People & Money

AfCFTA: The Threat to Nigerian Firms and Jobs

The African Continental Free Trade Area (AfCFTA) came into effect in January 2021 thus creating a single market of almost a billion people and over 50 countries with a combined gross domestic product of almost $3 trillion.

AfCFTA could boost Africa’s GDP by $500 billion over the next 50 years. Apart from boosting growth through increased intra-African trade, AfCFTA provides an opportunity to improve domestic competitiveness and raise the continent’s share of global trade, valued at $19 trillion (in 2019). If Africa increases its share of world trade from the current 3% to 4%, the 1% rise would generate additional income every year that’s greater than the total annual inflow of development aid, about $145 billion per annum.

Arbiterz is organising a webinar: Revamping Nigeria’s Infrastructure for Global Trade, on Tuesday, 25th of May to discuss how Nigeria can take advantage of the African Continental Free Trade Area to boost investment and boost foreign exchange earnings and generate jobs.

(Please, register to attend here

The popular rhetoric of regional economic integration emphasizes the benefits to participating countries but the economic reality is that integration projects could result in losses of jobs and investment for some countries and gains for others. For Nigeria, the AfCFTA is both a threat and an opportunity.

Africa’s largest economy has the advantage of a large market of around 200 million people and decades of experience exporting to the rest of the West African sub-region. But Nigerian companies could lose domestic and regional markets to more competitive firms from countries like Morocco, South Africa and Kenya in key manufactured and agricultural products as AfCFTA is implemented. These economies are more industrialised and more export-oriented. They pose a clear threat to Nigerian firms and jobs.

While Nigeria’s exports consist overwhelmingly of oil (87%), Morocco’s top five exports are Electrical machinery and equipment (18.1%), Vehicles (13%), Fertilizers (9.9%), Clothing accessories (8.3%) and Inorganic chemicals (4.9%). Morocco also has substantial agricultural exports such as fish, vegetable, fruits, and nuts.

South Africa’s main exports are platinum (9.3%), motor vehicles (7.5%), iron ores (6.5%), coal and similar solid fuels (5.3%) and gold (5.2%) while Kenya exports is dominated by cut flowers, fruits, nuts, vegetables, tobacco etc.

It’s always been recognised that trade rather than aid is the answer to boosting growth and reducing poverty in Africa but the discussion about increasing Africa’s share of global trade is often centred on reducing external barriers to African products. The Arbiterz webinar will look at the internal barriers to boosting Nigerian exports – physical infrastructure as well as key economic policies that support competitiveness and enhance export capacity.

A Nigerian top manager with an international logistic firm in the Middle East comments, “The African countries you mentioned have a fantastic last mile infrastructure in air cargo operations which enhance their business opportunities with other countries. We can’t compare to any of the regional players such as Kenya, Morocco, Egypt and South Africa in terms of last-mile linkages to the outside world or to other countries even within the African region. These linkages include our airport facilities, the road links to the airport etc. Ghana has a massive cold storage facility at its airport, and so does Kenya so it is easy to export produce. We lack such facilities and that’s why are not competitive in any way”.

Dominant economies in regional economic integration projects such as the European Union invest in boosting the capacity of less dynamic or poorer members to “correct imbalances” between regions. AfCFTA creates the paradox that Nigeria, Africa’s largest economy, is less competitive and faces the prospect of losing jobs as other African countries increase exports to the country.

Nigeria cannot expect compensation payments from more dynamic African economies. Hence, AfCTA should make it more urgent for Nigeria to initiate wide-ranging reforms that boost domestic productivity and transform many domestic sectors into exporting industries. This would not only improve the welfare of citizens but also make Nigeria a powerful driver of economic growth on the continent.

The event will be an interactive conversation between policymakers, exporting conglomerates, SMEs and financiers and investors in infrastructure with a view to generating ideas on new ways to build, finance and maintain export-critical infrastructure. It will underscore the potential of infrastructure-related policy reforms to diversify and boost Nigeria’s exports, create jobs and reduce poverty.

Attendees have the opportunity to send questions to the panelists ahead of the event about a range of topics related to the AfCFTA and how soft and hard export-related infrastructure affect Nigeria’s capacity for local, continental and global trade.

 Please, send your questions to

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