Nigeria to sign AfCFTA at AU summit in Niamey

Nigeria's Presidency has finally announced its decision to sign the Africa Continental Free Trade Agreement (AfCFTA) at the upcoming African Union summit in Niamey. This long-awaited move comes after months of deliberation and uncertainty surrounding Nigeria's stance on the agreement. Nonso Obikili, Director at Turgot Centre for Economics and Policy Research, sheds light on the significance of Nigeria's entry into the AfCFTA and the implications for the country's economy. The delayed decision by Nigeria to join the AfCFTA has been a topic of debate and speculation, with concerns raised about the potential losses the country might incur by signing on late. However, Obikili emphasizes that Nigeria's participation in the agreement is crucial, given its status as a major player in Africa. He notes that the primary goal of the AfCFTA is to promote intra-African trade and boost economic growth. By being a part of this landmark agreement, Nigeria stands to benefit from increased trade opportunities and market access across the continent. An important issue that surfaced during the discussions surrounding Nigeria's delayed entry into the AfCFTA was the need for further consultation with the manufacturing and private sectors regarding the rules of origin. The rules of origin serve as criteria to determine the nationality of a product, and concerns have been raised about the similarity of products across African countries. Obikili acknowledges the challenges posed by the rules of origin but stresses the importance of actively participating in the negotiation process to address these issues effectively. He asserts that being part of the discussions at the table is crucial for Nigeria to influence and shape the trade protocols in its favor. As Nigeria prepares to formalize its commitment to the AfCFTA, there are expectations of tangible changes in the short term. The focus is likely to be on harmonizing trade structures and removing non-tariff barriers to facilitate smoother trade relations among member states. While immediate transformations may not be evident, gradual progress in trade protocols and market integration is anticipated. In a related development, the recent surge in capital imports into Nigeria has garnered attention, with a notable 34.6% increase reported in the first half of the year. However, Obikili highlights that the composition of these capital inflows is skewed towards short-term investments in money market instruments like treasury bills. He underscores the need for a more robust strategy to attract foreign direct investments (FDI) into the country by implementing legal reforms, addressing infrastructure challenges, and enhancing the business environment. Obikili emphasizes the significance of long-term reforms to position Nigeria as a desirable investment destination, emphasizing the critical areas that require attention such as legal reforms, infrastructure development, and improved ease of doing business. He underscores the importance of capitalizing on the opportunities presented by the AfCFTA to leverage Nigeria's potential as a gateway to the African market. As Nigeria sets the stage to sign the AfCFTA agreement, it marks a pivotal moment in the country's economic trajectory. The decision signals not just a commitment to regional integration but also a strategic move towards harnessing the vast opportunities that lie within the African market. With careful planning and proactive reforms, Nigeria is poised to thrive in the era of increased trade liberalization and economic cooperation across the continent.