The value of Nigeria’s trade with the African continent expanded by 21.7 percent to $9.65 billion in 2021, up from U$7.93 billion in 2020.
Nigeria’s share of total intra-African trade increased slightly in 2021 to about 5.7 percent from 5.5 percent in 2020, raising its overall standing as the third largest intra-African trading nation in 2021, according to the 2022 Africa trade report by the African Export-Import Bank.
About 7.8 percent of Nigeria’s exports are to African countries, with South Africa, Togo, and Côte d’Ivoire being the top three destinations of Nigerian exports to the rest of the continent.
Nigeria’s imports from the rest of the continent remained relatively low, accounting for less than 3.3 percent of its total imports.
Crude oil still dominates Nigeria’s export to the rest of Africa, but the composition of its cross-border trade is changing.
Although only 3 percent of total imports into Nigeria emanate from the continent, historically, there has been a thriving informal cross-border trade in light manufactured products and agricultural commodities within the Economic Community of West African States region and with neighboring countries in Central Africa (Afreximbank, 2020).
Nevertheless, Nigeria’s decision to close its land borders with neighboring country Benin—to curb smuggling and increase production and self-sufficiency in commodities such as rice—likely affected the volume of informal trade during the review period.
Côte d’Ivoire’s imports from the rest of the region are mostly crude oil from Nigeria, which is refined and exported to regional trading partners like Mali and Burkina Faso, which are also Côte d’Ivoire’s top trading partners on the continent.
In Southern Africa, South Africa imports about 40 percent of its crude oil from the continent, 63 percent of which comes from Nigeria. Nigeria is the leading global supplier of crude oil to South Africa, ahead of Saudi Arabia.
In 2021, the value of intra-African trade reached US$169.73 billion after two years of consecutive declines.
The value of intra-African trade grew by 18.23 percent in 2021 compared with a decline of 7.33 percent in 2020. ExtraAfrican trade expanded even more than intra-African trade, reaching US$1.01 trillion with a growth rate of 29.54 percent in 2021, after the sharp decline in 2020 by 16.18 percent.
While the sharp decline in 2020 reflected the impact of containment measures on trade, the recovery of African trade in 2021 was driven by the strong and synchronized global recovery, the strengthening global demand, and the improving commodity terms of trade.
However, the aggregate value of Intra African Trade which expanded to reach US$169.73 billion in 2021 and accounted for about 14.4 percent of total African trade masks important regional variations.
Southern Africa which recoded the most impressive growth rate of post-pandemic with its trade with other countries around the region expanded by over 43 percent, consolidated its leading position as the main drive of intra-African trade, accounting for over 44 percent of total intra-African trade in 2021.
After registering the growth rate of 22.4 percent, West Africa also consolidated its position as the second intra-African trading sub-region, accounting for over 23.4 percent of total intra-African trade.
As the third intra-African trading subregion, North Africa accounted for about 12 percent. Contribution of Eastern and Central Africa to total intra-African trade are significantly much lower, 11 and 8 percent, respectively.
Developments in AFCFTA
One of the key achievements in ongoing efforts to boost intra-African trade in 2021 was the progress made in the implementation of the Africa Continental Free Trade Agreement (AfCFTA), which entered into force in January of that year.
While it was envisioned that trading would commence based on legally implementable and reciprocal tariff schedules and concessions, with agreed rules of origin and customs documentation, protracted negotiations on rules of origin meant that meaningful trade under the AfCFTA was delayed.
Notwithstanding, significant progress was achieved, with more than 87 percent of the rules of origin agreed. In addition, preparatory work for negotiations on trade in services, intellectual property, investment, and digital trade commenced.
At the time of writing the report, 42 countries have submitted their initial tariff offers, and 43 countries have submitted their initial services offers.
The year under review also witnessed compliance by eight additional African countries with domestic requirements for the ratification of the AfCFTA Agreement, with six countries depositing their instruments of ratification and becoming State Parties to the Agreement. The number of State Parties now stands at 41.
The year 2022 promises to be busy, with the commencement of tariff phasedowns and an increase in trade under the AfCFTA as remaining issues on rules of origin are resolved. Negotiations on trade in services are also expected to pick up pace as State Parties prepare for phase II negotiations.
Read the 2022 Africa trade report by African Export-Import Bank here : https://media.afreximbank.com/afrexim/Africa-trade-report-2022.pdf