Africa is at a historical crossroads. The launching of the operational phase of the African Continental Free Trade Area (AfCFTA) Agreement during the 12th Extraordinary Session of the Assembly of the African Union (AU) in Niamey, Niger on 7 July 2019 marks the most significant event in the decades long project of African integration. If managed efficiently, this newly formed market of 55 nations, 1.2 billion people, and an aggregate GDP of up to $6.7 trillion Purchasing Power Parity (PPP) has the potential to bring unprecedented stimulus to African economies by unlocking the historically low level of intra-continental trade and attracting long-term, stable investments from around the world. While there is general optimism surrounding the promise of AfCFTA to support economic development, there must also be a recognition that, like all Free Trade Agreements (FTAs), the AfCFTA will inevitably create winners and losers. Whether for their own inefficiencies, or the sub-optimal business environments they may find themselves in, some businesses – or even entire sectors of national economies – will not be in a position to make the most from the expanded market opportunities and may be unable to compete with the influx of new competitors from other economies. These were just some of the considerations that sparked considerable opposition to the deal in Nigeria prior to its signing. Unfortunately, there has previously been a general lack of data and information regarding how the national economy will react, leaving plenty of room for speculation. In this report, CSEA employs a two-pronged strategy to begin filling in the knowledge gap that exists about the possible effects of the AfCFTA on Nigeria’s economy. The second prong of this study takes a more general look at macroeconomic reactions and trade creation/diversion in the Nigerian economy as a result of AfCFTA. Here, we employed a Computable General Equilibrium (CGE) Model to simulate the general movements of the Nigerian economy, as well as those of other economies across the continent.
