Democratic Socialist Movement

For Struggle, Solidarity and Socialism in Nigeria

By - DSM


  • Neither free trade nor protection are real solutions

 By Kola Ibrahim

On 6th July, 2019 President Muhammadu Buhari (rtd.), signed Nigeria into the much-touted African Continental Free Trade Area Agreement (AfCFTA), at the Extra-Ordinary Meeting of the AU Heads of Government in Niger. With this, Nigeria, which had earlier suspended its ratification of the AfCFTA in March 2018, became the 54th African country, out of 55, to sign the agreement. This is significant because Nigeria is Africa’s biggest economy and the largest market.

The AfCFTA is being touted as an important solution to Africa’s development. UNECA claims that the agreement, whose process started in 2012, would boost intra-African trade by as much as 52%. Currently, intra-African trade, mostly centred on agriculture and mineral resources, is merely 16% of the continent’s trade. The AfCFTA is believed to be the largest trade agreement in the world, if it comes into effect, covering a population of 1.2 billion people, 55 countries and GDP worth over $.2.6 trillion.

However, reality and events subsequently have proved the news of this so-called agreement to be less cheering. In reality, it will be another means of maintaining the status quo of underdevelopment, and at best a tool for the promotion of free market capitalism in the interest of African big business and their big brothers internationally. Free trade agreements are meant to break barriers through tariffs and trade quotas, to free movement of goods, services and persons. In reality, free trade agreement is meant to open a country’s economy to competition from other countries, while also allowing such country to make use of available markets elsewhere. This, in a capitalist economy, means the government acting on behalf of a country’s capitalists to remove barriers to promote their businesses and interests in the international market. It is believed this will trickle down to the whole population through improved trade, investment and foreign exchange earning that will boost jobs, productivity and better lives.

Contrarily, free trade has meant erosion of job and dwindling industrialization in many advanced, developed, and semi-developed countries, as capitalists free trade agreements to move jobs to low-paying sectors and countries, where profits are maximized. Given the huge unused capital outlay and capacity globally, it is clear that increasing productivity and profitability is now concentrated on exploiting labour as competition between rival capitalists has increased. Furthermore, it has meant increased financialization of the economy as monetary capital is used through equity, investment, and loans, to drive up profits through increased exploitation of labour mostly expressed through low-paying, precarious and casual jobs. Therefore, working people and young people, looking to start a live, have been the sacrificial lamb for this.

In Africa, the situation is worse, as the continent, in spite of its huge and seemingly inexhaustible resources and human capital, has remained at the tail-end of global capitalist development, as supplier of raw materials, and at best cheap labour for foreign companies operating in the continent. Most of the economic activities involving advance technology and expertise, even in the raw material extraction industries, are controlled by foreign capital from advanced and semi-advanced economies. Therefore, the position of the Nigerian president that “Africa therefore needs not only a trade policy, but also a continental manufacturing agenda”, sounds more like wishful thinking than any planned action for such development.

Aside the fact that Africa has low manufacturing base and very poor infrastructure and social services to encourage manufacturing, the continent is also home to backward capitalist ruling elite that is not prepared for any serious development of the continent, inasmuch as its pecuniary interests are protected and insured. Dominated by imperialism most African capitalists concentrate on everyday items like foodstuffs, building materials, exporting raw materials, agencies for foreign companies or speculation. Faced with this situation the business section of the ruling class often rely on political power for direct patronage for their businesses. The richest African, Aliko Dangote, has had his businesses, including the huge cement manufacturing business consciously backed by successive Nigerian governments. Today, his refinery under construction is directly supported by Nigerian state through huge dole-outs and concessions.

Therefore, at best, the trade agreement, if it is successful, will only allow global finance capital to further deepen control of the African economy. The manufacturing sector in Africa is weak and need huge capital; free trade agreement allows global finance capital access to resource pool, huge market and unprecedented cheap labour, and added to this, limited barrier. Without foreign capital, Africa’s free trade will only be dominated by raw materials (agricultural products and mineral resources). While foreign investment may sound like an opportunity for Africa, it actually has very little to offer. In the first instance, foreign capital is not prepared for huge investment needed for Africa’s infrastructural development, which is prerequisite for any serious industrial development in Africa. This is more so that such investment will need longer gestation period of profitability, given the huge population of poor people, and small and yet dwindling middle class in the continent. Global capitalism is hardly interested in such at this period of precariousness and instability of global economy.

Secondly, global finance capital will mostly invest in businesses that require less labour but provide quicker and bigger profits. This will only provide few real jobs in the continent, and will hardly arrest the ever growing unemployment. However, it will not improve Africa’s development. China has been investing in Africa for some years now, yet the level of industrial and infrastructural development is still marginal. On the other hand, the debt profiles of many African nations have been growing. In fact, it has put them in a new colonial status. Therefore, foreign investment or free trade agreement under capitalist arrangement cannot engender genuine development for the majority.

Beyond this is even the question of the practicability of pan-African free trade. As said earlier, Africa as a continent, as a latecomer to the global capitalist system is a tied to the apron string of big capitalist economies. African politicians and capitalist big businesses are committed to different sections of the global capitalist class. This clearly put a big question mark on implementation of AfCFTA. For instance, currently, there is a disagreement between Francophone and Anglophone West African countries over adoption of Eco as the sub-region’s single currency. Also, the so-called consultation referred by Nigeria for signing the AfCFTA was actually aimed at defending the interests of local capitalist class.

Furthermore, just few weeks after Nigeria purportedly signed a free trade agreement, the government closed the country’s borders with its neighbours because the government wanted to protect rice producers, mostly big business. This shows the pressures which are on AfCFTA and any similar agreement. Different sections of the capitalist class have rival and conflicting interests, something which has been shown in the policy zigzags of the Buhari administration. Some capitalists want protection from foreign competition, others want the continuation of state help, there is a section which sees its future as working with foreign capitalists and those who see a free trade deal as opening up new markets  in other countries. The additional fact that many governments in Africa depend on taxes and tariffs on imported goods for their revenues is another barrier to AfCFTA, which aims to remove these barriers. However, on the basis of capitalism, neither free trade nor protectionism are real solutions as they only serve the interest and profit of the capitalist ruling elite and not the needs of the working people and the poor.

The worse part of the AfCFTA is the acquiescence of the labour union leadership especially in Nigeria; as the labour centres, which initially opposed the agreement, became an AfCFTA advocate. The question is; what has changed between when the labour centres opposed it and when Nigeria signed it? One of the central planks of any FTA is flexibility of labour, which makes labour cheaper.

No doubt, Africa needs not just economic but political integration in order to maximize the huge human and material resources of the continent for massive development in the interests of the vast majority. But genuine integration cannot be achieved under capitalism, either through free trade agreement or protectionism. This is because the underdevelopment of the continent is a product of merciless capitalist exploitation. The various local capitalist classes have only been vassal of the global capitalism. Therefore, only socialist programmes that put the huge wealth of the continent under democratic control and management of the working people, through voluntary cooperation can engender genuine development. However, working people and young people will need to first carry out social revolution to change the socio-economic foundation of the continent.