Four months after Nigeria commenced its participation in the African Continental Free Trade Area under the Guided Trade Initiative, Nigerian exporters have raised concerns that the ongoing foreign exchange crisis is hampering their full engagement with the platform, which represents a market with a collective Gross Domestic Product of $3.4 trillion.
In July, the Federal Government, through the Nigeria African Continental Free Trade Area Coordination Office, announced that 10 Nigerian companies were selected to export various locally made products to countries across East, Central, and North Africa.
This initiative was seen as a major step in bolstering Nigeria’s non-oil exports and strengthening its foothold in the AfCFTA market.
The National Coordinator of the Nigeria AfCFTA Coordination Office, Olusegun Awolowo, officially disclosed this during the AfCFTA Nigeria’s inaugural shipment ceremony under the Guided Trade Initiative framework in Lagos.
In his statement, he highlighted the significance of the occasion and what it symbolized for the country’s export sector.
“The companies are 10 in number, and over the next few days, weeks, and months, they will be exporting Nigerian products to five countries across East, Central, and North Africa,” Awolowo declared, stressing the importance of the companies setting a new standard for other local exporters to emulate.
He listed some of the companies participating in the initiative, including Le Look Nigeria Limited, exporting bags to Kenya; Secure ID Limited, exporting smart cards to Cameroon; Dangote exporting clinker to Cameroon; and Avila Naturalle, which exports black soap and shea butter to Kenya.
These companies were carefully selected to represent Nigeria’s diverse range of homegrown products.
However, the foreign exchange crisis has proven to be a significant barrier for these businesses. Mrs. Chinwe Ezenwa, the CEO of Le Look Nigeria Limited, one of the firms involved in the inaugural export project, revealed that rising logistics costs, driven by the forex crisis, have been a primary challenge.
“The challenges have been logistics. I mean, in the cost of freighting, it is a lot of money to freight because, you know, every airline, because of forex, has to increase their cost, and that has been affecting the process,” she explained.
Ezenwa further elaborated on the impact of this crisis on her operations. She had initially planned to export 20,000 school bags, but has only managed to ship 5,000 so far, due to the exorbitant cost of freight.
“Since the launch in July, I have been able to export over 5,000 bags and I have also established a warehouse in Kenya. So that is a very big plus for me. I have also located a willing partner in Kenya, that is because of AfCFTA,” she noted.
She emphasized that the forex issue had prevented her from meeting her export target, stating, “If not because of the forex issue, I am supposed to have exported more than 15,000 to 20,000 bags because these are school bags.”
To address these challenges, Ezenwa urged the government to provide more support for Small and Medium Enterprises by offering accessible loan facilities at favorable interest rates.
“The way forward is to continue to create more awareness and also to continue to get the government to assist SMEs in any way they can by providing single loans that can assist do some of these things that are like a challenge to us,” she advised.
Echoing similar sentiments, the Director-General of the African Centre for Supply Chain, Dr. Obiora Madu, also pointed out deeper structural issues affecting Nigeria’s participation in AfCFTA.
In a recent interview, Madu criticized the slow pace of export growth and pointed to the lack of a robust export culture and limited capacity among many Nigerian businesses.
“It’s not the lack of opportunities, but rather an absence of an export culture and knowledge,” Madu remarked, urging for greater education and infrastructure to support the country’s exporters in seizing the vast opportunities that AfCFTA presents.
