Despite initiating the African Continental Free Trade Area (AfCFTA), Nigeria’s intra-African trade has failed to meet expectations. In the first quarter of 2023 (Q1’23), the trade value declined by 11.95 percent year-on-year to N842.6 billion, compared to N956.93 billion in Q1’22.
The AfCFTA aims to facilitate the unrestricted movement of goods and services across African borders, bolstering the continent’s position in the global market. The International Monetary Fund (IMF) projects a 52.3 percent increase in regional trade by 2025.
However, despite more than three years since the AfCFTA’s commencement, Nigeria’s trade value with other African countries remains disproportionately low in relation to its total foreign trade. The National Bureau of Statistics (NBS) reported that Nigeria’s intra-African trade accounted for just 6.99 percent of its total foreign exchange (N12.047 trillion) in Q1’23, a decline from 7.4 percent in Q1’22.
On a quarter-on-quarter basis, Nigeria’s trade value with other African countries decreased by 24.87 percent to N842.6 billion in Q1’23, down from N1.122 trillion in Q4’22.
Examining the trade data breakdown, it is evident that Nigeria exported more than it imported, with export value increasing from N444.418 billion in Q1’22 to N665.10 billion in Q1’23, while imports decreased from N512.513 billion in the corresponding period of 2022 to N177.50 billion in Q1’23.
Further analysis reveals that the trade volume has declined since the start of AfCFTA in 2021. In 2020, Nigeria’s intra-African trade constituted 11.03 percent of its total foreign trade, which fell to 7.46 percent in 2021 and further dropped to 6.5 percent in 2022.
Commenting on this matter, Okiki Oladipo, a senior analyst at Parthian Partners, highlighted that despite the potential of the AfCFTA agreement, its implementation remains problematic due to inadequate infrastructure among African countries and economic ties issues.
Related News
“When agreements like this that cut across both Anglophone and Francophone countries become a thing, there are usually many barriers to be pulled down. Thus, African nations have struggled with optimizing the agreement.
“For Nigeria to be better positioned to milk the benefit, there is a need to promote industrialization in the country vis-a-vis fixing infrastructures that would aid optimal production cost.
“When this is done, Nigeria will become an export hub into other African countries, meeting the local content requirement while also exporting at a competitive price,” he said.
