The African Free Trade Zone policy drafted by the African Union is designed to drive economic growth among member states. The goals of the policy include the creation of free trade areas, customs unions, a single market, a central bank, and a common currency. These individual goals are collectively aimed at establishing an economic and monetary union for the African Union. The benefit of this policy to member states will differ, depending on the economic readiness of the states.


Analysts have seen the introduction of this policy from two perspectives:


  1. It is an effort to clone the European Union, with no regard for the complexity in Africa.
  2. It is a move to strengthen the stronger African nations and force the smaller ones to either consolidate or degenerate further.


The African Free Trade Zone policy is considered a major step to unifying the African market.  The question is this – how economically ready are the member states?


The Nigerian factor


Nigeria was not part of the policy formulation for the Africa free trade policy. This is strange because Nigeria has one of the largest African economies and ranked 4th in manufacturing value-added in 2018. Ideally, Nigeria should be one of the key drivers of this policy. The reason why Nigeria has taken the backbench on this is yet to be fully understood.


While there might be many advantages of a free trade zone in Africa, if not carefully implemented, the overall impact might outweigh the initial benefit derived in some countries. The African Free Trade policy may be more beneficial to countries like Nigeria with large economies. This is because such countries are better equipped to develop their infrastructure to boost the manufacturing industry. Transportation, water, and constant electricity are important infrastructures that must be put in place for a manufacturing environment to thrive. Strong economies and large populations provide large markets for locally made goods. Therefore, infrastructural development leads to the growth of the local manufacturing industry and promotes economic growth.


Nigeria is a highly import-dependent country. Our manufacturing companies are nowhere close to meeting market demand. Introducing the African Free Trade policy without developing the local manufacturing industry will do Nigeria more harm than good. Inter-African trade will ensure local demand will be easily met by foreign supply of goods as usual. Now the foreign goods will not be from developed European or Asian countries, they will be from our neighbours who were proactive. Being over-reliant on imports will cause degradation of the local manufacturing industry. In no time, manufacturing companies will move to environments with better conditions for production. Nigeria’s condition as a dumping ground will worsen.


The implementation of this policy will present both opportunities and challenges. Is Nigeria ready to take advantage of the opportunities that will arise when this policy is implemented? Other countries will manufacture and sell; is Nigeria ready to manufacture and sell? Is the government making plans in preparation for this policy?


The answer is not far-fetched, as most economic policies in Nigeria are developed to react to economic changes rather than anticipate them. Considering the level of preparation Nigeria needs to undergo, the adverse impact of this policy on the economy cannot be overemphasised.


The government must provide an enabling environment that will facilitate the country’s infrastructural transformation while consolidating its regional competitiveness. This will require overhauling its institutions, revamping its infrastructure, implementing business-friendly reforms as well as providing incentives for exports. The African Free Trade Zone policy is a huge opportunity for growth. We must act now and act fast.


Written by:


Sam Ogbeta

Senior Consultant