COVID-19: African Free Trade Zone And The Ecowas Trade And Commerce | O. M. Atoyebi, SAN

The world has never
been more ignited in recent times for survival than at the end of2019 and the
launch of 2020 through to the mid-year and still counting. For many, the
outbreak of the COVID-19 pandemic projected a rather unannounced arrival of end-time.
While the world is still adjusting to the disease and fighting to curbit,
unfortunately,COVID-19 has triumphed in disrupting the entire chain of human
affairs across the globe with its rippling effect.

The African Free Trade Zone and the Economic
Community of West African States (ECOWAS) Trade and Commerce, being one of
those economic engagements violently hit and halted by this crisis,along with
the repercussions birthed by various emergency measures adopted by member
countries and regions in curbing its overarching population sapping effects,
would have otherwise been the take-off of a tremendous economic transposition
for the African continent and indeed, the rest of the world.

Theeffect of the
pandemic and withthe gradual easing of imposed lockdownsin
member countries (which until recently resulted in an indirect placing of
unintended embargo on these kinetic commercial interactions, all in a bid to
prevent the multiplicity of the contagion) spells for the growth of the African
market,is the focal point of this work.

THE AFRICAN
CONTINENTAL FREE TRADE AREA

The African
Continental Free Trade Area (hereinafter referred to as “AfCFTA”) is a trade deal designed to drop barriers in intra-African
trade[1].
According to Brookings Institution, intra-African exports made up only 19% of
total trade in 2018, compared to 59% and 69% for intra-Asia and intra-Europe
trade respectively[2],
this sharp variance defines the rationale for the need to put such a long
overdue deal in place. Simply put, theAfCFTA aims at rewriting this
unproductive narrative by means of increasing in-house African
trade through the removal of barriers.

The 55-nation
continental Free-trade Zone which has been referred to as the world’s largest Free-trade
Zone, is being expected to create $3.4Trillion combined
gross domestic product of economic bloc with 1.3 Billion people across Africa
and constitute the largest new trading bloc in the world, since the inception of the
WorldTrade Organizationin 1994[3].
Interestingly, the International Monetary Fund (IMF) remarked that the AfCFTA
is a “potential economic game changer and
eliminating tariffs (in Africa) could boost trade in Africa by 15-25% in the
medium term”.

COVID-19
AND THE KICK-OFF OF THE LONG-AWAITED AFRICAN FREE TRADE AGREEMENT

The landmark
African Free Trade Agreement is the instrument intended to initiate the laid
out liberal trans-border commercial activities across the coastal regions of
the continent once implemented on the 1^st day of July, 2020, having
been ratified by all member countries, with Nigeria following suit in July,
2019 (after series of delays and protracted consultations with relevant
stakeholders). This decision of the largest economy in Africa to sign the agreement
was a massive amplifier to the deal. The AfCFTA entered into force on 30^th
May, 2019^[4].

A Free Trade Agreement
simply means where a country has a lower cost of production in her home Nation,
such Nation will gain market share by offering products cheaper than the competition[5].
Also, by the Agreement, Nations can no longer artificially increase prices of
imported goods by imposing import duties[6].
Free Trade Agreements are designed to cut trade tariffs among member countries,
help make a country’s exports cheaper and get easier access to other markets.
It removes border taxes or trade barriers, get rid of quotas in such a way that
there will be no limit to the amount of trades indigenous businessmen can
conduct. These tariffs are usually in the form of taxes.[7]

Beyond dispute is
the fact that though the Agreement is already legally in force, a number of details
are still unsolved as part of the first phase of the process which would have
brought the July zero hour for the take-off of trade in goods and services
under the new tariff into fruition. This was as a result of the direct fallout
of the African Union’s inability to hold its earlier scheduled Conference in
Johannesburg, South Africa in May, 2020, to place the lid over the Agreement,
owing to the cross-border travel restrictions and in-country imposition of
lockdowns to arrest the rapid spread of the coronavirus pandemic[8].
As it stands, only a rescheduling of both the meeting and take-off dates by the
Assembly as soon as practicable, would see to the successful unveiling of
trading inter-relations in the zone as initially earmarked, especially with the
gradual easing of the somewhat stiff control measures placed in concerned
territories.

