African superpower Nigeria has signed an agreement which aims to increase trade between African countries.
This leaves Eritrea as the only African country not to be part of the trading bloc.
Nigerian President Muhammadu Buhari signed the landmark agreement at the African Union (AU) summit in Niger.
The first step is to cut tariffs for goods from countries within the bloc but the timeframe to do this is yet to be announced.
The AU says that the African Continental Free Trade Area – called AfCFTA – will create the world’s largest free trade area.
It also estimates that implementing AfCFTA will lead to around a 60% boost in intra-African trade by 2022.
Only 16% of international trade by African countries takes place between African countries, according to research by the African Development Bank in 2014.
At the moment some of that intra-Africa trade ranges from fresh fish from the Seychelles to petrol from Angola.
Why is it a big deal that Nigeria signed up?
AfCFTA hit a hurdle last year when Nigeria pulled out days before the country was due to sign the agreement.
Nigeria is Africa’s biggest economy and has long been a regional leader so, when it stalled, observers questioned if the African trade bloc would ever actually happen.
President Muhammadu Buhari said he needed further consultations in Nigeria.
Since then, the Nigerian Office for Trade Negotiation says it has consulted with 27 groups, including trade unions.
Nigeria has a lot to gain from increasing access to its goods and services to a wider African market. But many of those consulted also feared increased regional integration would lead to unfair competition for jobs and the goods they produce.
With Nigeria signed up, AfCFTA’s dream of increasing intra-Africa trade, which currently lags behind the volume of trade the continent does with Europe, is now one step closer.
Now that AfCFTA can offer access to the enormous Nigerian market, they are in a much stronger position to negotiate with regional bodies in other parts of the world.
Why was Eritrea left out?
Eritrea did not participate in the negotiations because of their conflict with Ethiopia, according to the Commissioner for Trade and Industry of the AU Commission Albert Muchanga.
He adds that now the two countries are at peace and Eritrea has asked the AU to go through the agreement with them.
“So over time they are going to come on board” he said.
What are free trade agreements?
Free trade agreements are designed to cut trade tariffs between member countries.
Tariffs are a form of tax, like a border tax.
They are placed on goods coming into a country for a range of reasons, sometimes to try and protect a home-made product.
The purest free trade agreement (FTA) removes all border taxes or trade barriers on goods.
They get rid of quotas too, so there is no limit to the amount of trade you can do.
FTAs also help make a country’s exports cheaper and give easier entry to other markets.
They come in all sorts of forms and with different rules but in short, they make trade between countries as liberal as possible and allow for more rules-based competition.
Head of EU Delegation to Nigeria and ECOWAS, Mr Ketil Karlsen has said that bilateral trade volume between Nigeria and the European Union reached €25.3bn in 2017. Karlsen, while briefing newsmen in Abuja on the forthcoming Europe Day May 9, said this figure was an increase of 27% from that of 2016, which stood at €19.9 billion. He said about 50% of the 2017 trade value was in favour of Nigeria. “About 25.3 billion Euro was traded in 2017.
There is clear significant surplus in the benefit of Nigeria. Of the trade volume, around 50% more is actually benefitting Nigeria,” the envoy said. According to him, the EU remains the most significant trading partner of Nigeria, stressing that trade and investment was an integral part of Europe partnership with Nigeria. He said though about 30% of Nigeria’s external market is Europe, the region is exploring ways to expand the trade ties. He said the EU was making efforts to provide an additional market access for Nigerian products in Europe and beyond, thereby creating job opportunities for the teeming population.
On the EU Economic Partnership Agreement (EPA), which Nigeria is yet to sign, the envoy said the union would continue engaging Nigerian government and other stakeholders on the benefits of the agreement. “We are partnering with the Nigerian government, private businesses and other stakeholders to promote this and to continue the dialogue on the economic partnership agreement. “What we do want is to engage with everybody to stress the potential benefit that we consider in this kind of engagement in opening the market access, providing technical assistance in order to make sure that it does not become hostile to industries and the opportunities for youth employment, but opportunities to develop industries through access to market,” he added. He also disclosed that the EU was expanding its humanitarian support in north-east Nigeria to include job creation for the displaced populations. “We need to think of the north-east in economic terms and job creation.
This is part of our foreign policy. “In the period of 2015 to 2017, we have provided 144.5 million Euro in humanitarian aid mainly in the north-east. In 2018, we have set aside 34.5 million Euros in provision of food aid. “We are working in Borno state and currently in dialogue with Yobe state on how we can expand our support to the area. All together, we have set aside 257.5 million Euro in our support not only for humanitarian support but also in our long-term development in that region.
“There is need for military response, engagement in political dialogue, humanitarian aid to the victims but there is also need to engage in long-term development to secure job and strengthen local and state institutions so that they can provide all the opportunities. “We are working the talk on not only providing humanitarian relief but also engaging in long-term development cooperation,” he said. The envoy added that the EU has supported water and sanitation projects in 14 states to the tune 353.5 million Euro, reaching and benefitting more than four million people in the country.
Karlsen, who noted that it may be a little difficult to assess Nigeria’s level of implementation of the recommendations at this stage, called for improvement of internal democracy in political parties in the country. The envoy however, advised policy and law makers to ensure that reforms as regarding the electoral process should be done on time, preferably 6 months to the conduct of elections. Speaking at a media parley on its forthcoming National Day celebration, Karlsen, remarked that the EU take seriously, the issue of election and democracy in Nigeria and hence have continued to support efforts at improving them. “Since Nigeria’s return to civil rule in 1999, the EU has provided $100m in funding to support Nigeria’s electoral process.
The European Union’s intervention in the electoral cycle targets key stakeholders, including the election management body – the Independent National Electoral Commission – with the overall goal of contributing towards the consolidation of Nigeria’s democratic process. Ahead of the 2019 elections, supporting the process of electoral reforms that will enhance the capacity of Nigeria’s institutions to carry out their statutory duties in an effective, transparent manner remains a key priority for the European Union.
“The European Union Support to Democratic Governance in Nigeria (EU-SDGN), an ambitious 26.5m Euros multifaceted programme, was designed in pursuit of this goal”, he said. The programme, which he noted is being implemented in partnership with the government of Nigeria and key stakeholders, and will run until 2021, has five key components which involves support to INEC, support to the National Assembly, support to political parties, support to the media and support to the civil society.
He emphasized that EU’s interest is to strengthen the national leadership to consolidate democracy by ensuring that winners take over power and not to decide whom to be elected. ” We don’t have a preference. All we do is to bring our expertise to support a credible election in the country “, he said. Other areas of support the EU intends to expand outside electoral matters, the envoy noted, include issue of migration and mobility; trade and infrastructure development.
By Mayeni Jones, Nigeria correspondent
