January 1, 2021 was the beginning of trade under the African Continental Free Trade Area (AfCFTA) Agreement (the Agreement). It is arguable that not much had been achieved since March 21, 2018; the date of the AfCFTA’s launch in Kigali, Rwanda. Other than the signature of the Agreement by 54 AU Member States and the deposit of instruments of ratification by 34 of them (State Parties), much of what had transpired prior to now was largely in rhetoric. Expectations are however high that our continent’s US$2.5billion economy will shortly see a surge in intra-continent trade. Coming from a meagre 2% during the 2015 to 2017 period (compared with Europe’s 67%, Asia’s 61% and the Americas’ 47%), the hope is that the AfCFTA will stimulate a meteoric rise in intra-Africa trade.

Nigeria became the 34th State Party to the AfCFTA having deposited its instrument of ratification on December 5, 2020. The hesitation to ratify the Agreement was arguably owing to the skepticism of what the AfCFTA meant for Nigeria, especially its manufacturing or industrial sector. The bases for the skepticism is lost on some pundits, especially when viewed from the prism of the  economic statistics of Africa’s 3 largest (let’s work with the relatively simplistic Wikipedia stats):

Though Nigeria’s industrial sector is comparatively of the lowest percentage in the contribution to GDP in each of the countries, it is however the largest (US$124billion) in actual size. In fact, the sheer size of each of Nigeria’s highlighted sectors outweigh those of Egypt and South Africa on a comparative basis. Much ado about nothing then, you may say. Nay, I want to believe that there are important issues for Nigeria to worry about. I surmise it as, the productivity and efficiency of its population.

Nigeria’s population as a function of its Nominal GDP gives rise to its GDP per capita; also known as productivity per person. At circa US$2,500, Nigeria’s GDP per capita is estimated as the 18th highest in Africa. While the GDP per capita is not a good measure of personal income and the use of the United States’ Dollars and its attendant exchange rate fluctuations being subjective, GDP per capita however offers some basis to calculate the average productivity of a population. Thus, it is an arguable statement to conclude that the Nigeria State, though the with the largest economy in Africa, is a distant 18th, when viewed from the lens of the productivity of its average resident. Should this then rationally be the diagnosis for the ambivalence on the competitiveness of Nigeria and Nigerians on a continental scale?

Personally, I see the AfCFTA as no more than a call to productivity and competitiveness on a continental scale. The upside for businesses is in the market access to Africa’s 1.35billion people while the argued downside for any country is the access of other businesses to its own national market; Nigeria being the largest at between >195million<210millon people. For businesses that are primed and scalable, the upside should outweigh the downside. The very art of being primed for a larger market could really be a function of the scalability of the business model, processes and people of the relevant business. A bigger market need not necessarily translate into bigger operations, particularly if the relevant business sees no need to expand past its current niche. The chances however are that competition may swallow small players. AfCFTA leaves it to State Parties to determine what sectors or industries of their economy they choose to liberalize or keep as exclusive; with reciprocity being the name of the game. If you do not liberalize, you cannot take advantage of the liberty of others. Thus, small players in the exclusive areas may continue to be comfortable while those in the liberalized areas simply have to become more competitive to survive. There may be no more rooms for local champions.

Regulated competition should be a panacea for greater productivity. Nigeria and Nigeria’s businesses simply have to be competitively efficient and productive. With limited or no protectionism in liberalized industries or sectors, both the Government and the governed have to work hard at increasing the productivity of the Nigerian populace. Both at the macro and micro levels, more investments (not expenditure) have to be made in education and health care to increase the quality of human capital. The large population has to be galvanized into action, with quality over quantity being the mantra. 

While Nigeria may, understandably so, maintain the current course of events, where its highest export and import partners continue to be non-African countries, it cannot hide its intimidating size from the rest of Africa. Africa will come and Nigeria needs to be ready to receive Africa and go to Africa. AfCFTA is a marketplace for the best of Africa; Nigeria just has to bring its best to the party. An excellent competitive productive culture, paraded by a positively knowledgeable and healthy citizenry, will be our sure winner.

Working with 21Search, I’m happy to be a part of a team of young people who have embraced the AfCFTA with the knowledge and realistic optimism it deserves. We are AfCFTA-ready! 21Search works with its clients to improve productivity with trainings, certifications and the standardization of products and services.

This is wishing you a most productive 2021!


Leave a comment

Your email address will not be published. Required fields are marked *