ECOWAS TRADE AND COMMERCE

Trade in the Community
is evolutionary. There was a time when old trading links were still being
relied on to sustain business exchanges in the area. What
is being awakened now however is trade with development dimension. The Economic
Community of West African States (ECOWAS), since its inception has had a trade
policy designed to increase intra-regional commerce, raise trade volume and
generally galvanize the economic activities within the region in such a way as
to positively impact on the economic wellbeing of ECOWAS citizens[9].

The ECOWAS trade
policy is also meant to foster the smooth integration of the region into the
world economy with due regard for the political choices and development
priorities of states in the desire to engender sustainable development and
reduction of poverty[10].

The total trade of
the region has averaged $208.1 Billion. Exports are projected at approximately
$137.3 Billion while imports total about $80.4 Billion. The main active Countries
in trade are Nigeria; which alone accounts for approximately 76 percent of
total trade, followed by Ghana; (9.2 percent) and Cote d’Ivoire; (8.64
percent). The trade surplus of the region, estimated at about $47.3 Billion is
attributable to Nigeria ($58.4 Billion) and Cote d’Ivoire ($3.4 Billion) when
all other Countries have a deficit in the trade balance[11].

Today, the total
ECOWAS trade has increased by an average of 18 percent per year between 2005
and 2020. It is dominated by Mining Commodities (oil resources, iron, bauxite,
manganese, gold, etc..) and Agriculture (coffee, cocoa, cotton, rubber, fruits
and vegetables and other products rather marketed within the region such as dry
cereals, roots and tubers, livestock products) etc. Nigeria, Cote d’Ivoire,
Ghana and Senegal concentrate 87 percent of this trade, with 79 percent of
regional imports ($55,520Million per year) and 94 percent of exports and
re-exports ($77,792 Million per year)[12].

THE ECOWAS TRADE LIBERALIZATION PROGRAMME: CATALYST FOR
ECONOMIC TRANSFORMATION IN THE COMMUNITY

A main feature of
the Community’stradingand commercial policy is ECOWAS Trade Liberalization
Programme(ETLP). The objective of the programme is to progressively establish a
Customs Union among the Member States of the Community over a period of fifteen
years, starting from 1^st January, 1990, the date of entry into force
of the Scheme. The Customs Union will among others involve the total
elimination of customs duties and taxes of equivalent effect.

The ECOWAS Trade
Liberalization Programme, involves three groups of products; unprocessed goods,
traditional handicraft products and industrial products. The programme is meant
to give several advantages to member States and their citizens as they trade
among themselves. An example of this is, the advantages accruing to unprocessed
goods imported from a member state as contained in Decision C/DEC.8/11/79 of the Council of Ministersis, total
exemption from import duties and taxes, free movement without any quantitative
restriction as well as non-payment of compensation for loss of revenue as a
result of their importation, provided that unprocessed products among other
conditions, originate from member states of the Community and must appear on
the list of products annexed to the decisions liberalizing trade in these
products.

COVID-19 CLOG ON ECOWAS TRADE AND COMMERCE

The unpremeditated advent
of COVID-19 and the measures placed to curb its dispersion across ECOWAS member
states, with the commonest of such steps being the ban on cross-border
movement, resulted in a huge dip in the progress of the ETLP in particular, and
all forms of commercial interrelations in the region in general. This could
otherwise be channeled along a more productive and economically transforming
axis for the concerned States and in fact, even the rest of the Continent. 

Continuous Trade in
both goods and services would have played a key role in overcoming the pandemic
and limiting its health and economic impact, especially on the poor through
adopting coordinated measures on trade in response to the COVID–19
epidemic. Trading and Commerce would have contributed immensely by providing
countries access to essential medical goods (including material inputs for
their production) and services to help contain the pandemic and treat those
affected; ensuring access to food, maintaining and enhancing nutritional intake
of the poor which will boost immune systems and contribute to the ability to
resist the virus; providing farmers with necessary inputs (seeds, fertilizers,
pesticides, equipment, veterinary products) for the next harvest; and
supporting jobs and maintaining economic activity in the face of a global
recession, disruption to regional and global value chains, and reduced
employment and increased poverty.

