AfCFTA - FOR NIGERIA, IT'S RUIN OR GLORY

AfCFTA – FOR NIGERIA IT’S RUIN OR GLORY

The race for competitiveness is every bit as fierce as the competition among companies in the marketplace. Countries compete for investment, talent, growth, and opportunity in a globalized world, and those that are pushed out of the running surrender the greatest prize of all: human development, prosperity, and happiness for their people” 

- Sheikh Muhammad Bin Rasheed Al Maktoum (Ruler of Dubai and Vice President of the United Arab Emirates)

They say the best time to plant a tree is 20 years ago. The Second best time, of course is today. By signing the African Free Trade deal Nigeria has done the inevitable thing. And also the right thing. I need not commend the president because it was a fait accompli. If we hadn't signed we would have been Brexited, sorry Naijexited. For us that will mean even goods produced locally in Gabon, Guinea, and Zambia will be dumped here via our porous borders. It will mean economic collapse because no country in Africa can be an island and already we know we have problems in this area. The alternative is the right thing and that is what we have done. 

AfCFTA SHOULD HAVE BEEN NIGERIA’S BABY

The reason why I reserve any commendations to government is that we ought to have been the country driving this process, rather than being the good-for-nothing overgrown kindergarten bully trying to hold everyone back. We have lost the battle, at least psychologically, but could still win the war. Ghana positioned herself and today hosts the secretariat. If nothing, that is a lot of tourism money that will be drawn to Ghana, especially from Nigeria where many people in government service are getting ready, smacking their lips for the deluge of trips for meetings and conferences – which is what we know how to do best. We have been running this mode since independence, throwing hard-earned money at developing countries for no value-add. We are getting ready to do the same, even among our peers and junior sisters in Africa.

We should have led the idea, being a major definer of the modus operandi and stamped the whole shebang with our imprimatur. We should have been the ones really leading most of Africa into productivity, cooperation and greatness. We should have been the ones – with our purported largest economy and population in Africa – calling for African unity on the platform and premise of tangible trade. We shouldn’t have gone to sleep, hoping the idea shall not come to reality, or shilly-shallied when it seemed we hadn’t a choice and that even Africa was ready to move ahead without us. There is a first-mover advantage we have now lost, and like for most initiatives, we may now have to pick the crumbs – if our usual mediocrity continues to rule us and if we do not readily change our ways, our profligate, unserious, wasteful ways, immediately.

WELCOME AN ERA OF DISCIPLINE – IF WE HAD THE VISION

For we are now going into a disciplinary era. We must keep inflation relatively low if we are to compete with our goods within Africa. We must show discipline and not continue with our profligate, myopic ways if we are to save ourselves from ruin. This means we must organize ourselves and become productive. We must get up to the level of Ghana when it comes to packaging for example. You'll be shocked how advanced and meticulous they are. And North African countries are a different ball game entirely. South Africa is at European standards. The tussle and the war is between Egypt, Algeria, Morocco, Kenya, Ghana, South Africa and Nigeria but we must look out for a few other ambitious and strategic ones like small Botswana. Rwanda, Uganda, Cote D'Ivoire who can leverage some of their key products and get their people prosperous while we are sleeping. The competition is going to soon be about per capita incomes and bridging of income gaps. God forbid that our people continue to scatter all over Africa as modern slaves because of our visionlessness. 

I've heard it said that we shouldn't have signed because we have nothing to sell. Yes we don't presently but now is the time for a sea change in economic policy. We may not have had anything to sell but trust us, we are ready to buy anything from anywhere to satisfy our curiosity and the constant quest for comfort and convenience by our few elites who don't care that we now have the highest levels of inequality in the world. We should therefore hanker down, and produce competitive goods and services to sell.  Some also say we don’t have electricity and we should first start from there. I do not believe we should put everything on hold and hope to first fix electricity before doing the needful. We can walk and chew gum at the same time. I have advocated what I know to be the only solution to our electricity problems – that we do it ourselves using our youthful energy. No amount of imported power plants will do the trick for us. I have also advocated that we develop this sense of urgency to grow the economy at double digit rate, by ramping up productivity rapidly. This will not be possible except inflation remained at double digit too. A period of rapid economic growth is also a period for high inflation. However, we can quickly ride the tide because most of the fine details of the trade agreement may take at least 5-10 years to be put together. 

