The resolution of outstanding issues under the Economic Partnership Agreements, among others, will no doubt facilitate regional trade in Africa, writes Eromosele Abiodun

In the years before the global financial crisis in 2008, global trade increased exponentially. While African countries benefited from this increase, their share in world trade has remained low. Africa’s export trade amounts to only about three per cent of world exports. This poor trade performance partly relates to trade protection outside Africa against African products, but it also stems from constraints that inhibit trade within Africa. With the expectation of a generally moderate recovery of the global economy and of world trade, it is even more important than before to foster African countries’ trade with economies both outside and inside Africa.

Experts have said rapid conclusion and resolution of the outstanding issues in the Economic Partnership Agreements (EPAs) negotiations are crucial to Africa’s medium-term prospects in both regional and international trade. Indeed, among the different measures that several advanced countries adopted in 2009 to curb the effect of the financial crisis, trade protectionism has been on the rise. Protectionism increased despite repeated assurances in the context of the G20 meetings in London, as well as in the context of World Trade Organisation (WTO) talks.

Often stimulus packages were geared to favour domestic sectors, such as through export support, or to favour buying, lending, hiring or investing in local goods and services. Such measures clearly discriminate against developing countries, including those in Africa, on several levels. Unfortunately, African governments lack the resources to curb the domestic impact of the crisis with the same type of measures. Also, African companies face unfavourable treatment precisely in markets where additional spending is being promoted. Hence, with these new measures African products easily face discriminatory treatment in relation to similar domestic products and services in developed countries, despite the general agreements about preferential treatment they may enjoy.

FG’s Task Force

To check the situation in the West African Sub-regional, the Federal Government of Nigeria recently set up a task force on trade facilitation in Nigeria with a mandate to remove all bottlenecks to trade between Nigeria and its neighbouring countries.

The Task force member comprises representatives of Ministries of Commerce Trade and Investment, Ministry of Finance and Ministry Transport. Others are: the Nigeria Customs Service (NCS), Nigeria Shippers Council (NSC), the Nigerian Port Authority (NPA), National Agency for Food, Drug Administration and Control (NAFDAC), the Standards Organisation of Nigeria (SON), Nigeria Quarantine Services (NQS), the Nigerian Police, the Central Bank of Nigeria (CBN) and Nigeria Road Safety Corps.

While on a visit to the Managing Director of Nigerian Export Import Bank (NEXIM), Mr. Roberts Orya recently, Chairman of the taskforce, Mr. David Adejuwon, said the body had taken proactive steps to identify what constitutes technical and physical barriers to movement of goods in the sub region.

He confirmed that there are about 35 check points during the day and about 50 checkpoints at night from Lagos to Seme border, hindering trade between both countries. This, he said, was against protocol that ECOWAS member countries signed to reduce it to three checkpoints.

According to him, all these have been impacting negatively on the country’s image and its competitiveness in the effort to attract foreign direct investment (FDI) into the country.

He pointed out that once the taskforce was able to remove those barriers in the border posts, it will go a long way to facilitate trade between Nigeria and other African States. He called for support and collaboration from NEXIM Bank to facilitate trade between Nigeria and other West African States.

Adejuwon on behalf of the taskforce sought for the support of NEXIM Bank in the provision of surveillance vehicles, trade facilitation workshop, sensitisation and public awareness as well as disseminating and publicising information on the operation of the Committee.
Orya had pointed out that Nigeria has the biggest market in Africa and there was need to reduce the multiple checkpoints, which have militated against free movement of goods in the sub-region.

He added that Nigeria, being a strategic nation in both economic and political institution owned by ECOWAS, needed to explore the sub region market, saying that NEXIM Bank has started deepening payment system by supporting Nigerian exporters. Despite his promises at the time, nothing much has been done to show seriousness on the part of government.

NANTS Tasks ECOWAS

However, despite Nigeria’s efforts, some African countries especially those in West Africa are not taking adequate steps to ensure hindrances in achieving regional integration are removed.

Recently, the National Association of Nigerian Traders (NANTS) charged Economic Community of West African States (ECOWAS) leaders to address the poor implementation of the ECOWAS Treaty and Protocols, especially the protocol on free movement by member states as a major hindrance in achieving regional integration objectives.

Also, the association, in a message and agenda to the speaker of the ECOWAS parliament, pointed out that there is poor adherence to the provisions of the protocol on Rights of Residence and Establishment.

It added that the problem is further complicated by the lack of access to the ECOWAS Court of Justice by community citizens on violations of their socio-economic rights under the Protocols and the ECOWAS Treaty itself.

