Nigeria’s Economic Struggles Cast Shadows on AfCFTA Success

In 2020, Nigeria enthusiastically embraced its membership in the African Continental Free Trade Area (AfCFTA), envisioning a future filled with economic benefits. However, as macroeconomic challenges loom, the nation faces potential setbacks in leveraging AfCFTA, as reported by Infostride News.

The Guided Trade Initiative (GTI) of AfCFTA, launched in Accra, Ghana on October 7, 2022, aims to facilitate meaningful trading among participating countries and evaluate the operational, institutional, legal, and trade policy environment under the AfCFTA. Notably, Nigeria is absent from the eight countries engaged in the GTI, raising concerns about the nation’s preparedness to capitalize on the massive opportunities presented by AfCFTA.

Despite Nigeria’s initial optimism, recent macroeconomic hurdles have cast doubt on its ability to position itself strategically within the AfCFTA framework. The nation’s economy, between 2020 and 2023, has grappled with hyperinflation, escalating interest rates, foreign exchange scarcity, and an enduring energy crisis. Multinational companies have been exiting the country, with at least five halting production in the past 10 months, as manufacturers adopt last-minute strategies to navigate the economic turbulence.

The AfCFTA, designed to create a continent-wide market encompassing 54 countries with a combined GDP of $3.4 trillion and 1.3 billion people, could potentially yield substantial benefits, including job creation, economic growth, and poverty reduction. However, Nigeria’s current economic challenges have raised questions about its readiness to fully exploit the advantages of AfCFTA.

Exporters, represented by the Chairman of the Manufacturers Association of Nigeria’s Export Group, Odiri Erewa-Meggison, underscore the need for Nigeria to address impediments hindering participation in AfCFTA. These challenges include weak competitive ability, high production costs due to infrastructural deficiencies, exorbitant energy prices, elevated borrowing costs, insufficient credit allocation for private sector investment, and security concerns.

The Nigeria Export Promotion Council reported a 39.91% growth in non-oil exports in 2022, reaching $4.820 billion. However, Nigeria still lags behind other African countries in non-oil exports, as South Africa, Kenya, Madagascar, Lesotho, and Ghana dominated the 2022 non-oil AGOA exports. The African Growth and Opportunity Act (AGOA), a US trade initiative, provides African nations, including Nigeria, with favorable terms for exporting non-oil goods to the United States.

While Nigeria’s non-oil export figures indicate progress, the nation must address critical issues to compete effectively on the global stage. The urgency to enhance competitiveness, streamline regulatory processes,