INTERNATIONAL - Africa’s largest economy will commit to a continent-wide free-trade pact that could become the world’s biggest market, adding legitimacy to the deal months before first commerce is set to begin.
Nigeria’s cabinet has approved plans to ratify the African Continental Free Trade Area, Otunba Niyi Adebayo, the minister of industry, trade and investment, said Wednesday on Twitter.
The government had initially expressed reluctance to join the trade zone, raising questions about the viability of the continental market without its most-populous country. The oil producer and South Africa together account for half of sub-Saharan Africa’s gross domestic product.
The step to ratify the agreement comes as Nigeria’s land borders have been closed for more than a year in a bid to curb smuggling and with the central bank restricting access to dollars for the import of more than 40 products, saying it can be produced locally.
“Nigeria’s policy stance at the moment is heavily anti-trade, with government officials threatening to deny foreign exchange for certain imports in order to encourage local production,” Joachim MacEbong, a senior analyst at SBM Intelligence in Lagos, said.
The trade pact aims to bolster intra-African commerce by lowering or eliminating cross-border tariffs on 90% of goods, facilitating the movement of capital and people, promoting investment and paving the way for the establishment of a continent-wide customs union. When fully operational by 2030, it could cover a potential market of 1.2 billion people and a combined GDP of $2.5 trillion.
Fifty-four of the 55 countries recognized by the African Union have signed the agreement, with 30 having ratified the deal before Wednesday’s announcement. Nigeria was among the notable holdouts because of concerns it had about trans-shipments, where goods could enter the free-trade zone from countries that are not party to the agreement, Wamkele Mene, secretary general of the AfCTA, said in an interview in June.
The first commercial deal under the free trade zone it set place Jan. 1.
BLOOMBERG