'4,301 manufacturing tariff lines at stake without AfCFTA safeguards'
If liberalisation under the African Continental Free Trade Area (AfCFTA), is not checked through some safeguard measures, about 4,301 of 4,779 total manufacturing tariff lines of five per cent, 10 per cent, and 20 per cent will be moved to zero per cent in the first five years.
This will ultimately lead to the closure of virtually all manufacturing companies within the period, the Manufacturers Association of Nigeria (MAN), warns.
The first impact of liberalisation through tariff cuts, according to MAN, is the surge in imports of manufactured goods into the country, while other impacts are on the outputs, incomes, employment, and investment of the firms.
In principle, the import surge is expected to reduce sales/output; the magnitude would be higher for competing manufactured goods. This implies that full liberalisation from the outset moving 90 per cent of tariff lines to zero per cent would have catastrophic implications for Nigeria.
MAN in its factsheet on AfCFTA, titled, Enhancing Nigeria’s active participation in negotiating the AfCFTA, and made available to The Guardian, said in a scenario where 90 percent of tariff lines are liberalised within five years, will practically see the closure of all manufacturing firm in Nigeria.
This, MAN noted, is because such an action will result in an immediate surge of imports of manufactured products into the country without allowing any room for necessary adjustments by the Government and industries, thus leading to the total collapse of output, investment, and employment in the sector.
“Output will decline in all manufacturing sectoral groups but with higher magnitudes in Motor Vehicle & Miscellaneous Assembly, Chemical & Pharmaceutical, and Electrical & Electronics industries compared to others.
“The change in domestic outputs of the manufacturing sector will be alarming with a negative impact ranging from -10% to -0.228%; thus indicating that virtually all manufacturing companies will close shop,” MAN added.
In terms of ease of doing business and the ability to compete with other African neighbours in filling the supply chain, the report stated that Nigeria is likely to face severe competition in countries like Angola, Senegal, Morocco, Mozambique, Egypt, and Guinea. Products most affected will be a toilet or facial tissues, parts suitable for use solely or principally with spark-ignition internal combustion piston, sanitary towels, plate sheets, film, foil, and surface-active preparation and a host of others.
As safeguards to avert the impending doom, MAN recommended that “high information barriers and uncertainty in achieving market access can be mitigated with appropriate export promotion strategies, including tax exemptions, provision of market information, etc. The government should overhaul, enhance and strengthen already established programmes in these areas to fit the cost of liberalisation.
“There is a need for significant public investment to cooperate in the formulation and enforcement of continental rules of origin (RoO), to forestall trade deflection, institutionalisation of contingent protection measures and implementation of the trade facilitation agreement (TFA).
“To deal with unemployment induced by liberalisation, government needs to place strong emphasis on policies that enhance education quality, job market information, re-training opportunities for the upgrading of skills and the acquisition of new skills; to enhance job search through employment services which offer job placement information, interview training, career guidance and counselling,” MAN added.