Despite its strategic size, historical leadership, and early advocacy for continental integration, Nigeria’s trade with other African nations continues to shrink, even as its overall trade volume surges. This paradox paints a troubling picture for the country’s role in the African Continental Free Trade Area (AfCFTA), a flagship African Union initiative that Nigeria once championed and is now struggling to benefit from.
In 2023, Nigeria’s total trade rose sharply by 37.2 percent to N71.9 trillion, up from N52.4 trillion in 2022, according to trade data compiled by the Nigerian Observer. Exports and imports were almost evenly matched at N35.96 trillion and N35.92 trillion, respectively, delivering a wafer-thin trade surplus of N44.77 billion. Yet, despite this massive trade expansion, intra-African trade accounted for just 6.4 percent, down from 6.5 per cent in 2022 and 7.5 percent in 2021, and far below the 13.9 percent recorded in 2019.
“The bigger problem lies in what Nigeria is exporting, as over 81 percent of its exports are crude petroleum and natural gas, with marginal contributions from refined products like urea. No agricultural commodity crossed the 1 percent threshold of total exports in Q4’ 2023.”
This steady decline raises serious concerns about Nigeria’s ability to extract value from AfCFTA, even as it remains one of the continent’s most vocal supporters of the agreement. It also underscores a deeper structural problem – Nigeria’s overdependence on crude oil exports, an underdeveloped industrial base, and a poor logistics and trade facilitation ecosystem.
At first glance, Nigeria’s trade performance with the rest of the world in 2023 appears impressive. The country posted surpluses with Europe (N4.08trn), the Americas (N2.57trn), Oceania (N67.84bn), and even Africa (N2.82trn). However, it recorded a staggering N9.48 trillion trade deficit with Asia, where China alone accounted for 35 percent of Nigeria’s total Asian imports.
Meanwhile, the dismal intra-African trade performance reveals Nigeria’s deepening integration with non-African markets while failing to build competitive linkages on the continent. Even within the Economic Community of West African States (ECOWAS), of which Nigeria is a founding member and the largest economy, trade remains shallow. In 2023, Nigeria’s total intra-African imports were N896.05 billion, but just N168.28 billion came from ECOWAS, while N727.77 billion came from the rest of Africa.
On the export side, ECOWAS fared better, accounting for 60.2 percent of Nigeria’s intra-African exports. Still, the overall numbers remain unimpressive when benchmarked against the country’s total trade volume.
The bigger problem lies in what Nigeria is exporting, as over 81 percent of its exports are crude petroleum and natural gas, with marginal contributions from refined products like urea. No agricultural commodity crossed the 1 percent threshold of total exports in Q4’ 2023. This export concentration not only limits diversification but also reduces Nigeria’s trade attractiveness within Africa, where other countries seek value-added goods and intermediate products.
Ironically, Nigeria was instrumental in shaping the very architecture of the AfCFTA. From the Abuja Treaty to the Lagos Plan of Action, Nigerian diplomacy was at the heart of the continental push for integration. As Nwaibu Legasorsi Nima of Nigeria’s Private Sector Alliance reminded delegates at the 13th AfCFTA Council of Ministers Meeting in Durban, Nigeria was central to the negotiation rounds, led by the late Ambassador Chiedu Osakwe.
Yet, five years after AfCFTA’s formal launch in 2021, Nigeria is more of a spectator than a beneficiary. While other countries such as South Africa, Kenya, Egypt, and Morocco are fast-tracking industrial zones, transport corridors, and trade-ready export sectors, Nigeria still battles infrastructural bottlenecks, FX volatility, and inconsistent trade policies.
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To reverse this downward trend in intra-African trade and unlock the opportunities of AfCFTA, Nigeria needs bold, coordinated policy reforms across the short, medium, and long term.
Simplify trade processes and documentation: Customs procedures, port logistics, and cross-border processes must be digitised, harmonised, and streamlined. The Nigerian Customs Service and other border agencies should align with the Pan-African Payment and Settlement System (PAPSS) and AfCFTA protocols.
Incentivise non-oil exports: The government should provide immediate incentives for exporters of agro-processed goods, textiles, machinery, and pharmaceuticals, sectors with real continental demand. Export credit guarantees, FX liquidity windows, and value-added tax rebates can help catalyse this shift.
Operationalise Special Economic Zones (SEZs): Nigeria must fast-track AfCFTA-ready industrial zones in key regions like Ogun, Kano, Aba, and Calabar, linking them to regional markets with upgraded transport and logistics infrastructure.
Rebuild manufacturing capacity: Nigeria must support SMEs and industrial clusters with reliable electricity, affordable finance, and backward linkages to agriculture. This will enable the production of competitive goods for African markets.
Invest in border and transport infrastructure: The Lagos-Abidjan corridor, Trans-Saharan routes, and West African rail networks need urgent investment to reduce trade costs and speed up delivery.
Support trade finance and insurance: Access to affordable trade finance remains a major constraint. Nigeria must partner with Afreximbank and domestic financial institutions to expand trade credit and insurance for African transactions.
Fully implement AfCFTA protocols: Nigeria should not only ratify but also domesticate AfCFTA agreements in law. This includes aligning standards, intellectual property rights, investment protection, and dispute resolution mechanisms.
Promote regional value chains: Rather than compete, Nigeria should co-develop supply chains with neighbours. For instance, processing cocoa with Ghana, textiles with the Benin Republic, or auto parts with Côte d’Ivoire.
Champion an Africa-first mindset: Trade diplomacy should prioritise African markets and institutions. Nigeria can lead a coalition to harmonise tariffs, promote local currencies, and deepen regional integration beyond mere trade.
Nigeria’s falling intra-African trade share is a wake-up call. It cannot afford to remain a passive participant in a game it helped start. The AfCFTA is not just a trade deal; it is a development blueprint for a post-oil Africa. For Nigeria, reclaiming its leadership means moving from talks to results, from potential to performance. The continent is waiting. Nigeria must rise to the challenge or risk being left behind.
