• Sunday, May 19, 2024
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What to know as Nigeria prepares to enter the AfCFTA Guided Trade Initiative

Perspective: Why Africa needs to embrace the AfCFTA

Nigeria’s preparation to commence trade under the African Continental Free Trade Agreement’s (AfCFTA) Guided Trade Initiative (GTI) marks a significant milestone in its journey towards deeper economic integration with other African nations. This engagement signals a robust commitment to the AfCFTA, underscoring the country’s potential role in catalysing intra-African trade.

The GTI, introduced as a strategic framework to operationalize and accelerate the implementation of the AfCFTA, aims to systematically connect businesses and products for export and import across the continent. Launched in Ghana in 2022, this initiative seeks to facilitate the start of trading under the AfCFTA’s preferences among state parties that meet certain readiness criteria.

The first phase of GTI participation saw countries like Rwanda and Kenya successfully exporting goods under the agreement, showcasing the initiative’s capability to bolster trade relations within Africa. The inclusion of Nigeria in the next phase of the GTI is a welcomed development, reflecting its substantial role in African trade dynamics.

However, the transition towards effective AfCFTA participation necessitates a thorough examination of Nigeria’s current trade relations within the continent, as well as the identification of strategic measures to enhance its trade infrastructure and regulatory frameworks.

Q: “The inclusion of Nigeria in the next phase of the GTI is a welcomed development, reflecting its substantial role in African trade dynamics.”

Nigerian trade with African nations is still below pre-Covid levels

Recent data from the National Bureau of Statistics (NBS) reveals that Nigeria’s trade volumes with other African countries have yet to surpass pre-COVID-19 levels, despite the formal adoption of the AfCFTA in 2021. This slow recovery, with trade figures for 2023 showing only a partial rebound from the pandemic’s impact, underscores the challenges faced in maximising the benefits of the AfCFTA framework. Specifically, while exports have shown a degree of recovery, import volumes remain below pre-pandemic figures, partly attributed to Nigeria’s ongoing foreign exchange crisis.

Further analysis indicates that the Economic Community of West African States (ECOWAS) remains a crucial trade partner, accounting for a significant portion – about 52 percent – of Nigeria’s intra-African trade. This highlights the importance of regional trade blocs in facilitating Nigeria’s broader engagement under the AfCFTA. Despite trade nearing pre-COVID export levels to ECOWAS countries, Nigeria’s imports from these nations have not fully recovered, pointing to the need for targeted interventions to enhance trade balance and economic cooperation.

Critical needs for successful AfCFTA implementation
To fully harness the opportunities presented by the GTI and AfCFTA, Nigeria must address several critical areas, including the optimisation of its logistics and regulatory environments. The logistics sector, essential for the smooth operation of international trade, faces numerous challenges stemming from a complex and cumbersome regulatory landscape. This environment hampers efficiency and innovation, with particular obstacles in the courier services segment due to multifaceted licensing requirements and burdensome taxation structures. A streamlined and comprehensive regulatory framework is imperative to unlock the sector’s potential, facilitating smoother trade flows and economic growth.

Infrastructure development remains another pivotal area for strategic investment. Ambitious projects, such as the Nigerian Ports Authority’s $1 billion port rehabilitation plan and the development initiatives for Snake Island, Burutu, and Badagry Deep Seaport, signify a commitment to enhancing Nigeria’s trade facilitation infrastructure. These projects, aimed at expanding port capacities and improving accessibility for larger vessels, are critical for elevating Nigeria’s position as a key trade hub in Africa. However, the realisation of these projects, amidst funding challenges, requires concerted efforts from both the government and private sector to ensure timely and effective implementation.

In conclusion, as Nigeria steps into the next phase of its AfCFTA journey through the GTI, a multi-faceted approach encompassing regulatory reform, infrastructure development, and strategic partnerships within ECOWAS and beyond is essential. Prioritising these areas will not only facilitate Nigeria’s recovery to pre-pandemic trade levels but also position the country as a leading force in the realisation of the AfCFTA’s vision for a unified and economically integrated African continent. The progress made thus far by the government and the national action committee in activating Nigeria’s role within the AfCFTA is commendable. Nevertheless, continued diligence and strategic planning are necessary to overcome existing challenges and fully leverage the transformative potential of intra-African trade.