Nigeria struggles to leverage AfCFTA’s potential as trade value plummets by 11.9%
Nigeria’s aspirations for robust intra-African trade, propelled by the African Continental Free Trade Area (AfCFTA), have hit a stumbling block as trade value experiences a significant dip. Despite the AfCFTA’s promise to facilitate free movement of goods and services across the continent and elevate Africa’s standing in the global market, Nigeria’s trade figures with other African nations remain disappointingly low.
According to the National Bureau of Statistics (NBS) report on Foreign Trade in Goods Statistics for Q1 2023, Nigeria’s intra-African trade value shrunk by a staggering 11.95% year-on-year. The trade volume dwindled from N956.93 billion in Q1 2022 to a meager N842.6 billion in Q1 2023, dealing a blow to the country’s aspirations for economic integration within the region.
These figures are even more concerning when considering the ambitious projections put forth by the International Monetary Fund (IMF), which anticipates a 52.3% expansion in continental trade by 2025 under the AfCFTA. Nigeria’s inability to capitalize on the trade pact raises questions about the challenges encountered during its implementation and the nation’s economic ties with its African counterparts.
Experts have pointed to the sorry state of infrastructure as a major hurdle in fully optimizing the AfCFTA’s potential. Okiki Oladipo, a Senior Analyst at Parthian Partners, emphasized the need for industrialization and infrastructure development within Nigeria to stimulate domestic production and facilitate competitive pricing. By investing in and addressing the nation’s infrastructure deficiencies, Nigeria can position itself as an export hub, meeting local content requirements while capitalizing on the growing demand in other African markets.
The decline in trade volume further underlines the prevailing obstacles faced by African nations in reaping the benefits of this landmark agreement. As the AfCFTA spans both Anglophone and Francophone countries, the dismantling of barriers has proven to be a complex task. Economic disparities, inadequate infrastructure, and limited economic cooperation have impeded the smooth flow of goods and services across borders.
Nigeria, which had showcased relatively higher intra-African trade proportions in the past, has seen its share dwindle. In 2022, intra-African trade accounted for 11.03% of Nigeria’s total foreign trade, only to drop to 7.46% in 2021 and further diminish to a mere 6.5% in 2022. This downward trajectory paints a somber picture of Nigeria’s engagement with its African counterparts and underscores the need for a concerted effort to reverse the trend.
As the continent’s largest economy, Nigeria holds the potential to drive intra-African trade and strengthen Africa’s position on the global stage. However, a more comprehensive approach is required, focusing on improving infrastructure, fostering economic ties, and harmonizing policies. Only then can Nigeria truly harness the transformative power of the AfCFTA and assume its rightful role as a pivotal player in African trade.
In light of the prevailing trade challenges, Nigeria stands at a crossroads. It must seize the opportunity to recalibrate its approach, transforming itself into a beacon of intra-African commerce, while recognizing the urgency of infrastructure development and deepening economic integration across the continent. Failure to do so risks relegating Nigeria to the sidelines of a transformative trade agreement that promises immense potential for economic growth and prosperity across Africa.
