Posted Fri, Dec 20, 2019 7:09 AM

Effects of the African Continental Free Trade Area Agreement (AfCFTA) on the Nigerian Agricultural Sector

The framework agreement for the establishment of the AfCFTA was endorsed by 44 African countries in Kigali, Rwanda on 21 March, 2018. On July 8, 2019, Nigeria signed up to the AfCFTA framework Agreement. One main objective of the AfCFTA is to create a single continental market for goods and services across Africa. While stakeholders in Nigeria have expressed concerns that the agreement will have negative consequences on the economy, others have echoed optimism and highlighted potential benefits for Nigeria, if the agreement is well implemented. This policy brief examines the implications of the AfCFTA agreement on the agricultural sector in Nigeria and provides recommendations on how the Nigerian government can maximise the benefits of the agreement and minimise associated costs. In this brief, four scenarios were created and the results for each scenario were compared with a baseline which showed the direction of a specific variable if Nigeria had not signed the AfCFTA. When the results of each scenario were compared with the baseline (if Nigeria had not signed the AfCFTA), it was observed that the removal of tariffs led to a marginal decline in Nigeria’s agricultural outputs across all four scenarios, as imported produce become cheaper, thus, creating a disincentive for investment and local production in the sector. Agricultural imports, on the other hand, increased in all scenarios while exports increased in the first two scenarios but declined in scenario 3 and 4. This brief concludes that without the implementation of support policies and incentives for players in the sector, the agricultural sector in Nigeria will be adversely affected by the agreement. To improve agriculture output, it was recommended that the government must identify key agriculture and agro-processing commodities that Nigeria can build competitive advantages in, over the medium to long term and summon the political commitment to implement business support reforms in the sector. The need for coordination and collaboration between and among government agencies both at the federal and state level to address key policy challenges in the agricultural sector and promote export was deemed important. Proper monitoring and enforcement of standards for agricultural produce by government agencies such as SON, NAFDAC, NAQS among others must be prioritised. Other critical recommendations include the need for the Nigerian government to address specific constraints that limit competitiveness of Nigerian exports and the need for involvement of key stakeholders including the private sector during the AfCFTA negotiation process. Lastly, the brief recommends that the Nigerian government must improve border scrutiny and security to prevent dumping and abuse of the rules of origin by traders.