• Wednesday, June 19, 2024
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BusinessDay

Nigeria’s intra-African trade shrinks further despite AfCFTA

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Nigeria’s trade with other African countries amounted to N1.305 trillion out of the N25.84 trillion worth of foreign trade recorded from January to June 2022, data from the National Bureau of Statistics(NBS) have revealed.

In the comparable period of 2021, the country’s intra-African trade was worth N1.47 trillion out of the total foreign trade of N21.79 trillion in that period. Also, trade with other African countries in the first six months of 2020 amounted to N1.67 trillion out of N14.55 trillion total foreign trade Nigeria recorded.

Further analysis of Nigeria’s external trade data with the rest of Africa, in comparison to the nation’s total foreign trade in the first half of the year from 2020 to 2022, showed a decreasing trend from 11.5 percent in H1 2020 to 6.7 percent in H1 2021 and 5.1 percent in H1 2022, implying a slow start to the recently signed African Continental Free Trade Area (AfCFTA).

“We are not making much progress with AfCFTA. It is because some countries have ratified the agreement but are yet to domesticate it. Some countries are accusing others of holding the lever at the AfCFTA Secretariat. There are problems with origins and destinations. For now, it is all talk but no actions,” Ade Adefeko, vice president, Olam Nigeria, said.

The AfCFTA was initiated to create a free trade area among the 55 countries on the African continent with a combined population of 1.3 billion people and GDP worth $3.4 trillion. According to the World Bank, the AfCFTA has the potential to lift 30 million Africans out of extreme poverty within a few years of its implementation.

The decline in intra-Africa trade was an odd one out as Nigeria recorded an 18.6 percent year-on-year growth in trade with other continents such as America, Asia and Europe. In the first six months of 2022, trade with America, Asia and Europe grew by 16.5 percent, 5.3 percent, and 43 percent year-on-year respectively. In contrast, trade with the rest of Africa declined by 11 percent during the same period.

“AfCFTA will not have a positive impact on Nigeria in the short to medium term. We might not realise the benefits of the regional trade agreement until our manufacturing sector is developed and competitive in terms of quality and pricing,” Moses Ojo, a Lagos-based economic analyst, said.

“For now, our major export is crude oil. African countries are not highly industrialised to the extent of consuming all the crude oil coming out of Nigeria. Only South Africa and some countries in North Africa are fairly industrialised on the continent. That is why the highly industrialised countries in other continents can accommodate all the crude oil that is coming out of Nigeria.”

Nigeria’s foreign trade data showed that the decline in intra-African trade emanated from the exports segment as the country’s exports to the rest of Africa declined from N1.38 trillion in H1 2020 to N1.03 trillion in 2021 and further to N908.04 billion in H1 2022.

Read also: LCCI to maximise AfCFTA for improved trade fair

On the contrary, imports from the rest of Africa rose from N292.95 billion in H1 2020 to N432.29 billion in H1 2021. However, it declined by 8.1 percent to N397.48 billion in H1 2022.

That was not the case with the American, Asian and European continents. Nigeria’s exports to America rose from N319.89 billion in H1 2020 to N1.03 trillion in H1 2021 and further to N2.09 trillion in H1 2022.

Nigeria’s trade with America is bound to surge as African Export-Import Bank (Afreximbank) organised the first-ever AfriCaribbean Trade and Investment Forum (ACTIF) earlier in September 2022.

“We stand at the cusp of history to open a well of opportunities for Africa and the Caribbean and to leverage our individual and collective strengths towards the attainment of our shared prosperity,” Benedict Oramah, president and chairman of the board of directors of Afreximbank, said at the inaugural ACTIF 2022.

Nigeria’s exports to Asia rose from N2.01 trillion in the first six months of 2020 to N2.98 trillion in H1 2021. Exports to Asia surged 72.7 percent to N5.14 trillion in the first six months of 2022.

Nigeria’s exports to Europe rose by 10.8 percent from N2.55 trillion in H1 2020 to N2.82 trillion in H1 2021. Exports to Europe witnessed a 124 percent rise to N6.33 trillion in H1 2022.

On the import segment, imports from America rose from N1.18 trillion in H1 2020 to N1.69 trillion in H1 2021. But it reduced to N1.19 trillion in H1 2022. Imports from Asia rose from N4.09 trillion to N6.79 trillion in H1 2021. It declined to N5.15 trillion in H1 2022. Imports from Europe rose to N4.78 trillion in H1 2021 from N2.61 trillion in H1 2020. But it fell to N4.53 trillion in H1 2022.

Nigeria’s trade with Oceania was the least among all the continents. It amounted to 0.8 percent in H1 2020, 0.6 percent in H1 2021 and 0.4 percent in H1 2022.

But Tunde Abidoye, head of research at FBNQuest, while arguing that this trend is not a defeat to AfCFTA, attributed Nigeria’s low trade with the rest of Africa to African countries’ level of industrialisation.

“Nigeria’s low trade with the rest of Africa is not a defeat to AfCFTA. It depends on the composition of trade. You would expect that western countries, namely USA, Europe and also Asian countries would likely be off-takers for most of Nigeria’s oil exports as oil constitutes some 80 percent of Nigeria’s exports by value,” Abidoye said, adding that African countries do not have the level of industrialisation to drive crude oil demand.