Nigeria has agreed to sign the African Continental Free Trade Agreement (AfCFTA), with the goal of creating a single market and free movement on the continent, after extensive domestic consultations. The government made the announcement on its official Twitter handle. Nigeria will sign the AfCFTA agreement at the Extraordinary Summit of the African Union scheduled for 7 July in Niamey, Niger. The decision comes almost a week after the president committee on the Impact and Readiness Assessment of the Agreement Establishing the AfCFTA, set up in March, submitted its report to President Muhammadu Buhari. The country abstained from signing the agreement initially, saying it was weighing the effects it will have on its economy. Being the continent’s biggest market and bedevilled by porous and poorly manned borders, Nigeria was wary it may become a dumping ground for all sorts of goods, especially those not made in Africa. According to the African Union’s commissioner for trade and industry, Albert Muchanga, Nigeria ratifying the agreement is a “good and important development.” AfCFTA came into effect in March with 52 out of 55 countries backing the policy. The Brookings institution described Nigeria’s decision to not ratify the agreement at the time as “baffling”. Two countries – Eritrea and Nigeria’s neighbour, the Republic of Benin – are yet to sign the agreement.

The value of Nigeria’s exports fell by 3.9 percent to ₦4.535 trillion in the first quarter of 2019, compared to the same period in 2018. The total export rose by 1.7 percent compared to the Q4 2018. The breakdown of the figures from the National Bureau of Statistics’ report on foreign trade statistics shows that the value of total imports increased to ₦3.7 trillion in Q1 2019, a 3.39 percent increase compared to Q4 2018 and a 29.84 percent compared to Q1 2018. The trade balance remained positive at ₦831.6 billion in Q1 2019, boosted by the export and import increases. The boost also had an effect on the total trade increase to ₦8.239 trillion, a 2.50 percent rise compared to Q4 2018. The export trade was dominated by crude oil, which contributed ₦3.376 trillion or 74.45 percent to the value of total exports during the quarter. The country exported mainly mineral products, which amounted to ₦3.95 trillion in total or 87.1 percent of the total value of exports. This was followed by vehicles, aircraft and parts; prepared food stuff, beverages, spirits; and vegetable products. Products exported to Europe, Asia and Africa in Q1 2019 were valued at ₦1.833 trillion, 40.43 percent of total exports, ₦1.324 trillion, 29.2 percent and ₦936.8 billion 20.67 percent respectively. ₦405.8 billion, 8.95 percent worth of goods was exported from the country to the Americas and ₦34.5 billion, 0.76 percent to Oceania. Within Africa, Nigeria exported goods valued at ₦300.6 billion to ECOWAS member states (representing 32.08 per cent of total merchandise exports to Africa). By country of destination, the country exported goods mainly to India, Spain, Netherlands, South Africa and France, valued at ₦745 billion, 16.43 percent, ₦487.1 billion, 10.74 percent, ₦405.4 billion, 8.9 percent, ₦325.5 billion, 7.2 percent and ₦302.3 billion, 6.7 percent respectively.

The FG has announced the suspension of the proposed establishment of Rural Grazing Area (RUGA) settlements across the country. The settlements, which were aimed at resolving the persistent Pastoral Conflict, had been met with a backlash from most of the country. Ebonyi Governor, Dave Umahi said that President Buhari suspended the implementation of the ruga programme because it is not consistent with the National Economic Council and FG-approved National Livestock Transformation Plan, which already provided for programmes for the rehabilitation of Internally Displaced Persons and also for the development of ranches in any willing state of the country. A spokesman for President Buhari, Bashir Ahmad, also confirmed the suspension on his verified Twitter handle.

A video released by Boko Haram appeared to show the group capturing a Nigerian naval base in the Lake Chad border town of Baga. The insurgents paraded four naval officers who were made to introduce themselves while being recorded before they were executed. According to one of the officers, the attack occurred on the night of 26 June. Parts of the video contained footage from a different gun battle between the insurgents and the military showing that the former was having an upper hand. The insurgents showed its members overrunning the base, killing all military personnel around and taking over all equipment belonging to the Nigerian Army.

