AfCFTA: Labour Activists say Nigeria’s Unproductive Economy May Negate Gains

AfCFTA: Labour Activists say Nigeria’s Unproductive Economy May Negate Gains

…Insist Country’s Bane is Policy Summersault, Abysmal Infrastructure, Hostile Business Environment Labour activists, who graced the 23rd Annual Dr Mayirue Eyeniegi Kolagbodi Memorial Foundation Lecture in Lagos, say the possibility of Nigeria reaping immensely from the new African Continental Free Trade Agreement (AfCFTA), designed to facilitate the easy movement of persons, capital, goods and services

…Insist Country’s Bane is Policy Summersault, Abysmal Infrastructure, Hostile Business Environment

Labour activists, who graced the 23rd Annual Dr Mayirue Eyeniegi Kolagbodi Memorial Foundation Lecture in Lagos, say the possibility of Nigeria reaping immensely from the new African Continental Free Trade Agreement (AfCFTA), designed to facilitate the easy movement of persons, capital, goods and services and ultimately crystallise an African common market, may be forlorn owing to the country’s largely unproductive economy. They also argue that the prevailing policy inconsistency, poor infrastructure and a hostile business atmosphere in the country will negate any gains from the treaty.  

“No matter how rosy we couch this treaty, Nigeria may not benefit if we do not improve the productive capacity of the economy,” says Mr Issa Aremu, General Secretary, National Union of Textile, Garments and Tailoring Workers.

Also echoing a similar view, Deputy General Secretary, Nigeria Labour Congress (NLC), Mr Ismail Bello argues that AfCFTA is a neoliberal policy that will hardly address social inequality in the country. “NLC was opposed to Nigeria signing the treaty because we believe it is bad for industry and bad for jobs,” he says, contending that unless we improve the quality of production of our music and film where we have an advantage, other countries in Africa may take the lead.

Mr Gbenga Ekundayo, chairman, Trade Union Congress (TUC), Lagos state branch is perhaps more emphatic; “We are wary of agreements that would not benefit the country”. He’s of the view that we must be careful entering any agreements that will compound youth unemployment which is already provoking crisis. “We cannot throw our borders open in such a way that it does not benefit us”.

Arguing that “trade without other components of development is nothing,” Prof Olawale Ogunkola had stirred the hornet nest with his paper titled: “The New Africa Continental Free Trade Agreement: Implications For Employment And Labour Relations”.

Unlike other development paradigms like the United Nations Economic Commission of Africa (UNECA) and Economic Partnership Agreement (EPA) that were foisted on the African continent, Ogunkola says AfCFTA was inspired within Africa for the continent to chart its own future. “It’s the first agreement to be negotiated in Africa,” he quips.

In continuation of the development agenda for Africa as contained in the treaty establishing the African Economic Community (AEC) in 1991, according to the professor of Economics at the University of Ibadan, the African Union, the Organisation of African Unity (OAU) successor, launched Agenda 2063.

“The African Continental Free Trade Agreement (AfCFTA) is a follow-up to the various continental initiatives. It was designed as a developmental approach to trade-related issues in Africa. The ultimate goal is to create a single market for the continent’s 1.27 billion people with a GDP of between $2.1 and $3.4 trillion. Given the content of the Agreement, the ACFTA is more than trade liberalisation,” Ogunkola posits as he stokes other thoughts.

“What’s the implication of the free trade for the African economy? Are we just interested in looking at agreement at the area of work? What should labour be doing or can we integrate trade in our daily struggles? How can we make it part of the bigger picture of the total liberation of Africa?

“Trade is a means to an end. It’s not just trade. Increasing trade does not imply development. What’s paramount is how it will affect your development. In other words, it’s trade for the sustenance of growth” 

Various studies have attempted to gauge the potential impact agreement and emerging consensus points to positive impact of the agreement on the welfare of Africans. Aggregate GDP is expected to grow by 1.0%; total employment by 1.2%; intra-African trade by 33.0% and, the continent’s trade deficit to be reduced to half.

The African Development Bank (AfDB) says, “AfCFTA is expected to increase net real income by between $2.8 billion and $100 billion, depending on the degree of liberalization, and lead to more domestic investment, particularly in infrastructure”. 

Given the findings from various studies, Ogunkola is of the view that the AfCFTA is unlikely to negatively affect labour outcome in Africa. Indeed, if the AfCFTA is properly implemented, it could provide more and better jobs that are sorely needed for Africa’s sustainable development.

