Ghana seems to have cooked a really nice playbook on how to become the hub for foreign car assembly for the West African market. Recall my initial opposition to AfCFTA, the African trade agreement, until the “rule of origin” clause was strengthened. Yes, under AfCFTA, nothing stops Nissan or other foreign brands to operate in Ghana and target Nigerian customers since running factories in Nigeria is harder.
The Manufacturers Association of Nigeria (MAN) has suggested to President Buhari not to sign the agreement establishing the African Continental Free Trade Area (AfCFTA). The major concern is that with Nigeria’s largely subpar infrastructural capacities [mainly electricity], most Nigerian factories could relocate to other African countries to produce items they sell in Nigeria. The implication would be massive manufacturing unemployment in the land. Also, the risk of dumping goods in Nigeria is also high.
Nigeria should SIGN but must make sure the “rule of origin” clause is strong. We cannot afford goods produced outside Africa to be repackaged in a treaty member state and then shipped to Nigeria at a low tariff that is exclusive to member states.
Nigeria’s poor infrastructure makes it a slam dunk for these firms to make Ghana home. It was on a similar concern that India did not join other countries in the recently signed Regional Comprehensive Economic Partnership (RCEP). Nigeria needs to watch carefully as John MC Keown notes in this piece.
Whether AfCFTA actually becomes a reality on ground remains to be seen. The West African Regional Economic Community ECOWAS is just a little bit bigger than the European Union. It has countries of much closer proximity than the expanse of all Africa, with many of the peoples having tribal or cultural commonality with each other, and direct dealings going back centuries.
While ECOWAS has a common market in theory, non-compliance and summary suspensions have happened from time to time at official level between individual countries in response to tensions over unrelated matters. These actions have never incurred economic penalties for nations in violation levied by ECOWAS as a collective afterwards.
This is not a simple matter – the National Assembly needs to look into this matter.