Conversely, measures
to contain the pandemic in West-Africa and the whole of Africa is reducing
trade. African countries are highly dependent on global trade, and measures put
in place that limit trade are rapidly having negative impacts on most countries
hitherto operating in the ETLP. Thirty-two countries in Africa have put in
place flight restrictions[13].
Some have suspended all commercial passenger flights, others have blocked
international flights, while a few have limited the restrictions to countries
with high infection rates.

Experience from
previous crises, such as the 2008-2011 food price crisis of 2009, clearly shows
that imposing export restrictions on medical and food products will increase
the international prices of these products which will impact most negatively on
the poorest people. Export bans on food also lowers domestic prices which
reduces the incentive to grow food crops in the next season. If the pandemic
spreads in Africa the same way as in Europe and the USA, it will result in
critical hotspots that could overwhelm local health capacities and food
security, the two most vital survival necessities for everything alive.

URGENT NEED FOR IMPLEMENTATION OF THE AfCFTA

The last World
Economic Outlook from IMF forecasts a -3% contraction in world GDP in 2020 and
a -1.6% contraction for sub-Saharan Africa for the same period[14].
The fall in the world GDP will no doubt lead to a severe fall in the exports
demand for African products due to the fall in the global demand as COVID-19
persists. Given the specificities of African economies, the negative impact
would be more than proportional, hence more trade among African nations and
between Africa and the rest of the world is of essence. The AfCFTA will thus
have the advantage of boosting intra-African trade contributing to mitigate the
rapid decline in African GDP[15].

COVID-19 is both a
supply and demand shock. Given this magnitude, the crisis may lead to a
significant upending of global value chains, perhaps leading to a higher
reliance on regional value chains. Given the potential for the AfCFTA to serve
as a real economic engine at the continental level, policymakers must maintain
the momentum towards its implementation so as to empower the region to more
successfully navigate the hit its economies will take and have already taken.
Trade liberalization under the AfCFTA is among many policies that could help
pull countries out of recession after the pandemic is over.

CONCLUSION

Indubitably,
the very soul of every nation is the income that accrues to it. From the
provision of basic amenities (with food, shelter and even clothing being the
constant variables), to the more political cum economically motivated projects,
policies and programmes aimed at maintaining the stronghold of a nation among
its other dominating contemporaries. African countries have managed to devise
tactical progressive models designed to rescue the continent from sinking into
the abyss of hunger, war and poverty, by evolving a medium via which trade and
commercial activities will flourish among the inhabitants of the black-nation
with little or no need of reliance on external channels.

The bid to
introduce the AfCFTA and the push to advance the long existing ECOWAS Trade and
Commerce(for the benefit of member-countries and by extension, the whole of
Africa), have been the forces at the forefront of achieving this mandate.
Unfortunately, just when plans were set to go on motion, the
COVID-19 pandemic trotted its way from other parts of the Globe into the shores
of the Continent and is threatening to cancel the anticipated success of these
plans.

With the stiff
measures to fight the pandemic now being tenderly relaxed coupled with the
positive available windows it has helped to expose, the time is ripe for
African leaders to intensify their strength to see to the quickened implementation
and diversification of the masterplan for the economic development and
transformation of our dear continent.

Paper by OyetolaMuyiwaAtoyebi,
SAN.

Mr. OyetolaMuyiwaAtoyebi, SAN is one of the most notable
professional Nigerian youth, who has distinguished himself in his professional
sphere within the country and internationally. He is the youngest in the
history of Nigeria to be elevated to the rank of a Senior Advocate of Nigeria.
At age 34, he was conferred with the prestigious rank in September, 2019. Mr.
O.M. Atoyebi, SAN can be characterized as a diligent, persistent, resourceful,
reliable and humble individual who presents a charismatic and structured
approach to solving problems and also an unwavering commitment to achieving
client’s goals. His hard work and dedication to his client’s objectives sets
him apart from his peers. 

As the Managing Partner of O.M. Atoyebi, SAN and Partners,
also known as OMAPLEX Law Firm, he is the team leader of the Emerging Areas of
Practice of the Firm and one of the leading Senior Advocates of Nigeria in
Information Technology, Cyber Security, Fintech and Artificial Intelligence
(AI). He has a track record of being diligent and he ensures that the same
drive and zeal is put into all matters handled by the firm. He is also an avid
golfer.

Email: Atoyebi@omaplex.com.ng

LinkedIn:
https://www.linkedin.com/in/atoyebi-oyetola-muyiwa-san-804226122/