Nigeria is missing out on valuable opportunities to earn foreign currency by failing to leverage free trade agreements effectively, trailing behind regional peers in boosting non-oil exports.
Despite 24 years of the African Growth and Opportunity Act (AGOA), which allows over 6,000 products to be exported duty-free to the US until 2025, Nigeria has yet to significantly increase its exports to the world’s largest economy.
In contrast, countries like South Africa, Kenya, Madagascar, Lesotho, and Ghana accounted for 90 percent of non-oil AGOA exports in 2022.
Nigeria’s exports remain dominated by crude oil, with non-oil exports stagnating and primarily consisting of a few agricultural products and handicrafts.
This weak performance under free trade agreements limits Nigeria’s ability to earn foreign exchange amid an acute dollar scarcity, which has severely impacted the naira and the economy.
“We have failed to utilize our free trade agreements to grow our non-oil exports because we have never been intentional and have no export culture,” said Obiora Madu, an export consultant and director-general of the African Centre for Supply.
Madu emphasized the need for the government to foster an export culture and build capacity to boost non-oil exports and take full advantage of free trade opportunities.
Madu urged the government to move beyond discussions on diversifying the economy to implement actionable strategies that deliver results.
The African Continental Free Trade Area (AfCFTA), which offers a $3.4 trillion market opportunity, has also been underutilized by Nigerian manufacturers due to a lack of competitiveness.
Sada Ladan Baki, chairman of the export group at the Lagos Chamber of Commerce and Industry (LCCI), attributed the failure to maximize trade agreements to the government’s focus on crude oil and a lack of coherent export policies.
“We are not maximizing our free trade exports because we have failed to look beyond oil revenue,” he said.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise (CPPE), identified competitiveness as the major challenge.
“Lack of competitiveness is why most manufacturers are inward-looking and more dependent on domestic than international markets,” Yusuf explained.
He noted that high production costs hinder Nigeria’s ability to make a significant impact in non-oil exports, with primary product exports continuing to dominate.
Without a robust and ambitious export policy, Nigeria struggles to harness opportunities in AGOA and AfCFTA, leaving the country lagging behind its regional peers and missing out on crucial foreign exchange earnings.