Commentary

  • While the announcement that Nigeria will join the AfCTA is a welcome development, this reversal is a rather strange decision coming just a week after President Buhari gave reasons why the country cannot sign just yet. Nothing of substance has changed in the AfCTA in that time, so this u-turn is unlikely to be due to any concessions made to Nigeria. The country should have been at the forefront of the negotiations surrounding the agreement and spearheaded the signing while positioning to benefit from it. That being said, we believe the decision to sign the Agreement is a positive as it reinforces Nigeria’s leadership position on the continent and gives our producers access to a potential market of over 1 billion consumers. Opportunities for benefit still exist and as the country signs, all the levers of government should move to help Nigerian businesses take advantage. Notwithstanding its advantages, the risk expressed by bodies such as the Manufacturers Association of Nigeria, of our neighbours and their Asian trading partners utilising the country as a dumping ground for inferior goods, cannot be brushed aside. From our point of view, the sensible response will be for Nigeria to create an enabling business environment for manufacturing to thrive and to enshrine quality control measures for Nigerian products.
  • The numbers in the NBS’s report do not support the popular perception that Nigeria is a heavier importer than it exports. In absolute numbers, while exports outstrip imports, Nigeria continues to depend almost solely on the crude exports as well as other unrefined mineral products for its earnings. Whilst the government often points to reducing food import volumes, the numbers show that the export volume of agricultural products is not rising, despite huge spending on agricultural intervention. The chief import item meanwhile is machinery, which comprises 41% of total imports. This begs the question of why the dominant frame in policy making is that Nigeria imports too much simply for consumption. Nigeria’s policymakers need to pivot to consulting the wealth of economic data they generate and consign their infamous anecdotal approach to policy design to the relics of history.
  • There are many questions that need to be asked about the now suspended RUGA scheme. Since the VP dissociated his office from it and the Presidency did the same as well, the most important question is where did the policy originate from? This controversy points to the dysfunction within the Federal Government where different offices institute programmes with seemingly the same objective but with little coordination and synergy. The scheme has only succeeded in acquiring a toxic political colouration and attracting a number of legal challenges including a class suit in Niger that argues it is unconstitutional. There have been reports, some backed with evidence, that contracts running into billions have already been awarded for the scheme’s implementation. Who approved them? Was this budgeted for? What happens to these contracts now? What does the suspension of the policy mean for the funds? Does a suspension mean that the scheme will be reviewed and reintroduced? In this regard, Aso Rock has some significant communication gaps to fill. Considering how politically explosive the farmer/herder conflict is and its wide implications for economic and national security, the RUGA settlement programme or the National Livestock Transformation Programme, whichever you prefer, was poorly handled. With a Federal High Court ruling on 4 July dismissing a suit by Miyatti Allah Kautal Hore challenging a 2017 Benue law which prohibited open grazing and ranching, the window for wide ranging reform on this issue is shrinking.
  • Last week’s attack is the latest in a series of attacks on the military by the ISWAP faction of Boko Haram, which has marked its territory in Borno’s North and focuses its insurgent activities exclusively on the military. On 3 July, security forces restricted vehicular movement along the A4 expressway between Maiduguri and Monguno in order to conclude an operation following another ISWAP attack on Gajigana. Similar attacks occurred in Mafa and Kukawa LGAs last week. While the military does the victory lap, the relative ease with which the insurgents attack military positions calls into question a mostly defensive approach which prioritises the protection of the large urban centres to the detriment of the rural open spaces in between them. We have counseled on a number of occasions that Maiduguri is in increasing danger of being strategically hemmed in by a concentric series of attacks on hard targets in the surrounding areas. That counsel, unfortunately appears to be playing out. With this uptick in activity in the Nigerian sphere coinciding with Islamic State amping up insurgent activities in the Mali-Burkina Faso-Niger tri-border area and a reaffirmation by the West Africa affiliate group to the ISIS Central in mid-June, now is the time for the military to be strategically bold.