African Continental Free Trade Area: Challenges and Opportunities for Small and Medium Scale Enterprises in Nigeria
The Continental Free Trade Area (CFTA) is being prepared by the Africa Union (AU) to take off in December 2017 for free trade in goods and services. Small and Medium Enterprises (SMEs) will participate and drive the free trade area. The paper showed the features of the CFTA, the opportunities and challenges for SMEs in the CFTA and determined the level of awareness of CFTA among formally educated citizens. The study used document study with content analysis as well as primary data collected through convenience sampling in a Lagos suburb and analyzed with descriptive statistics. 65 respondents were targeted but 62 were used for analysis. The results showed that the decision to start the African CFTA was taken in 2012. The mechanism of its establishment is from AU member countries through the eight Regional Economic Communities. The SMEs in Nigeria serve as basis of industrialization. 67.74% of the respondents were not aware of the CFTA while 32.26% were aware. The SMEs will have the opportunities of introducing their product to foreign market and form regional value chain in production. Operational capacities supported by smart technology for monitoring goods in transit and at destinations and overcome of socio-cultural differences like language barrier in the targeted foreign market within the CFTA are required from businesses. Africa should increase the quantity of cross-border business infrastructure for CFTA. The AU should step up media campaign to create awareness of the CFTA among Africans.
Free Trade Area, Africa Continent, Awareness, Small and Medium Enterprise, Challenges, Opportunities, Nigeria
Acyl, F. (2016, July 18). ‘Continental Free Trade Area to set off in Africa next year’: AU official. Retrieved from https://www.trademarkea.com/news/continental-free-trade-area-to-set-off-in-africa-next-year-au-official/.
Adekoya, F. (2017, Feb., 7). Nigeria begins negotiations on CFTA adoption. Guardian Newspaper. Retrieved from www.t.guardian.ng.
Afolabi, L. (1998). Monetary Economics.2nd Edition. Lagos, Nigeria, Perry Barr Ltd. ISBN: 978-2079-00-6.
AUC- African Union Commission (2016). CFTA – Continental Free Trade Area. Retrieved from https://www.au.int/en/ti/cfta/about.
AU - African Union. (2017). Regional Economic Communities (RECs). Retrieved from https://www.au.int/en/organs/recs.
Economiconline (2017). Economic integration. http://www.economicsonline.co.uk/Global_ economics/Economic_integration.html.
EBRD - European Bank for Reconstruction and Development (2012). Regional trade integration: Benefits and challenges. Transition report 2012 Integration across Borders. Chapter 4. Retrieved from http://tr.ebrd.com/tr12/index.php/chapter-4/regional-trade-integration-benefits-and-challenges.
Goh, A. and Sullivan, M (2010). The five biggest challenges business face when they expand to China. Retrieved from http://www.businessinsider.com/the-five-biggest-practical-challenges-for-foreign-smes-in-the-chinese-market-2010-12.
Ituwe, C. E. (2005). Strategic Management: Theory and Practice. 2nd Edition. Lagos. Excel Bokkhouse.
Kim, B. S and Wright, J. (2013). Global logistics: challenges for expansion into emerging markets. Retrieved from Jan. 25, 2017 from http://www.logisticsmgmt.com/article/global_ logistics_challenges_for_expansion_into_emerging_markets.
Manelisi, G, Kornegay, F. and Stephen, R. (2000). Formation of the African Union, African Economic Community and Pan-African Parliament. African Union and Pan-African Parliament: Working Papers. Retrieved Feb. 15 from http://unpan1.un.org/intradoc/groups/ public/documents/idep/unpan003885.pdf.
Mwasha, O. N. (2015). The benefits of regional economic integration for developing countries in Africa: A case of East African Community (EAC). Korea Review of International Studies. Pp 69 -92. Retrieved from http://gsis.korea.ac.kr/wp-content/uploads/2015/04/11-1-05-Ombeni-N.-Mwasha.pdf.
NBS and SMEDAN, (2010). Survey report on micro, small and medium enterprises (MSMEs) in Nigeria – Preliminary Report. 2010 NATIONAL MSME COLLABORATIVE SURVEY. A collaboration between National Bureau of Statistics (NBS), Abuja andThe Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).
Olympio F. K. N. (2004). Transformation of the Organisation of African Unity (OAU): A New Vision for the 21st Century, or Political Rhetoric?. A Dissertation submitted to the Department of Political Science, Universität Trier, Germany, in partial fulfilment of the Requirements for the award of Doctor of Philosophy (PhD). Retrieved from https://www.uni-trier.de/fileadmin/fb3/POL/Studium/Promotionen/dokserv.pdf.
1Voice Africa (2014). The African Business Terrain. Retrieved Feb. 10, 2016 from http://www.1voiceafrica.com/blog/the-african-business-terrain-what-it-is/.
Punch Editorial (2016, May 9). Nigeria’s tough business terrain. Punch Newspaper. Retrieved from http://punchng.com/nigerias-tough-business-terrain/.
Region Refocus Third World Network-Africa. (2016). The Continental Free Trade Area (CFTA): Process and Political Significance. A Primer. April. Retrieved from http://twnafrica.org/RR%20+%20TWN-A%20-%20CFTA%20Primer.pdf.
Tralac (2016). Continental Free Trade (CFTA) Legal Texts and Policy Documents. Retrieved https://www.tralac.org/resources/by-region/cfta.html.
UNCTAD – United Nations Conference on Trade and Development (2012). Trade liberalization, investment and economic integration in African Regional Economic Communities towards the African common market. UNCTAD/DITC/TNCD/2011/2. Retrieved from http://www19.iadb.org/intal/intalcdi/PE/2012/09658.pdf.
UNCTAD – United Nations Conference on Trade and Development (2016a). African Continental Free Trade Area: Developing And Strengthening Regional Value Chains In Agricultural Commodities and Processed Food Products. United Nations, Geneva. Retrieved from http://unctad.org/en/PublicationsLibrary/webditc2016d4_en.pdf.
UNCTAD – United Nations Conference on Trade and Development (2016b). African Continental Free Trade Area: Policy and Negotiation Options for Trade in Goods, United Nations, New York and Geneva. Retrieved from http://unctad.org/en/PublicationsLibrary/webditc2016d7_en.pdf.
UNCTAD – United Nations Conference on Trade and Development (2016c). African Continental Free Trade Area: Advancing Pan-African Integration, Some consideration. United Nations, New York and Geneva. Retrieved from http://unctad.org/en/pages/PublicationWebflyer.aspx?publicationid=1658.
Warford, L. (2016). Africa is moving toward a massive and important free trade agreement. Retrieved from https://www.washingtonpost.com/news/monkey-cage/wp/2016/07/14/the-7-things-you-need-to-know-about-africas-continental-free-trade-area/.