South African President Cyril Ramaphosa urged his Nigerian counterpart to sign a continent-wide free-trade deal.
Nigeria should take its time to consult on the agreement before signing up, but shouldn’t “take too long,” Ramaphosa said at a conference Wednesday in the West African nation’s capital, Abuja. “The continent is waiting for Nigeria and South Africa. By trading among ourselves, we are able to retain more resources in the continent.”
At a joint press conference with Ramaphosa later in the day, Buhari said Nigeria was careful about signing the trade deal to avoid hurting its young industries. “I will soon sign it,” he added.
Talks to establish the African Continental Free Trade Area with a combined gross domestic product of more than $3 trillion started in 2015 and in May Ghana and Kenya became the first countries to ratify the deal. Ramaphosa signed the agreement last week in Mauritania. South Africa will ratify it “soon,” he said.
The AfCFTA is a project driven by the African Union to eliminate tariffs on intra-Africa trade of goods and services and create a single continental market with free movement of business people. It will only become effective once the parliaments of at least 22 members ratify it.
South Africa and Nigeria account for about half of the continent’s GDP.
Nigeria can’t rush signing the deal because it doesn’t want to get things wrong, Finance Minister Kemi Adeosun said at the conference. Her government is talking to stakeholders including manufacturers, she said.
Ramaphosa and Adeosun were speaking at the African Export-Import Bank’s annual meeting being held in Abuja this week.
The Cairo-based lender released its 2018 Africa trade report, which showed that the trade deficit narrowed to $96.9 billion last year compared with $132.5 billion in 2016. Exports increased to $405.3 billion in 2017 from $344 billion a year earlier, while imports advanced to $502.3 billion from $476.6 billion, it said.
While Africa’s trade with the rest of the world expanded 11% to $907.6 billion last year, the portion of trade within the continent declined to 14% of the total. South Africa, Namibia and Nigeria accounted for more than 35% of intra-Africa trade last year. South Africa contributed a quarter of the region’s domestic commerce in 2017, mostly in oil imports from Nigeria and Angola.
A free-trade area for the continent, if implemented according to schedule, could increase intra-Africa trade by at least half by 2022, according to the report.
“An integrated African market is also likely to see enhanced flow of foreign direct investment and could shift FDI from natural resources to industry and manufacturing as investors seek to take advantage of increased market size,” the bank said in the report.
Afreximbank set plans to disburse as much as $25 billion to support intra-African trade for five years ending 2021, it said. It has opened $800 million of credit lines to 55 banks in the region and wants to reach at least 500 lenders by 2021, it said.
© 2018 Bloomberg