LET’S GET PRODUCTIVE

At the end of the day, the strength of a country’s currency depends on the quality of the goods it produces and sells in exchange for imports, but at the end of the day, it is down to the per capita productivity of the people. In order to compete in a free trade zone Africa, we have to ramp up productivity big time and urgently too. But with 13.2 million of our children walking the streets, with 30 million extra in school and not being taught, Nigeria’s foolhardy elitist modern may blow up in her face. By disconnecting so many of our children and youth from a modern understanding of productivity, and sub-optimizing the potentials of millions more, we have done in this country a long time ago. Can we find an opportunity to rise within the short window we have? A state of emergency is required not only in education but also in the general orientation of Nigerians, many of whom now believe in getting paid for doing nothing, or as little as possible. A lot of Nigerians now feel entitled to the good life. Even most of those employed by government resume daily, not to perform service to the people, but to see how much money they can corner for themselves. On the matter of per capita productivity Nigeria has a herculean task on hand and without solving it, we cannot take our rightful place in this trade agreement.

STUDY EUROPEAN UNION – ESPECIALLY GREECE AND GERMANY

The underbelly of the Nigerian economy will now be exposed if we don't buckle up and act fast. But it is also the greatest opportunity we could ever have. We should study what happened between Greece and Germany to understand the impact of laziness and slothfulness when a country enters a free trade agreement and what focus, strategy, discipline, hard work, unity, and self-motivation can achieve also. Greece was a high inflation economy with high deficits and debts. Nigeria should mind its debts especially if they are not contributing remarkably to economic growth. Anyway, Greece sells tourism and little else. Germany produces German machines – from the best cars in the world to the best industrial machines. What the low domestic inflation in Germany means is that she is able to produce goods cheaper and sell cheaper within Europe, while other countries like Greece, Italy, Portugal, Spain and others have to worry about the need to increase wages which further price most of what they trade out of the market. Other competitors for trade must be considered. Our African Trade Agreement does not stop the Americans or Europeans from trading with African countries. In fact one of the scariest thing around that agreement is the involvement of Europe which we hear has given out $40bn to African countries to accelerate the deal. Why? What is in it for them legally? Why are they so concerned? Is France really going to use her francophone former colonies to push in goods to the whole of Africa? What will Britain also do in retaliation now that she is in a quandary over Brexit and gasping for air anywhere she can find some?

GENERAL ECONOMIC MANAGEMENT

Just as it is for inflation management, other monetary policy instruments need to be kept on a tight leash in order to benefit from the trade pact, which is actually a double-edged sword. Free Trade could over result a win-lose scenario; a zero-sum game. What you lose, someone else gains, and vice versa. Interest rate levels have to be low relative to others otherwise goods and services produced in your country cannot compete with those of others. Exchange rate management needs to be superb too. Fiscal policies are our key problem in Nigeria. We know this. There is real fiscal insanity in this country, and so monies that we should even accrete to reserves in order to have a stronger Naira, or spend on tangible infrastructure to boost productivity, we keep spending on frivolities and ego tripping like there will be no tomorrow. Now tomorrow is breathing down our necks. Can we truly change?  Will we keep doing what we have always done, in the way we have been doing them, and hope that things will change for the better? An unsustainable debt situation for example cramps the ability of a country to maneuver in a free-trade arrangement. Greece and a few others had that problem. Debt servicing eats up a country’s abilities to boost productivity, stabilize currencies or take care of her poor people. Ours is currently about 70% of our revenue and growing! We must boost revenue and slow down on this easy route of debt acquisition. We have been warning about this to no avail. Our governors announced they are taking $4bn of cheap loans from the World Bank to eradicate illiteracy, provide water for the people and build roads – projects that have no cash flow and that we should do with our internal capacities. The FGN is taking $2.76bn at least, to balance the budget. By the end of this year, Nigeria could be owing $100bn, up $20bn from the current $80bn. We have never owed these kinds of amounts!

ECONOMIC COMPLEXITY

Check out this resource on Economic Complexity: https://atlas.media.mit.edu/en/rankings/country/neci/.  In it, Nigeria ranks 124thout of 129 countries. This resource from the MIT describes Economic Complexity as “the relative knowledge intensity of an economy and the products it exports”. Nigeria exports mostly crude oil and agricultural products, just as most African economies. In other words there is very low knowledge intensity in most of the goods we produce and export.  Crude oil production is very scientific but we don’t own the process, the science or the technology. The few manufacturing companies we have also have to import their technology from abroad and we suffer perennially from not being at the cutting edge of innovation, meaning that we often use obsolete technology that cannot compete globally for efficiency, and of course cost management. But for how long can we compete within Africa even if we got serious? The African Trade Agreement has just shown us that we have no time at all to tidy up our affairs and all the lamentations by some of us over the years ought to have been heeded rather than a scenario where our leaders were hoping the cup will pass over us, that African free trade will not be a reality, and that we can remain an Island. For one, it will be great to see African countries leverage on our internal strengths as a continent, and encourage each other to greatness. Nigeria may have bungled the opportunity to lead the way for other African countries, and we may yet be unsure of the challenges ahead on this project, but we have hit a turning point. From here on, it is make or mar, especially for this country. I hope we will wake up and seize the occasion.