The world`s largest free trade area since the World Trade Organization has come closer to reality. With Nigeria`s signature, AfCFTA`s dream of increasing intra-African trade, currently below the continent`s trade volume with Europe, has taken a step forward. Free trade agreements aim to reduce tariffs between Member States. Currently, some of this intra-African trade ranges from fresh Seychelles fish to Angolan gasoline. Nigeria has ratified the free trade agreement, which will enter into force on 1 January 2021. This is an important step for the ambitions of the African Continental Free Trade Area (AfCFTA), as Nigeria is considered not only one of the continent`s largest economies, but also the most populous country. “The ratification of AfCFTA in Nigeria is a positive development, but the country`s commitment to intra-African trade should also be reflected in the reopening of its land borders,” said Landry Signé, senior fellow at the Brookings Institution. “The reopening of the borders will send a strong signal to Nigeria`s intentions… “to boost intra-African trade.” In 2000, Nigeria and the United States signed a Framework Agreement on Trade and Investment (TIFA). The eight TIFA Council meetings between the United States and Nigeria took place in March 2014 and Nigeria was represented by the Federal Ministry of Industry, Trade and Investment (FMITI). To view the TIFA document, click Nigeria on the following link: ustr.gov/trade-agreements/trade-investment-framework-agreements. The purest free trade agreement (FTA) removes all border taxes or trade barriers on goods.
Nigeria is Africa`s largest economy and, for a long time, a regional leader, so observers, as they became bogged down, wondered whether the African trading bloc would ever take place. According to a 2014 African Development Bank study, only 16% of African countries` international trade is between African countries. Since then, according to the Nigerian Trade Negotiations Bureau, the Nigerian Trade Negotiations Office has consulted with 27 groups, including trade unions. The African superpower, Nigeria, has signed an agreement to strengthen trade between African countries. The most important effects are informal traders – most of them are small and medium-sized enterprises operating along the Nigeria-Benin border. Nigeria`s high level of protection for products such as rice has made smuggling from neighbouring countries very lucrative. The World Bank estimates that 80% of Benin`s imports go to Nigeria. With its entry into force, AfCFTA intends to create an internal market for goods and services in Africa.
By 2030, the continent`s market size is expected to be 1.7 billion people, with more than $6.7 trillion in cumulative consumer and business spending – when all African countries join the Agreement. But despite these prospects and Nigeria`s positive attitude towards the outside world, the country continues to put a big red flag on free trade hopes across the continent. It also estimates that the implementation of AfCFTA will lead to an increase in intra-African trade of about 60% by 2022. Trade accounted for 33.0% of Nigeria`s GDP in 2018, up from 26.3% the previous year, according to the World Bank.