COMMUNIQUE OF THE 61st ANNUAL CONFERENCE OF THE NIGERIAN ECONOMIC SOCIETY, HELD AT THE NAF CONFERENCE CENTRE AND SUITES, ABUJA
| Conference No: 397100 | |
| Date: Tue, September 08, 2020 to Sat, September 12, 2020 | |
| Venue: NAF Centre, Kado, Abuja and ZoomLive | |
| Time: 10:00am | |
Preamble The 61st Annual National Conference of The Nigerian Economic Society (NES) and the first Virtual Edition of the Conference held between 8th and 12th September, 2020, with the broad theme, AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) IN POST COVID-19 ERA: WHAT NEXT FOR NIGERIA? The African Continental Free Trade Area (AfCFTA) which was officially launched on July 7, 2019, during the 12th extraordinary summit of the African Union held in Niamey, Niger Republic between July 4th and 8th, 2019, followed in the footsteps of what is largely seen as successful regional integration efforts in other parts of the world. Easily worthy of note in this connection are the relatively young North American Free Trade Area (NAFTA) and the much older European Union, which has progressively evolved, since 1957. It started out as the European Coal and Steel Community to a Community that has, today, progressed to the stage of an economic union, the ultimate stage in economic integration, assuming in so doing the status of a supra-national behemoth, made up of 28 European member States that have chosen to cooperate in such diverse areas such as social, political, and economic policies under the umbrella called the European Union. The push towards setting up the AfCFTA derived from the perceived many advantages that are likely to be derivable from it, considered in light of the fact it has the potentials to bring together some 1.3 billion inhabitants of some 55 countries in the Continent into one economic grouping. In addition to creating an economic block with a combined GDP of about $3.4 trillion, the AU envisages that the AfCFTA will mature to a Customs Union, much like the European Union by 2063. The AU further envisages that the creation of AfCFTA will usher in a new era of development for a Continent that has lagged significantly behind every other region of the world, judging by every development indicator. In terms of overall objective, the Conference set out to provide a platform for a comprehensive diagnosis of theoretical issues relating to the conditions and criteria for Nigeria’s successful participation in the Free Trade Area, considered against the backdrop of the stark realities in the country’s economy with respect to its structure, production and productivity, resource endowment, the state and quality of infrastructure, etc. Although, admittedly, the goals of regional integration appear to be at cross purpose with the contemporary reality of an increasingly borderless world, in which the WTO is saddled with the responsibility of overseeing the smooth and unfettered international trade flows, the harsh reality occasioned by the COVID-19 pandemic brought to the fore, the fact that the rapid progress that has been made in the areas of information and communication technology has the capacity to attenuate the adverse consequences of limited cross border physical interactions, as evidenced, for example, by the Virtual nature of the 61st Edition of the Society’s Annual Conference. In a highly informed keynote address that indicated that the Federal Government is already very much conversant with the challenges that stand in the way of Nigeria in benefitting from the AfCFTA, but implying that all that is required is the political will to address the challenges, the Vice President, Professor ‘Yemi Osinbajo, GCON, observed, amongst others, that the COVID-19 pandemic exposed the country’s over dependence on commodity exports to other parts of the world and over dependence on manufactured goods imports. He noted, furthermore, that the disruption to global supply chains occasioned by the pandemic exposed the vulnerability of African countries, in view of their limited productive capacity and lack of regional value chains. The Vice President acknowledged that the desire of the AfCFTA is to deepen regional value chains, pointing out, however, that AfCFTA is not a magic wand that would automatically engender growth and prosperity. For this reason, he observed, on a rather blunt note, that if there is no production, there would be little or no scope for trade in a Continent that aspires to create a Free Trade Area where the intra-continental trade in goods is, relatively speaking, very low. In this connection, he pointed out that the value of intra-African trade stood at $135 billion in 2017, or a mere 15%, which contrasts sharply with the share of trade within other regional groupings such as intra-Europe trade which stood at 70%and intra-Asia trade which stood at 60% in the same year. While noting that the liberalization of trade that would be incidental to AfCFTA has the potential to expose the Nigerian economy to stiff competition and sharp trade practices with adverse consequences for domestic producers and workers who might have to lose their jobs, he argued that it is imperative to be proactive in order to participate effectively in AfCFTA. To this end, he pointed out that the imperative to improve the country’s ability to produce and to trade competitively in goods and services justified the heavy investment by the Federal Government in power, roads, rail and port infrastructure projects, citing as examples the National Trading Platform or Single Window Project, which entails installation of scanners at the ports. In all, 78 thoroughly researched papers, made up of five papers at the Plenary Session, three at the Policy Round Table session and three papers at a Special Round Table session that focused specifically on AfCFTA and Covid-19pandemic, as well as a total of67 papers at 15 different Concurrent Sessions were presented at the Conference. The papers sought to shed light, in an effort to answer the question raised in the theme of the Conference, on the potential gains and pains that await Nigeria as the country accedes to the AfCFTA Agreement and Protocols. Several observations and actionable recommendations that, if observed in the compliance by policy makers in the country, could make smooth the pathway for Nigeria to maximize the benefits and minimize the costs that are incidental to the country’s participation in the Free Trade Area were made at the Conference. Several observations and policy-relevant recommendations were, accordingly, made at the Conference. 