AFRICAN CONTINENTAL FREE TRADE AREA (AfCFTA) AND POVERTY REDUCTION IN NIGERIA: AN EXPLORATION OF THE POSSIBILITIES

Abstract

The creation of a free trade area such as the African Continental Free Trade Area (AfCFTA) was long overdue given the benefits member nations would have derived from it at least when drawn from the experiences of other regional and sub-regional economic integration bodies. One benefit envisaged is the reduction in poverty of member nations. This study, therefore, explored the possibilities of AfCFTA reducing poverty in Nigeria when fully operational taking into consideration the African Regional Integration Index (ARII) drawn from the dimensions and indicators of regional integration (such as the free movement of people, trade, macroeconomic, productive and infrastructure integrations). Available data on the values of these indexes showed that Nigeria's regional integration index on the free movement of people, trade, macroeconomic, productivity and infrastructure are weak because the country performed poorly in all the five dimensions of African Regional Integration Index (ARII). This by implication is likely to deter the contribution of AfCFTA to poverty reduction in Nigeria in the future unless measures such as the improvement in production in the agricultural, manufacturing and solid mineral resource industries are affected. Massive infrastructural development that would necessitate investment (especially foreign direct investment), production and trade across borders, free movement of people (especially, the most productive and skillful workforce are also affected). Stability in key macroeconomic variables (e.g. inflation, interest and exchange rates) across borders is essential to help ease foreign businesses and investments and create healthy banking and financial climate.