“NANTS has been canvassing for the compliance of member states with these laws, but has also noted that the role of the ECOWAS Parliament in cases like this is unfortunately limited to merely advisory as it lacks law making powers necessary for the review of sub-optimal provisions in a Protocol,” the association said.

NANTS added that, “It is therefore our expectation that your administration as the Speaker of the Parliament would strengthen the extant weak powers of the ECOWAS Parliament, empower the ECOWAS Commission to be more efficient where necessary, enhance the laws of the Community by possibly infusing strict sanction mechanisms thereunto and effectively capacitate even the National Parliaments and other relevant institutions as fundamental organs in the enforcement of laws and or dispensation of justice and integration in West Africa.”

It urged the Speaker to take immediate action and review the laws establishing the ECOWAS Court of Justice, with a view to broadening its mandate and jurisdiction in line with other regional Courts such as the European Court.

NANTS said it expected that the ECOWAS Parliament would be instrumental to driving the achievement of the ECOWAS Vision 2020 objectives, particularly of transforming ECOWAS from ‘an ECOWAS of States to an ECOWAS of people.’

“In this regard, we envisage that the Community Development Programme (CDP) would be institutionalised as a veritable instrument for realising the objectives of the Vision 2020, which is endorsed by the Authority of Heads of States and Governments of ECOWAS. This is essential given that the CDP seeks to anchor regional policies, programmes and plans shaped by the citizens themselves rather than erstwhile practice of approval of wholly-Consultant-drawn-policies and programmes,” NANTS said.

“Basically, the CDP seeks to rather institute a ‘bottom-up’ approach to policy making in the region as opposed to a ‘top-bottom’ approach. As representative of the community citizens, NANTS believes that the ECOWAS Parliament should play a more visible role in the entire transformation process.

“We would therefore cherish an opportunity to not just brief you in details on the CDP process but also explore options for the immediate involvement of the Parliament in the CDP process. Indeed, we wish to emphasise that NANTS believes that the ECOWAS Parliament is indispensable and crucial for the actualisation of the ECOWAS vision 2020,” NANTS stressed.

Trade Performance in Africa

Meanwhile, the Organisation for Economic Cooperation and Development (OECD), in a recent report on trade performance in Africa, noted that one critical reason for Africa’s relatively poor trade performance is the weak diversification of African trade both in terms of trade structure and destination.

Most African economies, OECD said, depend on very few primary agricultural and mining commodities for their exports and mainly import manufactured goods from advanced countries.

“As the traditional markets in advanced countries are expected to grow less than markets in emerging Asian and Middle East countries as well as markets within Africa, enhancing trade relations with these more dynamic markets is key. Several inefficiencies also constrain trade within Africa. These inefficiencies include poor transport infrastructure such as maintenance and connectivity, political instability and lack of security within and among several regions, and intra-African trade barriers.

“Despite progress, intra-African trade is still low, representing on average around 10 per cent of total exports. Many factors contribute to the low trade performance, including the economic structure of African countries, which constrains the supply of diversified products; poor institutional policies; weak infrastructure; weak financial and capital markets; and failure to put trade protocols in place, “OECD said.

OECD in the report pointed out that Africa’s trade performance is extremely low compared with other trading blocs outside the continent.

It said: “For example, trade within the Association of South East Asian Nations (ASEAN) accounts for about 60 per cent of their total exports. The same is true for the countries belonging to the North American Free Trade Agreement (NAFTA) area, whose intra-regional trade accounted for 56 per cent of total exports. It is no wonder that the economies of ASEAN and NAFTA are doing remarkably well.

“Barriers to external and internal trade in Africa are numerous, despite Africa’s determination to dismantle trade restrictions in order to create a common market within the framework of regional and sub-regional agreements. These barriers are mostly the consequences of the above-mentioned factors. In addition, 15 of the countries in Africa are landlocked,” it said.

These countries, the report stressed, continue to face serious challenges in having direct access to the sea adding that lack of territorial access to the sea, remoteness and isolation from world markets, and high transit costs continue to impose serious constraints on the overall socio-economic progress of landlocked developing countries.

The situation, it said, has pushed many landlocked developing countries to higher poverty levels.

“Currently, the African Union Commission is focusing on its Minimum Integration Programme (MIP), consistent with previous AU Conferences of African Ministers in Charge of Integration (COMAI). This focus underscores the need for rationalising resources and harmonising the activities and programmes of Regional Economic Communities (RECs). The MIP is in line with a broader undertaking, namely the realisation of the African Economic Community (AEC), as envisaged in the Abuja Treaty and the Constitutive Act of the African Union, “the report said.

