INTRA-AFRICAN TRADE VOLUME ON A DECLINE DESPITE AFCFTA

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In a concerning trend, Nigeria’s trade volume with other African countries has continued to decline despite the implementation of the African Continental Free Trade Area (AfCFTA) over two years ago. In the first quarter of 2023 (Q1 ’23), Nigeria’s trade volume with African nations fell by 11.95 percent year-on-year; reaching N842.6 billion, down from N956.93 billion in Q1 ’22. This decline is in stark contrast to the significant increase in trade between Nigeria and China, which reached $5.4 billion during Q1 ’23 and an impressive $23.9 billion in 2022.

AfCFTA, which was designed to promote integration, facilitate trade and investment, enhance labor and capital mobility, support industrialisation, and boost the services sector within Africa, has not yet yielded the expected results. Nigeria’s trade volume with other African countries accounts for just around 6.99 percent of its total foreign trade; far below the potential.

Experts have suggested that AfCFTA could potentially increase intra-African trade by 33 percent and reduce the continent’s trade deficit by 51 percent. However, data reveals that Nigeria’s intra-African trade has been steadily decreasing since 2021, when AfCFTA was initiated.

One of the key factors contributing to this decline is Nigeria’s decision to keep its land borders mostly closed to neighboring countries for the past three years, which goes against the spirit of AfCFTA that seeks to simplify cross-border trade across Africa.

To address these issues, Nigeria has committed to joining the second batch of the Guided Trade Initiative (GTI), which aims to enable meaningful trading under AfCFTA and test its operational feasibility. So far, only eight countries are participating in GTI.

Furthermore, Nigeria’s top export destinations in Q1 ’23 were non-African countries; with the Netherlands, the United States, Spain, France, and India ranking as the top five. No African country made it to the top 10.

In terms of imports, China leads the way; accounting for 23.32 percent of Nigeria’s total imports. This highlights the disparity between Nigeria’s trade with African nations and non-African partners.

Blessing Irabor-Oza, President of the Organisation of Women in International Trade (OWIT), pointed out that factors such as poor infrastructure, border inefficiencies, bureaucratic hurdles, customs delays, and security issues have hindered trade integration for Nigeria.

Additionally, the lack of stability, peace, and good governance in many African countries is undermining AfCFTA’s objectives. Regulatory and non-tariff barriers continue to impede the exchange of goods and services; making it challenging for Nigerian businesses to access new markets within Africa.

To fully realize the potential of AfCFTA, the organisation suggested that Nigeria should diversify its export base, promote domestic industries, invest in innovative sectors, and address non-tariff barriers and infrastructure gaps. Regional integration is considered key to fostering cooperation and overcoming trade barriers in Africa.

 

 

 

 

 

 

 

 

 

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