Following the historic accession of Nigeria to the Africa Continental Free Trade Agreement in July, LADOL MD and CEO, Dr. Amy Jadesimi speaks to Financial Times about what this means for Nigerian and African Trade, and how this agreement must work to benefit the people and economies of African nations. The deal is an important milestone for Africa and our CEO Amy Jadesimi presents her insightful view on the need for a continental-focused solution designed to make the trade agreement a mechanism for tangible economic growth focusing on local industrialization, job creation and development.
She shares her thoughts with FT Neil Mushi
After more than a year of delay, Nigeria last month signed a continent-wide trade agreement, supercharging a pact that supporters believe could transform business across Africa.
As Africa’s largest economy, most-populous country, biggest crude producer and cultural powerhouse, Nigeria has long been seen as essential to any pan-African deal, which has had broad support among business leaders across the continent. But President Muhammadu Buhari, a protectionist at heart, heeded calls from his country’s labour and manufacturing trade groups to study the deal’s effects before signing.
Amy Jadesimi is one of the few among Lagos’s business elite to support Mr Buhari’s deliberative approach because, she says, of how important the deal is.
“We need a continental-focused solution that is developed by the [African Union], and targets making the trade agreement a mechanism for local industrialisation,” says Ms Jadesimi, managing director of Ladol, a Lagos-based industrial free zone.
“That should be the aim of this trade agreement, rather than just something broad and high level about economic growth or prosperity — those things won’t come if, underlying all of this, we do not create jobs and lift our economies through industrialisation,” she adds.
Supporters argue that the Africa Continental Free Trade Area (AfCFTA) has the potential to spur economic growth in a bloc of nations with a combined gross domestic product of more than $3tn, creating the world’s largest free trade zone.
But major challenges remain, and sceptics such as Ms Jadesimi argue that any pact must offer incentives to boost African manufacturing or it will fail — an outcome that could turn the continent into a dumping ground for cheap Chinese, US or European goods.
“Are we going to create an entirely new paradigm for trade, that is Africa-centric, that is controlled by African countries, and that disincentivises foreign companies and countries outside of the continent from importing — are we going to do that?” she asks. “That’s going to be really tricky.”
The African Union summit in Niger in July was a landmark moment for the pact whose roots stretch back decades. Although the deal officially came into force on May 30, the implementation of any final agreement is at least three years away and specifics on everything from rules of origin to intellectual property must be agreed between a diverse group of largely fragmented economies.
The agreement must also contend with a history of regional trade agreements that have largely flopped and done little to bolster trade integration — the AfCFTA will need to be harmonised with eight such regional pacts.
Beyond the issue of whether the costs of an open market outweigh the benefits to specific countries, there is also the question of whether it is possible for Africa to overcome its structural challenges to trade.
The agreement aims to remove 90 per cent of tariffs to create a single market with free movement of goods and services. However, sceptics question how under-resourced governments — newly deprived of that tariff revenue — will be able to afford to upgrade poor infrastructure.