ABUJA, June 19 (Reuters) – Nigeria will consider the interests of its industries in deciding whether to sign up to a $3 trillion Africa free-trade agreement, President Muhammadu Buhari said in a meeting with local manufacturers on Wednesday.
The African Continental Free Trade Agreement (AfCFTA)encompasses 1.2 billion people. Fifty-two of the 55 countries that make up the African Union (AU) have now signed. Aside from Nigeria, only Benin and Eritrea have opted not to sign up to the agreement.
Buhari has so far refused to join the trade zone, which came into force last month and is meant to eliminate most tariffs to create a single market with free movement of goods and services.
He fears that by joining the zone other countries would dump cheap goods in the huge market in Africa’s most populous country – a nation of some 190 million people – and therefore undercut efforts to stimulate the manufacturing sector, which is currently limited.
Nigeria’s dependence on imports puts a strain on the country’s finances and foreign reserves. It relies on oil exports for around 90 percent of U.S. dollar earnings.
Buhari told leaders of the Manufacturers Association of Nigeria trade body on Wednesday that he was awaiting the findings of a committee set up in October to assess the potential cost and impact if Nigeria signed up to the agreement.
“Nigeria will be guided by national interest in taking any decision on the agreement establishing the African Continental Free Trade Area,” Buhari said in a statement. He did not say when a decision would be taken.
Buhari, who last month began a second four-year term at the helm of Africa’s biggest economy, has touted local consumption and boosting non-oil exports as a key policy. But results are yet to materialise.
He told the manufacturing leaders that the trade zone would be discussed at the AU summit to be held in neighbouring Niger in July.
“I don’t think Nigeria has the capacity to effectively supervise and to ensure that our colleagues in AU don’t allow their countries to be used to dump goods on us to the detriment of our young industries and our capacity to utilise foreign exchange for imported goods,” he said.
Intra-regional trade sits at around 15 percent of Africa’s total commerce. Economists have pointed to this low level as one of the reasons for the continent’s enduring poverty and lack of a strong manufacturing base. (Reporting by Felix Onuah; writing by Chijioke Ohuocha; Editing by Alexis Akwagyiram and Alison Williams)