All the studies on the impact evaluation of AfCFTA irrespective of the area of focus concluded that a well and fully implemented agreement would be beneficial to the continent.

The studies are also in agreement that flanking policies are important in promoting and maximizing the potentials of the Free Trade Area.

The general objectives set out the vision for the AfCFTA (Article 3), essentially to Boost Intra African Trade (BIAT) are to:

  • Create a single market for goods, services, facilitated by movement of persons in order to deepen the economic integration of the African continent and in accordance with the Pan African vision of ‘an integrated, prosperous and peaceful Africa’ enshrined in Agenda 2063;
  • Provide a liberalized market for goods and services through successive rounds of negotiations;
  • Contribute to the movement of capital and natural persons and facilitate investments building on the initiatives and developments in the State Parties and RECs (Regional Economic Communities);
  • Lay the foundation for the establishment of a Continental Customs Union at a later stage;
  • Promote and attain sustainable and inclusive socio-economic development, gender equality and structural transformation of the State Parties;
  • Enhance the competitiveness of the economies of State Parties within the continent and the global market;
  • Promote industrial development through diversification and regional value chain development, agricultural development and food security; and
  • Resolve the challenges of multiple and overlapping memberships and expedite the regional and continental integration processes.

The plans for CFTA go beyond removing trade barriers, the usual remit of a free trade area, and encompass steps to support inclusive and sustainable development.

For the trade liberalization component of CFTA to yield optimal gains, the enabling environment must be sound.

Hence, the AU adopted a developmental approach rather than one that simply emphasized regionalism. For that same reason, the action programme for BIAT is to be implemented pari pasu with the CFTA.

In January 2012 the AU made the decision to establish the CFTA by an indicative date of 2017 and endorsed the Action Plan on Boosting Intra-Africa Trade.

The benefits of trade liberalisation according to Ogunkola, include removal of barriers on imports, lowering of import prices and thus consumer prices, access to greater varieties of products in domestic markets and welfare gains in the form of consumer surpluses in importing countries.

Others include lower import prices that may also reduce costs of imported raw materials and intermediate inputs for downstream producers in the importing countries.

It will also lead to cuts in production costs thereby increasing competitiveness of domestic producers and allow countries to integrate into global value chains.

It will allow domestic firms access to bigger markets and gain from economies of scale and a basis for the firms to grow faster and also have better access to finance and technology in the world economy.

It may not be a bed of roses. Trade liberalisation comes with its own challenges.

Large firms that are taking advantage of economies of scale may gain dominant position in markets at the expense of SMEs.  Market consolidation may also arise when SMEs are exposed to stiffer competition during the transition.

Thus, in order to ensure a smooth transition during trade liberalization, complementary policies such as consumer protection and competition policies need to be put in place.

As intra-African trade has higher skill and technology content than Africa’s trade with others, the CFTA can improve diversification, industrial product and technology content of AU member state exports

In the long run, it is expected that increased competition will translate to efficiency of domestic firms, lead to structural transformation of skill and technology content of developing countries’ exports.

Contending that South Africa with a more productive economy is in a bigger stead to benefit from AfCFTA, Ogunkola however says, Nigeria’s ability to meaningfully devour the pie will be dependent on a viable and consistent trade policy, trade facilitation or improvement in infrastructure, cost of transportation and by extension cost of production, productive capacity, trade related infrastructure like massive railway development to facilitate exports, trade finance, factor market–increasing inter regional harmonisation of labour and establishment of mutual agreement.

“If implanted faithfully, AfCFTA would be beneficial to the whole of Africa”, he says.

Present at the lecture sponsored by Friedrich Ebert Stiftung (FES) and moderated by Prof Dung Pam Sha of the Department of Political Science, University of Jos, are Mr S.O Osidipe, chairperson of National Association of Trade Union Veterans (NATUV), Mr Sylvester Ejiofor, former general secretary of Civil Service Technical Workers Union of Nigeria and  Mr Owei Lakemfa, popular columnist and former general secretary NLC.

Others include Country Representatve, FES, Mr Ulrich Thum, Head of FES Lagos Office, Mrs Remi Ihejirika, Chairman, Academic Staff Union of Universities (ASUU), University of Lagos branch, Dr Dele Ashiru, Political Science Lecturer at the Lagos State University, (LASU), Dr Dele Seteolu, Executive Director, International Press Centre (IPC), Mr Lanre Arogundade, Mrs Blessing Isreal of the National Union of Nurses and Midwives, representatives of different workers unions and civil society organisations.   

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