The Presidential Committee on Impact and Readiness Assessment for African Continental Free Trade Area Agreement has recommended to the Federal Government to sign the treaty.
The committee, which was chaired by Mr Desmond Obadiah, submitted its report to President Muhammadu Buhari in Abuja on Thursday.
The committee said it recommended the signing of the agreement by Nigeria because its findings showed that the country would benefit from the envisaged trade transactions within the African continent.
However, it admitted that some risks, including increase in smuggling, would have to be borne by Nigeria.
Nigeria had foot-dragged on signing the agreement in the past one year due to fears of its possible economic implications for the country, especially the danger of killing local industries and turning Nigeria into a dumping ground for goods flooding in from other countries.
In October 2018, Buhari appointed the Obadiah panel to assess the implications of Nigeria signing the treaty and advise the government accordingly.
Presenting the report to Buhari at the State House, Obadiah stated that the panel received over 200 memoranda before it arrived at its recommendations.
He spoke on both the high and low points of AfCFTA, saying, “It is envisaged that the trade liberalisation offered by the AfCFTA will make African goods more attractive and potentially cheaper than similar products from outside the continent.
“The AfCFTA therefore provides immense opportunities for Nigeria’s manufacturing and service companies to expand to Africa. Today, many Nigerian companies have developed capacity in some of these sectors and have long desired to expand to Africa but have been constrained by trade barriers which AfCFTA is expected to remove.
“Our study has shown that the AfCFTA is not without major risks and undesirable impacts, the most significant of which is the potential rise in smuggling and abuse of rules of origin. The risk is that it will provide incentive for traders to disguise goods imported from outside the continent as made-in-Africa goods, to qualify for duty-free treatment.
“This risk is high for Nigeria, considering that 92 per cent of Nigeria’s imports come from the rest of the world and smuggling, under-reporting of imports and other forms of abuse of rules of origin already constituted major challenges faced by Nigeria in the Economic Community of West African States.
“The risk is further complicated by the lack of capacity, resources and ‘will’ on the part of some African countries, to enforce their borders. Tackling this threat will require collective efforts at the highest level of ECOWAS and the African Union.
“Our report recognises that there will be significant adjustment costs to manage the negative impacts and to take advantage of the opportunities.
“The adjustment costs will include retraining workers in declining sectors to be able to take up employment in growing sectors, providing capital to business owners to re-tool their plants to remain operational and attracting investments to growing sectors in order to produce goods and services to export to Africa.”
Obadiah also spoke on the measures the committee recommended Nigeria should take to reap from AfCFTA.
He explained, “We identified sectors which can act as arrowheads for Nigeria’s expansion into Africa, while efforts are intensified to attract private sector investments to the productive sectors.
“Our report shows that on the balance, Nigeria should consider joining the AfCFTA and using the opportunity of the ongoing AfCFTA Phase I negotiations to secure the necessary safeguards required to ensure that our domestic policies and programmes are not compromised.”
Buhari, while receiving the report, said the first step was for the government to study the recommendations carefully before taking a final decision.
However, he observed that there would be obvious positive and negative impacts on Nigeria.
The President noted, “Let me state unequivocally that trade is important for us as a nation and to all nations. Economic progress is what makes the world go around.
“Our position is very simple; we support free trade as long as it is fair and conducted on an equitable basis.”
Buhari added that because of the huge size of Nigeria’s economy in Africa, it would not be a wise decision to rush into signing the agreement without fully analysing all the implications.
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