Why Nigerian Small Manufacturers Fear New Continental Trade Deal

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ABUJA, NIGERIA – A recently signed African Continental Free Trade Agreement (AfCFTA) is intended to increase trading among African nations and eliminate tariffs and bottlenecks. Some manufacturers in Nigeria, however, say that wading into the continental market could undermine local players and have negative implications.

When Chijioke Nelson graduated at the top of his class at the University of Nigeria, Nsukka in 2015, he had no intention of getting a regular job.

Nelson started footwear company Chinelk Outfits almost immediately after graduation. The business management graduate says he wants to contribute to Nigeria’s economic growth.

Nelson, however, said he is concerned that President Muhammadu Buhari’s recent signing of the Africa trade deal in Niger might put small manufacturers like him out of business.

“It’s one thing to sign this into law. It’s another thing to ensure that this free trade, whatever that has been signed, does not kill the infant industries in the country, because you know, this has to do with cross transportation of produced or manufactured goods,” he said.
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Nigeria initially walked out on the deal and spent months deliberating on the risks involved in exposing local manufacturers to increased competition in the continental market.

After reviewing an impact assessment in June, the president agreed to sign the deal, said Razaq Okulaja, a council member with the Manufacturers Association of Nigeria, or MAN.

“The concern that as manufacturers we had is … are we ready? So, MAN requested for some time, had good meetings with stakeholders. Let’s look at it again, and kudos to the government. Government listened,” said Okulaja.

While skepticism runs high, some local manufacturers, like Jibril Mohammed, said they’re looking forward to expanding their business through the trade deal.

“I am very, very interested, because I think I will get one of the countries around and open my office, even if it’s a showroom for me to move my products directly,” said Mohammed.

Inter-regional trade in Africa only accounts for 17% of the continent’s total exports, compared to 69% in Europe and 59% in Asia, respectively. The trade deal could drive the numbers up to 52.3%.

Ken Ife is a lead economic consultant at ECOWAS, the Economic Community of West African States.

He said Nigeria’s decision to participate in the deal is a boost to the pact.

“Nigeria is the big event that is waiting to happen, and that’s why they’re very patient with Nigeria. Not only that we’re instrumental in the various phases in the development of this, we actually want to be the capital of the AfCFTA. And justifiably so, because it looks like it’s zoned to (the) ECOWAS subregion, and we’re the No. 1 in Africa anyway, both in terms of population and in terms of size of economy,” said Ife.

The African trade deal gained momentum in Mayafter it was ratified by the parliaments of 24 African countries.

The continent’s manufacturing industry accounts for only about 10% of the African Union’s combined GDP of $3.4 trillion.

In Nigeria, manufacturers face diverse production challenges that put them at a disadvantage when compared to their counterparts on the deal.

But many here are waiting and watching to see this deal turn around their businesses and the economy.

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