AfCFTA: The investment case for Nigeria

Nigeria has taken a significant step towards economic growth by signing on to the African Continental Free Trade Agreement (AfCFTA). The operational phase of the treaty was launched on the sidelines of the African Union (AU) summit in Niamey, signaling a new era of trade opportunities for the country. Winston Osuchukwu, Co-founder of Trans-Sahara Incorporated, shares insights on the investment case for Nigeria and the potential impact of the AfCFTA on the country's economy. With the commencement of trading on the AfCFTA scheduled for the first of July 2020, Nigeria stands at a critical juncture in its economic trajectory. Despite concerns surrounding the possibility of cheaper goods flooding the market and the challenges faced by the manufacturing sector, Osuchukwu remains optimistic about the long-term benefits of the agreement. He emphasizes that the industrial base of Africa as a whole is underdeveloped, presenting an opportunity for countries to collectively raise their manufacturing standards. One key advantage for Nigeria lies in its position as the largest market in Africa, making it an attractive destination for regional and international businesses. Osuchukwu highlights the potential for leading from the front and suggests key steps for Nigeria to leverage this opportunity. By removing subsidies and allowing market forces to determine currency value, Nigeria can enhance its economic competitiveness and lead the continent in driving growth. While the transition may entail short-term challenges, Osuchukwu believes that the benefits of restructuring the economy outweigh the costs. By reallocating resources from subsidies to key sectors like education and healthcare, Nigeria can experience immediate positive impacts and stimulate job creation. The potential for increased business activity and employment generation is a compelling reason for Nigeria to embrace the changes brought about by the AfCFTA. In addition to tariff reductions, the AfCFTA aims to address non-tariff barriers such as corruption and insecurity that hinder intra-African trade. Osuchukwu underscores the role of zero tariffs in combating corruption at borders and streamlining trade processes. By eliminating the need for bribes and reducing red tape, the agreement can foster a more transparent and efficient trading environment. However, the successful implementation of the AfCFTA hinges on effective integration of customs services across the continent. Osuchukwu acknowledges the complexity of this task and suggests that a longer timeline may be necessary to achieve seamless customs integration. Ensuring compliance with rules of origin and preventing the circumvention of tariffs on non-local goods are critical aspects that require meticulous planning and coordination. As Nigeria navigates the opportunities and challenges presented by the AfCFTA, strategic policy decisions and proactive measures will be essential in maximizing the benefits of increased regional trade. By embracing transparency, reforming economic structures, and investing in key sectors, Nigeria can position itself as a leader in the African trade landscape and drive sustainable economic growth across the continent.