AfCFTA: Freight Cost, Forex Crisis Threaten Nigerian Exporters’ Participation

Nigerian exporters are currently facing challenges arising from the country’s foreign exchange crisis and freight cost, four months after launching its participation in the African Continental Free Trade Area (AfCFTA).

The AfCFTA initiative, which aims to foster trade across Africa, represents a combined Gross Domestic Product of $3.4 trillion.

In July, the Nigerian Federal Government announced that 10 companies would export various locally-made products to East, Central, and North African countries.

The national coordinator of the Nigeria AfCFTA Coordination Office, Segun Awolowo highlighted that, freighting costs are one of the challenges of exporting Nigeria products, adding that, as Nigeria continues to engage in AfCFTA, it will be crucial to address the bottlenecks to maximise the benefits of increased trade within Africa.

He said 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.

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Awolowo stated that, among the participating companies are: Le Look Nigeria Limited, which will export bags to Kenya; Secure ID Limited, exporting smart cards to Cameroon; and Dangote, sending clinkers to Cameroon. Avila Naturalle will export black soap and shea butter to Kenya.

However, CEO of Le Look Nigeria Limited, Chinwe Ezenwa expressed concerns over the high freight costs driven by the forex crisis stating that “The challenges have been logistics. The cost of freighting has increased significantly due to forex issues, affecting our export volume,” she said. She reported exporting only 5,000 bags instead of the anticipated 20,000 since the launch. Despite this setback, Ezenwa established a warehouse in Kenya and partnered a local distributor, thanks to the opportunities provided by AfCFTA.

To support exporters, Ezenwa called on the government to provide better loan facilities for SMEs, noting that, “the way forward is to create more awareness and seek government assistance in providing loans at favourable interest rates to overcome these challenges.

Director general of the African Centre for Supply Chain, Dr. Obiora Madu criticised the slow progress of Nigeria’s trade initiatives, emphasising that the barriers to trade are rooted in a lack of export culture and limited skills among potential exporters.

‘It’s not the lack of opportunities, but rather an absence of an export culture and knowledge,’ Madu noted.

As Nigeria continues to engage in AfCFTA, addressing these challenges will be crucial for maximising the benefits of increased trade within Africa, experts suggested.