1. Observations and Recommendations from the Conference 1.1 Observations (1) Participants observed that for Nigeria and other Signatories to the AfCFTA Agreement, there are threats and opportunities that are inherent in the Free Trade Area. Among the potential opportunities, participants observed that the AfCFTA could be instrumental to expanding the market size that is available to the players in the country’s industrial sector and the manufacturing sub-sector. It was observed that this possibility makes it imperative to pursue pragmatically efforts at improving on the range and diversity of industrial and manufactured output by raising the quantity and quality of these goods to meet the implied greater demand for the export of these goods that will be incidental to the implementation of the Agreement. It was observed, on the other hand, that the AfCFTA has the potential to expose the products of the feeble firms in the country’s industrial and manufacturing sub-sectors to stiff competition from goods that are produced by more efficient firms in the Free Trade Area and possibly also goods from outside the Free Trade Area, making rules of origin an issue that should be of concern in the implementation of the Agreement. (2) Participants observed that the AfCFTA, if properly harnessed, could provide a unique opportunity for member countries in the region to be competitively integrated into the global market and to serve as impetus for increased job creation and productivity. It was observed, furthermore, that there are potential gender-related benefits that are derivable from the AfCFTA. In this connection, it was observed that in addition to being advantageous to women by lowering gender wage gap, the AfCFTA has the potential to increase employment opportunities for women. Specifically, it is estimated that AfCFTA could engender a 10 percent increase in wages, with larger part of the gains accruing to unskilled workers and women. (3) Although participants observed that AfCFTA has inherent in it such potential drawbacks as loss in revenue due to reduced tariff for member countries, trade diversion, etc., it was nevertheless argued that the Trade Agreement could serve as an impetus to improve infrastructure, in addition to creating a wider market in the Continent. Participants observed, too, that the unexpected COVID pandemic engendered negative growth trajectories for both developed and developing economies, through the widespread Infectious disease and illness, high death rate, and declining growth rates that came in its wake, the totality of which served to trigger off a global recession in the process, and by so doing disrupting the path of AfCFTA. Participants observed that these undesirable outcomes may, nevertheless, serve as an opportunity to reconfigure the AfCFTA short-term strategy to minimize internal and external economic shocks while at the same time maintaining and achieving the expected outcomes of the Agreement. (4) It was observed, furthermore, that there are disproportionate costs that are incurred in and benefits that are derivable from participating in a Free Trade Area (FTA) by countries. Participants were of the view that it is up to each country to strive to minimize the costs while at the same time implementing policies that make it possible to maximize its benefits. It was noted, however, that with an export basket that is dominated by crude oil, low processed agricultural products and few manufactured goods and a largely inefficient ports, customs, immigration and border management infrastructure, Nigeria is, for now, largely unprepared to derive any meaningful benefit from entering the AfCFTA. (5) Participants also expressed deep concern that Nigeria would lose out with the implementation of AfCFTA Agreement, given the absence of the needed framework for its successful implementation. It was observed that implementing the Agreement implies that the country will have to forfeit some level of customs revenue in exchange for trade creation opportunities, which the country is ill-prepared for and ill-equipped to take advantage of for now. (6) Participants observed, furthermore, that there is need for Nigeria to pursue in an aggressive and pragmatic way, an inclusive economy, characterized by transformative leadership, re-invented governance, overhauled educational and health sectors, improved infrastructure base, an economy that is substantially diversified away from crude oil, as pre-conditions for Nigeria to benefit from the AfCFTA. Given the absence of these pre-conditions for now, participants noted that it will be ill-advised for the country to implement the AfCFTA, especially considered against the backdrop of the deep concerns they expressed about the sharp disconnect between reported official expenditures on infrastructural facilities (road, rail, power, ports, water and sanitation, etc.) and the disturbing state and quality of these facilities. (7) In addition, it was observed that there are potential far-reaching implications of AfCFTA