Emmanuel OchayiNigeria’s Trade Performance
Nigeria has emerged as the fourth-largest contributor to intra-Africa trade in 2023, trailing behind South Africa, Cote d’Ivoire, and Egypt, according to the Africa Trade Report 2024 by the Africa Export-Import Bank.
The report, titled “Climate Implications of the AfCFTA Implementation,” revealed a 2.1% decrease in Nigeria’s intra-Africa trade, dropping to $8 billion from $8.2 billion in the previous year.
Join our WhatsApp Channel“This slight decline has impacted Nigeria’s share of total intra-Africa trade, reducing it to about 4.2% from 4.4% in 2022. Despite this, Nigeria remains a key player in intra-Africa trade,” the report stated.
Approximately 5.1% of Nigeria’s exports are directed to African countries, with Cote d’Ivoire, South Africa, and Senegal being the top destinations. However, Nigeria’s imports from the continent remain low, making up less than 2.9% of its total imports.
Top Trading Partners
According to the National Bureau of Statistics, Nigeria’s top five trading partners for imports in the last quarter of 2023 were Singapore, China, Belgium, India, and the United States.
Imports from these countries amounted to N9.72 trillion, with Singapore leading at N5.09 trillion.
Growth in Intra-Africa Trade
The report highlighted a 3.2% increase in the value of intra-Africa trade in 2023, reaching $192.2 billion compared to a 10.9% growth rate in the previous year.
The Afreximbank estimated the export potential to have exceeded $69.4 billion in 2023.
“This projection could elevate the current level of intra-Africa trade to $261.6 billion, potentially representing 36% of total intra-Africa trade, assuming all other conditions remain constant,” the report projected.
Key products with high export potential within Africa include machinery, electricity, motor vehicles, food products, minerals, chemicals, and fertilizers.
READ ALSO: ECA Predicts $195bn Intra-Africa Trade On AfCFTA Implementation
Impact of AfCFTA
The implementation of the African Continental Free Trade Agreement (AfCFTA) since January 1, 2021, has boosted intra-Africa trade.
In 2023, three more countries ratified the agreement, bringing the total to 47. The seven countries yet to ratify it are Benin, Liberia, Libya, Madagascar, Somalia, South Sudan, and Sudan, with Eritrea being the only African Union member state that has yet to sign the agreement.
“AfCFTA is a crucial framework for enhancing trade within the continent,” the report noted. “It is based on legally implementable and reciprocal tariff schedules and concessions, with agreed rules of origin and customs documentation.”
Challenges and Opportunities
Despite the progress, the report indicated that Nigeria faces challenges, particularly in terms of its reliance on fossil fuels. Afreximbank expressed concerns over the potential economic impact of divestment from fossil fuels on Nigeria’s economy.
“For major oil-exporting countries like Nigeria, fossil fuels are a significant source of export earnings and fiscal revenue,” the report explained. “Divesting from fossil fuels could reduce Nigeria’s GDP by as much as $30 billion.”
The report also emphasized the need for African countries to diversify their economies and reduce dependency on fossil fuels, given the growing global emphasis on climate change and renewable energy sources.
Nigeria’s position as the fourth-largest contributor underscores its importance in the continent’s economic landscape.
However, the need for economic diversification and the challenges posed by fossil fuel dependency highlight the complex dynamics at play.
As AfCFTA continues to shape intra-Africa trade, countries like Nigeria must navigate these challenges to sustain and enhance their performance within the continent.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
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