UNECA, AFDB’ Efforts

It added that, “Furthermore, the African Union Commission, together with the United Nations Economic Commission for Africa (UNECA), the African Development Bank (AfDB) and the RECs, has also made notable progress in establishing three-pan-African financial institutions: the African Central Bank, the African Monetary Fund and the African Investment Bank.

“The AfDB is also supporting the institutional setup for improving macroeconomic and financial convergence on the continent. It has also focused on the preparation of a continental Programme on Infrastructure Development in Africa (PIDA), as well as on the development of an EPA template to be used as a guide in the negotiations for EPAs. This last aspect will be particularly conducive to greater coherence between the different EPAs being negotiated and other regional agreements, which are already in place.”

Ebola Changes the Equation

Efforts to get African countries working together to enhance economic integration may have suffered a huge blow following the recent outbreak of the Ebola Virus Disease. Following embargo on movements to curb the spread of the epidemic economies around West Africa are already suffering. For instance, it is estimated that Nigeria may lose $3.5 billion to the Ebola epidemic by December this year, if nothing is done to contain the spread of the deadly disease.

In a recent report released, the Chief Executive Officer, Financial Derivatives Company Limited, Mr. Bismarck Rewane said the fear of the disease had affected economic activities significantly.

According to him, the sectors of the economy mostly affected by the fear of the disease are aviation, tourism and hospitality, trade, medical and agriculture.

He added, “Analysing these sectors’ contribution to the Gross Domestic Product shows that Nigeria may lose about $2 billion in the first quarter of the outbreak. The chance of the outbreak going into a second quarter is very slim; which could extend the loss to $3.5 billion.”

The Boko Haram insurgency had been the headline news in Nigeria until July 25 when it was confirmed that Ebola was imported into the country.

Since then, fear, panic, disbelief and frustration have set in as economic, particularly in Lagos, have gradually slowed down. Global rating agency, Moody’s, has announced that the outbreak of Ebola in Nigeria can lead to serious disruptions in some sectors of the economy with negative financial consequences.

The World Health Organisation has also reported that the Ebola crisis is vastly underestimated as the reported cases and deaths do not reflect the scale of the crisis.

About 1,069 persons have died in the affected countries, out of which three are Nigerians and 198 other persons are currently under quarantine in the country.

Impact on West Africa

Teneo Intelligence estimates that economic growth in Liberia, Sierra Leone and Guinea may reduce by two percentage points.

In other words, Sierra Leone’s growth rate in 2014 may not exceed 12 per cent instead of the initial forecast of 14 per cent. Liberia, Sierra Leone and Guinea have a combined Gross Domestic Products (GDP) of approximately $13 billion, equivalent to 2.5 per cent of Nigeria’s GDP.

Rewane further stressed that a small part of the Nigerian economy was already benefiting from the Ebola scare. These include shop owners selling sanitizers.

He, however, said a larger part was experiencing losses.

He said, “Air transport was 0.09 per cent of Nigeria’s GDP in the first quarter and the second most used this means of transportation after road. Since the outbreak of Ebola in West Africa, several airlines including Arik Air, Asky, British Airways and Emirates have suspended flight operations to and from any of the Ebola affected countries.

“Saudi Arabia also suspended giving out visas to Muslim pilgrims from West African countries. Serious screening for Ebola has also begun at several international airports before passengers are allowed to board an airplane. We expect revenues in the aviation sector to plunge downwards, which would affect both the airlines and the support industry (handling companies, oil marketers, catering, duty free shops, etc.)”

He further said, “Hospitality and tourism preliminary information shows that many hotel and airline bookings in Lagos have been cancelled by in- bound travellers due to Ebola scare. This is not surprising since India and Greece have openly advised their citizens to avoid non-essential travel to Nigeria and other Ebola-affected countries. It is estimated that restaurant visits in Lagos have already declined by 50 per cent.”

“Trade in the first quarter contributed 17.35 per cent to Nigeria’s GDP. Trade and investment flows are critical to the external sector of this vibrant country and the West African region. The region enjoys almost a custom union with common external tariff and movement of visitors without visas. Since movement of people is restricted in and out of the affected regions, fewer goods will be equally transported. Air transportation is very critical to trade.

“Hence, a reduction in the number of international flights literally means a reduction in international trade flows. Domestic trade is also likely to be negatively affected significantly if the disease spreads,” he stated.