Why Nigeria Should Stay Away From Africa Free Trade Agreement - LCCI
The Lagos Chamber of Commerce and Industry, LCCI has pitched its tent with President Muhammad Buhari and all those who are against Nigeria signing up to the Africa Free Trade Zone.
In an emailed response to Nigeria’s decision not to sign the agreement to Bounce News on Tuesday, the Director General of LCCI, Muda Yusuf noted that while the dream of the African Union, AU to open up the African market is fantastic, it poses significant risks to Nigeria’s manufacturing sector.
“The CFTA is a good dream, especially in the light of the numerous benefits of a larger market. However, a liberal trade regime within the continent poses a major risk to the Nigeria manufacturing sector.
“The Nigerian industrial sector is highly vulnerable because of its weak competitiveness. Manufacturing in Nigeria is burdened by profound infrastructure challenges and high cost of fund which put tremendous pressure on their production and operating cost. “
Speaking further, he said, “Some African countries already have trade treaties with countries outside the continent. This means that products from outside of the continent may penetrate the entire continent under a CFTA regime. These are some of the issues that may have informed the current equivocation on the signing of the Africa CFTA by Nigeria.”
According to him, “Nigeria’s industrialisation strategy, which has been in place for several years is rooted in import substitution. This is a model of industrialisation that is inward looking and focused on domestic market for its sustenance.
“This strategy does not position the sector for competition in the regional, continental or global market place. The sector does not have an outward looking or export-oriented disposition.
“Therefore, exposing the Nigerian industrial sector to international competition may be the undoing of the sector. This poses a major dilemma for our trade policy.
“While economic integration is desirable because of the attraction of larger market, we need to worry about the implications for our weak industrial sector.”
“The way forward,” he said, “is to strengthen the competitiveness of the Nigerian industrial sector. It is only then that the country can get value from being part of a continental free trade agreement.”
He added: “The summary is that trade can only be beneficial if we are in a good competitive position to be part of such trade.
“We need to review our industrialization strategy from the disproportionate dependence or protectionism to a policy choice of focusing on building the capacity of the manufacturing sector for competitiveness.
“This is what can create an enduring industrial sector in Nigeria. This is also in tandem with the Nigeria Industrial Revolution Plan [NIRP] which underlines the significance of resource-based industrialisation strategy. This is a model that stresses local value addition, robust linkages and competitiveness.”
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