The Federal Government approved the ratification of the African Continental Free Trade Area agreement in November 2020 and deposited the instrument of ratification on Dec/ 15, 2020, thus becoming the 34th state party to ratify the treaty.
AfCFTA is projected to benefit the country by creating larger market access, free movement of labour, goods, services, and capital. It is also expected to boost the country’s revenue through economic diversification from crude oil to value-added goods and services.
The AfCFTA agreement is expected to, among others; motivate Nigerian Small and Medium Enterprises to expand their businesses to other African countries, foster business growth and increase profit.
It will also contribute substantially to the development of the manufacturing sector, and increase job opportunities and the demand for labour that will ultimately lead to a reduction in unemployment and create opportunities for Nigerian professionals to seek employment in other African countries.
While agreeing that AfCFTA will benefit the country immensely by creating enlarged, continental markets for trade in goods and services, the Central Bank of Nigeria is playing a critical role to facilitate the successful participation of Nigerians in the initiative.
The CBN Governor, Mr Godwin Emefiele, says when fully implemented, AfCFTA will afford Nigerian companies preferential access to African markets worth 504.17 billion dollars in goods and 162 billion dollars in services.
At the Zenith Bank’s 2021 Export Seminar recently in Lagos, Emefiele urged Nigerian businesses to seize the AfCFTA opportunity to ensure that Nigeria served as a significant hub for international and domestic manufacturing companies seeking to serve the West, Central and East African Markets.
CBN’s Deputy Governor for Economic Policy, Dr Kingsley Obiora, said that the apex bank had been implementing various development finance programmes aimed at stimulating the real sector activities and diversifying the economy particularly in the agriculture, manufacturing, healthcare and other non-oil sectors.
Obiora, at a Town-Hall Meeting with Financial Sector stakeholders, said: “The interventions include the Anchor Borrowers’ Programme, the Real Sector Support Facility, Export Stimulation Scheme and the Commercial Agricultural Credit Scheme
“These examples are indications of CBN’s involvement and commitment to growing our domestic industries and boosting international competitiveness, particularly in preparation for the AfCFTA.”
He said that the financial sector stood to reap immense benefit from the agreement due to the removal of certain barriers.
“We believe that the financial sector has the potential to accrue substantial benefits from the AfCFTA in view of the intermediary role of finance in facilitating growth and engendering sustainable growth.
“The critical advantage of the AfCFTA to the Nigerian financial sector would be the removal of barriers for the expansion of financial institutions and services. This advancement will foster the provision of financial service in the continental market at a reduced cost,” he said.
According to Dr Hassan Mahmud, CBN’s Director, Monetary Policy, the apex bank has a leading role to play in positioning the Nigerian financial sector to harness the potential benefits of the agreement.
Mahmud said that the CBN’s monetary and trade policies were aimed at maintaining macroeconomic stability, and promoting non-oil exports.
He said that the success of AfCFTA would depend on the ability of Africa’s financial service industry to serve as effective intermediaries.
So far, Nigerian banks are currently ranked among the largest banks in Africa, with branches across countries.
“These banks with branches across the continent have an advantage that can be used to strengthen the participation of other sub-sectors. For instance, the banks can broaden their activity sphere into other areas of finance,” he said.
CBN’s Director of Banking Supervision Department, Mr Haruna Mustafa, said that the apex bank saw AfCFTA as a vista of opportunities for the Nigerian banking sector, which has a crucial role to play in the successful implementation of the agreement.
“But they need to be well capitalised to be able to finance big ticket transactions. They also need to scale up in terms of their payment infrastructure to be able to reach out to Pan-African market.
In addition, they should operate at the highest standard of their businesses to gain the confidence that will attract patronage to them,” he advised.
Mustafa said that AfCFTA would boost intra-African trade and global trade with 90 per cent tariff liberalisation, adding that it would enhance growth potential for intra-African Trade by 52.3 per cent and global trade by six per cent by 2022.