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The Nigerians in the Diaspora Organization, NIDO, has observed with deep interest the refusal of the Federal Government of Nigeria, under the Presidency of His Excellency, Mohammudu Buhari, to sign up to join the emergent Africa Free Trade Area (AFTA), which most countries on the continent signed up to recently at a meeting in Kigali, Rwanda. We have also noted the bewilderment and criticism of many Africans, including Ghanaians, as to Nigeria’s position on the issue. The conventional wisdom across the continent, including here in Ghana is that Nigeria, having the largest economy in Africa, should be leading the efforts to create an African common market, rather than refusing to be part of it.
To clear the air on this issue NIDO’s Ghana chapter wishes to explain the position of the Federal Government of Nigeria, which we indeed commend whole heartedly.
This position is based on the globally accepted premise that while economic regionalism is an integral part of the emergent globalized economic architecture, the promotion of the respective national interests of each sovereign nation remains paramount in national economic policy design and implementation.
Thus while we commend members of the African Union in taking policy decisions aimed at promoting intra African trade and investment, each sovereign member’s position must be dictated by their respective overriding national interest.
In Nigeria’s case, this is what the Federal Government has done. As President Mohammadu Buhari himself has pointed out, Nigeria recognizes that it is not yet sufficiently competitive on a continental level with regards to merchandize trade in manufactured products, to open its markets to the rest of Africa without exposing its domestic manufacturing sector to competition from superior product quality, better priced, and better packaged products from several other African countries.
Since Nigeria has a relatively youthful population which is still suffering from inordinately high unemployment levels, the Federal Government has correctly considered that this would result in a loss of domestic market share by Nigeria’s domestic manufacturers to competitors from other African countries, accompanied by the inability of those Nigerian manufacturers to compensate for this by winning commensurate increased market share in those other African countries.
Indeed, it is an established fact that in particular, South Africa and the North African counties have significantly more product quality and price competitive manufacturing sectors than Nigeria. The consequent loss of domestic market share to the manufacturing sectors of such countries would inevitably result in lower production levels by Nigeria’s manufacturers and consequently significant job losses in a country already suffering from high unemployment rates.
Therefore, the Federal Government of Nigeria has prudently decided to work at supporting and enabling the country’s manufacturing sector to attain product quality and price competitiveness on a continental level before opening up its domestic market through membership of an African free market area.
It should be noted that due to Nigeria’s relatively large population, its membership of AFTA would make its markets a primary target for manufacturers from the rest of the continent. On the other hand, our population also offers the opportunity for domestic manufacturers to develop and exploit the economies of scale that would enable them become sufficiently competitive in the near future.
Thus Nigeria’s position is not strictly against the formation of AFTA; it is simply that it will postpone its membership until its own domestic manufacturers are sufficiently competitive.
At this point, NIDO wishes to advise Ghana to adopt a similar approach. While Ghana has for the past two decades made efforts to export manufactured goods to other African countries, and indeed has achieved appreciable success in this regard, it is an established fact that the country’s manufacturing industry as a whole is still not sufficiently competitive and this indeed results in a trade deficit with regards to manufactured goods.
We therefore recommend that Ghana, like Nigeria, seeks to further develop the quality and price competitiveness of its manufacturing sector before opening its markets up to exports from other African countries, several of which are clearly more competitive in their respective manufacturing capacities.
We point to the path taken by China as most instructive in this regard. China, for decades refused to join the World Trade Organization and open up its domestic markets to foreign exports, instead developing the competitiveness of its own manufacturing sector. Only when this was achieved did it join the WTO and open up its markets. We are all witness to the results; China is now the world’s biggest net exporter of manufactured goods despite being a major importer too. In turn this has given China the world’s second biggest economy. While the industrialized economies of the western hemisphere complain, China’s own citizens are enjoying near full employment and among the highest living standards in the world.
To be sure, NIDO understands Ghana’s need to sign up to the EU-ECOWAS trade agreement, since its failure to do so would both inhibit the ability of Ghanaian exporters to exploit the European markets which are already major markets for their primary and semi processed exports; and would likely deprive Ghana of the crucial foreign development assistance on which the county’s economy is still heavily dependent.
However, these factors are not in consideration with regards to the AFTA. Africa is not a significant export market for Ghana as at now, nor is it a source of foreign development aid. Therefore, Ghana’s membership of the AFTA would expose its domestic manufacturing sector to competition it cannot cope with without providing any commensurate benefits.
NIDO therefore not only supports Nigeria’s intention to adopt the hugely successful Chinese model for the development of its international trade relationships, but strongly advises that Ghana also adopts this model. While it is not in line with the conventional approach of intra and inter regional free trade, it has been clearly established that this would be the best way to protect our economic interests and thus promote better living standards of our respective peoples.
SGD BY : OSCAR UGOH
Director of Corporate Affairs