Nigeria’s AfCFTA push: unlocking trade potential amid challenges

Nigeria is moving boldly into the African Continental Free Trade Area (AfCFTA), cutting tariffs, expanding digital trade, and investing heavily in infrastructure.

The potential is massive. The World Bank estimates AfCFTA could lift 50 million Africans out of extreme poverty and boost regional trade by billions of dollars. Yet, Nigeria’s progress is tempered by logistical bottlenecks, regulatory barriers, and the need for stronger trade facilitation.

In today’s feature, we examine how Nigeria’s AfCFTA strategy is unfolding—highlighting key reforms, infrastructure commitments, and the challenges that could determine whether the country fully capitalizes on Africa’s evolving single market.

This edition is coming behind schedule. As a result, the round up covering major news items on Nigeria’s economy and business environment will now come tomorrow, as I work to maintain the editorial rhythm of delivering a deep dive and a round-up every week.

It’s a Monday holiday and it’s just past 6pm as I hit send on this newsletter. Let’s dive in.

Samuel Okocha, Editor, 234 Digest here.

Nigeria is advancing its integration into the African Continental Free Trade Area (AfCFTA), eliminating tariffs and expanding digital infrastructure to strengthen trade competitiveness. But logistical hurdles, regulatory barriers, and SME readiness remain critical challenges.

Balancing protection and openness

Nigeria was initially hesitant about AfCFTA. When the agreement was first introduced, manufacturers and labour unions worried that local industries could struggle against lower-cost imports from more competitive neighbours.

After months of debate, President Muhammadu Buhari signed on in 2019, promising to protect Nigerian businesses while opening new trade channels. Since then, Nigeria has set up a special AfCFTA committee focused on export diversification, regulatory reforms, and digital trade, aiming to keep local industries competitive in Africa’s evolving single market.

Nigeria’s approach aligns with broader projections about AfCFTA’s transformative impact. According to the World Bank’s AfCFTA report, the agreement represents the world’s largest free trade area by country count, connecting 1.3 billion people across 55 nations with a combined GDP of $3.4 trillion.

If fully implemented, AfCFTA could lift 50 million Africans out of extreme poverty and increase Africa’s collective income by $450 billion by 2035—a 7 percent boost to the continent’s economy. Notably, $292 billion of these gains would come from stronger trade facilitation, highlighting the urgency of reducing red tape and simplifying customs procedures.

For West Africa, the impact is expected to be particularly pronounced. The region is projected to see the sharpest decline in extreme poverty, with 12 million people lifted out of poverty—over a third of the total impact across Africa.

Tariff breakthroughs and new opportunities

In April, Nigeria submitted its ECOWAS Tariff Offer to the AfCFTA Secretariat, eliminating duties on 90% of goods traded within Africa. The policy covers everything from textiles and cosmetics to agro-processed foods and manufactured goods.

“This strengthens our role in shaping African trade and unlocks new opportunities for businesses and exporters,” Nigeria’s government stated following the announcement at the AfCFTA Council of Ministers meeting in Kinshasa.

Minister of Industry, Trade and Investment Jumoke Oduwole described the move as a show of confidence in Nigeria’s entrepreneurial capacity. She added, “We welcome businesses into our single market and look forward to bringing Nigerian products to new shores.”

Bottlenecks of infrastructure and logistics

Despite tariff eliminations, Nigeria’s trade still faces structural barriers. The country ranks near the bottom on the World Bank’s Logistics Performance Index, with port congestion, poor roads, and inconsistent regulations slowing commerce.

SMEs—which comprise over 90 percent of Nigerian businesses—encounter high costs when transporting goods due to inadequate infrastructure. Bolaji Sofoluwe, managing director at ETK Group, stressed that logistics inefficiencies remain a significant obstacle to growth.

“Transporting goods and services across Africa can be a very expensive business,” Sofoluwe told CNBC Africa in an interview in February.

“There’s so much work to do around infrastructure and the cost of moving goods across the continent. There’s a broader conversation to be had about investing in this much-needed sector to see more of these good news stories.”

To address these gaps, Nigeria has committed to invest ₦5.9 trillion in infrastructure that includes new road and rail projects. It has also opened the continent’s first Afreximbank African Trade Centre in Abuja, designed to streamline logistics, financing, and trade services.

AfCFTA air corridor and digital trade leadership

Nigeria is also tackling logistics by air. In May, the country launched a dedicated AfCFTA air corridor, under the African Continental Free Trade Area framework., linking Nigerian exports to Uganda, Kenya, and South Africa.

Exporters are expected to see shipping costs drop by 50 to 75%. The inaugural flight, operated by Uganda Airlines, featured products from women-led exporters, highlighting Nigeria’s focus on inclusive trade.

On the digital front, Nigeria is emerging as a regional leader. The African Union recently named Nigeria AfCFTA’s Digital Trade Champion for its role in developing Africa’s first Digital Trade Protocol—a framework for e-commerce, fintech, and digital services across borders.

Nigeria is also committing $2 billion to digital infrastructure, with plans to lay 90,000 kilometers of fiber optic cable and install 7,000 telecom towers beginning in Q4 2025, creating a more seamless digital marketplace for businesses.

Sofoluwe believes Nigeria’s next growth frontier lies in "invisible exports"—services that do not rely on traditional logistics infrastructure but instead leverage digital platforms.

“With the investment going into tech, we’re beginning to see the enhancement of these skills in the sector,” she says, noting that Africa's digital economy could provide high-value trade opportunities without immediate reliance on large-scale physical infrastructure.

"There needs to be a lot more emphasis on digital trade services and all the invisible exports that are high value, that don't depend on that hard infrastructure that's very much needed."

Nigerian fintech Fincra is already capitalizing on this shift. The company recently secured a payment service provider license in Tanzania, its third East African market, further enabling it to expand financial infrastructure for businesses.

Export growth and market Intelligence

Meanwhile, Nigeria’s AfCFTA-driven trade expansion is showing results. Non-oil exports hit a record $5.46 billion in Q1 2025, up 21% year-on-year.

According the Nigerian Export Promotion Council, exports to ECOWAS jumped 223%, and exports to other African countries reached $32.7 million.

The AfCFTA deal is expected to attract foreign direct investment, bringing in capital, technology and skills to boost living standards and reduce Africa’s reliance on volatile commodity exports, according to the World Bank.

For investors, Nigeria’s role as a West African trade hub offers them a gateway to a vast, integrated market with a more predictable regulatory environment.

To help businesses, Nigeria launched an AfCFTA Market Intelligence Tool, offering real-time data and tariff schedules to guide exporters.

“For businesses to thrive, they must be equipped with the right knowledge and insights,” says Nonye Ayeni, Executive Director of the Nigerian Export Promotion Council.

Looking ahead

Nigeria’s AfCFTA journey is gaining traction, with reduced trade costs, stronger digital integration, and a projected drop in poverty. But sustaining this momentum will require infrastructure upgrades, streamlined policy, and SME support.

“Nigeria is open for business,” Oduwole says. “The gazetting and transmission of the ECOWAS schedule of tariffs to the AfCFTA Secretariat signals Nigeria’s readiness for trade under the agreement.”

Africa’s single market is expanding—but Nigeria’s success will depend on how effectively it executes its trade strategy.