implementation for labour and cross-border movement of workers. These call for investment in the education of citizens in order to equip them with the needed skills set to prepare them for the competition in the labour market that will be incidental to its implementation of the FTA. Participants expressed the optimism that the youth could help the country to derive maximum benefits from AfCFTA, using their intellectual capital, if they are motivated so to do, given their largely untapped intellectual potentials. Participants observed, furthermore, the need for policy makers to enter into fruitful partnership with workers, ensuring in so doing the elimination of anti-labour policies, while at the same time ensuring that workers are given the deserved recognition and fair treatment in the country’s production process as a way of reaping the benefits from AfCFTA. (8) Participants were unanimous in observing that the persistently high and rising cost of governance, which is compounded by the problem of pervasive and cancerous corruption remains a daunting challenge that must be surmounted as a precondition for progress in the economic, social, political and other aspects of life in the country. It was observed that the problems of high cost of governance and corruption account for the poor quality of education, health, water and sanitation facilities, road, rail and port infrastructure, the crippling business environment and the significant adverse movements in key socio-economic indicators of development and the generally low quality of life of the citizens. Participants observed that the country can secure little or no benefit from AfCFTA in the face of these undesirable states of affairs. (9) Participants also identified other issues that could constitute bottlenecks to the fruitful implementation of the AfCFTA to include deficient infrastructure, high transaction cost and tariffs, low intra-African trade, weak regional value chains, fragile and un-integrated financial system, non-convertibility of national currencies to facilitate cross border trade flows and lack of effective compensation scheme for countries that are likely to lose out in the implementation of AfCFTA. 1.2 Recommendations (1) Nigeria should, as a matter of urgency, articulate and implement a clearly defined trade policy, given that participating in a Free Trade Agreement without a National Trade Policy amounts to accepting to lose out in willingness and possibly also in contentment in the Trade Agreement. (2) As a matter of necessity, and in bid to enhance the competitiveness of its domestically produced exports and import competing goods, the Conference recommends that policy makers in the country initiate and implement reforms that are designed to enhance value addition to upscale raw materials to intermediate goods and to final products. (3) Deriving from recommendation 2 above, participants unanimously recommended overhauling the country’s ailing and decrepit hard infrastructure while at the same time improving on the quality of soft infrastructure in order to operationalize and to give meaning to the claims of being a digital economy and to create the enabling environment for industrial and manufacturing sectors’ players to operate smoothly and efficiently. To this end, it is recommended that the power sector, being the sector upon which every other sector relies to thrive, be completely overhauled with the removal of the bottleneck that impede the sector from functioning efficiently. (4) Participants recommended a more vigorous exploitation of the benefits inherent in Public Private Partnership (PPP) arrangements in order to redress the wide infrastructural gaps in Africa. (5) In what is suggestive of the need to make haste slowly, participants recommended extending the time frame for full liberalization of tariff barriers on 90% of products that are traded in the Free Trade Area, given the present realities. In addition, it is recommended that policies that could fast-track the integration of the financial system and to make convertibility of national currencies possible, with a view to facilitating cross border trade flows, be carefully articulated and implemented. (6) The vigorous and pragmatic pursuit of the diversification of the economy away from oil dependence to manufacturing and agricultural productions and agricultural value chain addition was also strongly and unanimously recommended by participants as the sure pathway to boosting genuine productive activities that are capable of creating the much needed jobs in the country. (7) For effective implementation of AfCFTA, participants recommended that the African Union (AU) intensifies efforts to establish a revenue loss compensation scheme as part of the implementation strategy of the AfCFTA, given that such a scheme has the potential to ginger the interests of member countries to participate in the Free Trade Agreement. (8) Given what appears to be limited information that is available to the citizens of member countries of the AfCFTA and in order to get the citizens to buy into its aims and objectives, it was recommended that policy makers in the country articulate and implement strategies to sensitize the citizens on the benefits of the AfCFTA. (9) Participants made a strong case for improved border management, digitization of the economies of member countries, fiscal sustainability plans, aggressive infrastructural development and very importantly, patronage of Africa made products by African citizens, which was observed to be the surest pathway to giving meaning to and reaping the benefits that are derivable from the Continental Free Trade Area. Professor Sarah O. Anyanwu President Dr. Anayochukwu B. Chukwu Publicity Secretary | |
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