African Continental Free Trade Area commenced trading, making it the world’s largest free trade area in terms of participating member states after the formation of the World Trade Organisation, that not few people are yet to comprehend the benefits inherent in its implementation, particularly consumers, cannot be held as a misnomer. No doubt, as assured by experts, the nascent and wide-reaching trade area will be watched closely, given its scope, size and potential development impact, along with what it means for existing regional communities and trading ties with other partners.
Aims of AfCFTA
For the sake of clarity, AfCFTA is expected to create a single market for goods and services. It also aims at liberalising and facilitating the movement of people, investment and business across Africa. On the strength of the foregoing, Kennedy Onyero, an economist, said, “AfCFTA would unarguably engender a market atmosphere where there is choice for consumers, as it would offer a variety of products and services that match their particular needs. This is what most consumers aspire to.”
Against this background, it is expedient to say that AfCFTA will, to a large extent, discourage consumers from the age-long strong dependence on goods from European, American and Asian countries. For some years now, locally-made products have been facing a number of challenges, which allegedly inhibited development in Nigeria. The reason for the foregoing view is not far-fetched, as the 54 participants in the trade, who are invariably signatories to the trade agreement, are all Africans.
Other stages, as gathered by Financial Street, which consumers are bound to benefit from, will include Customs, common market and economic union, monetary union and full economic development union among African countries.
Benefits to consumers
In as much as AfCFTA is positioned to make consumers experience a wider horizon in trade area, and give them limitless choices in the market, it will equally give them the opportunity to establish new business relationships with business-minded citizens of other African countries more than ever. There is no denying the fact that AfCFTA will make Nigerian businesses more competitive in the global market, from which consumers stand to benefit. The expanded markets and the projected demand for Nigerian-made goods across sectors will lead to the establishment of new businesses and the expansion of existing ones to meet the projected demand of consumers. That consumers will invariably benefit from opportunities inherent in AfCFTA cannot be pooh-poohed, as it will readily offer them the availability of Nigerian-made goods across markets.
This explanatory feature could not have come at a better time, as there is even an ongoing nationwide stakeholders’ sensitisation in Lagos State on the AfCFTA agreement aimed at addressing the public, private sector and other relevant stakeholders in the state with respect to their role in the implementation of the agreement. There is no doubt that it will reverberate the sensitisation.
Still on its benefits to consumers, the reduction in non-tariff barriers, with which it is characterised, will result in increase in Nigeria’s exports of commodities, manufactured goods and services to Africa and other continents. This means that Nigerian products and services will become cheaper than imports and demand will grow.
To Mr. Obed Iwuchukwu, an importer, “From any perspective, AfCFTA will undeniably remain beneficial to consumers. The reason cannot be far-fetched, as investors thriving on the platform provided by AfCFTA will see the lifting of restrictions on foreign investments in otherwise restricted economies. Consequently, the inflow of foreign capital will also stimulate banking systems by empowering businesses to drive wholesale and consumer lending, and all this will unarguably lead to decrease in the prices of consumer goods across markets.”
In the same vein, Osagie Owie, an insurer, said, “AfCFTA will, no doubt, facilitate the growth plans of the service sector, which is the greatest contributor to the country’s Gross Domestic Product.”
Buttressing his view, he added, the trade area had a share of 49.73 per cent of the GDP in 2019, according to Statista.com, and that Nigeria’s services sectors are mature and ready for expansion into Africa, especially financial services, entertainment, transport, Information and Communications Technology and travel sectors where Nigeria has significant comparative advantage.
Gladly enough, as observed by Financial Street, given that Nigeria’s manufacturing sector is more advanced than other African countries, it cannot be denied that Nigerian producers are better positioned to take advantage of the rise in demand, and the advantages therefrom will, no doubt, positively impact on consumers’ purchasing power across markets.
To Nigeria, as a signatory to the agreement, AfCFTA will promote industrial development and economic growth through the diversification of her revenue streams and the establishment of regional value chains. This, no doubt, will also positively impact on consumers’ transactions across markets in all ramifications.
The beauty of the agreement is that it aptly fits into Nigeria’s economic diversification objectives because it provides huge export opportunities on the continent for products manufactured in Nigeria and services rendered by Nigerian businesses. Not only that, AfCFTA will make most consumers experience buyer satisfaction and encourage repeat business, as sellers, or rather producers, will literally be falling head over heels across the continent to ensure that consumers’ needs are met.
Opportunities upon opportunities
Harry Megbontowon, a civil servant, in his response to the issue at a parley, said, “Customers are bound to trade under enabling market atmosphere, as Nigeria is poised to negotiate terms of trade with the other 54 member states of the African Union as a bloc, instead of having to establish different bilateral agreements with each individual nation.
“The array of opportunities inherent in AfCFTA cannot be gainsaid, even as the reason cannot be far-fetched, as the good thing about a free trade area is that it encourages competition, which consequently increases a country’s efficiency to be at par with its competitors. By virtue of the preceding view, products and services then become of better quality without being too expensive. When there is tough competition, countries will tend to produce more products or goods that they are most efficient at. This is because they take less time to complete and their output is higher.
“Another opportunity it offers is that when there is free trade, tariffs and quotas are eliminated, even as monopolies are broken because more players can come in and join the market, and the foregoing boil down to the benefit of the consumers.”
Opportunity, he added, can also be gained from AfCFTA, as there would be lowered government spending.
“Many governments subsidise local industries. This can be experienced as, after the trade agreement removes subsidies, those funds can be put to better use.
“Another opportunity therein is the reduction in price of goods. This is because where there is competition, especially on a global level, prices will surely go down, allowing consumers to enjoy a higher purchasing power,” he said.
Enter NAC of AfCFTA
At this juncture, it is expedient to ask who coordinates the implementation of AfCFTA in Nigeria.
The answer, according to Megbontowon, cannot be far-fetched, as the National Action Committee on (NAC) on AfCFTA was inaugurated by President Muhammadu Buhari to implement AfCFTA for Nigeria.
“The NAC Secretariat is responsible for the management and implementation of the AfCFTA agreement and strategic collaborations, including stakeholders’ engagement and resources mobilisation for the implementation of the AfCFTA pact in Nigeria. As such, NAC provides technical support, policy coordination support, readiness strategies and market intelligence information.”
As to its functions, NAC provides up-to-date information on the agreement status, provides information on incentives and means of accessing them, as well advise on the agreement and help structure individual implementation plans.
In the same vein, it makes sure Nigeria adheres to WTO’s free trade standards when implementing the agreement.
It also measure the impact of the agreement in Nigeria by providing up-to-date statistical and analytical data, as well as review company implementation policies, making sure they adhere to government standards.
