Struggles at the Border: Obstacles blocking Nigeria's aims for international trade expansion
In a bid to boost its non-oil exports and establish itself as a competitive global player, Nigeria is addressing three major hurdles that have long obstructed its ambitions. These hurdles include a hyper-focus on consumer goods, underutilised trade blocs, and inadequate infrastructure.
Firstly, Nigeria's non-oil export sector shows a "gross imbalance" favouring consumer goods such as biscuits and soaps over value-added goods like processed palm oil and cocoa powder, and capital goods like machinery for production. To tackle this, Nigeria needs to invest in processing capacity and capital goods to increase the production of value-added products.
Additionally, supporting Small and Medium Enterprises (SMEs) in upgrading technologies to meet stringent international compliance standards is crucial. For instance, investing in steam sterilisation equipment required for exports to Europe could be a game-changer. By leveraging trade opportunities such as duty-free access in foreign markets, Nigeria can increase the volume and quality of value-added exports rather than relying heavily on consumer goods.
Secondly, Nigeria has yet to fully utilise regional and international trade blocs to boost its non-oil exports. Strategies to address this include harmonising trade policies and regulatory frameworks within trade blocs to simplify cross-border trade, enhancing cooperation with neighbouring countries to facilitate smoother customs processes, and promoting informational campaigns and technological adoption to better integrate Nigerian exporters into these trade blocs and regional value chains.
Lastly, inadequate infrastructure severely limits export capacity and efficiency, especially at customs and logistics points. Investing in modern customs infrastructure and streamlining export procedures, developing reliable transport networks, and implementing efficient data-gathering and documentation systems are key to addressing these issues. Encouraging government collaboration among agencies to harmonise policies and provide a conducive business environment is also essential.
Omowumi Omidiji, a member of She Trades by ITC and eTrade for Women by UNCTAD, is at the forefront of these changes. As the founder of SOUQ OS, a B2B cross-border supply chain management platform, she is working tirelessly to reposition Nigeria as a competitive global exporter.
SMEs in Nigeria are reluctant to pay recurring fees in foreign currency for warehousing without guaranteed sales. To address this, platforms must devise innovative models to address the warehousing issue to avoid excluding many SMEs.
On a positive note, Nigeria exported around $5 billion worth of non-oil exports in 2024, compared to Mexico and China's over $500 billion and $400 billion, respectively. Payment services from U.S. accounts directly to Nigerian vendors are being offered by startups like Raenest, a promising sign of progress.
In a significant move, the Moonshot event by SOUQ OS website is returning to Lagos on October 15-16, featuring Africa's top founders, creatives, and tech leaders. Early bird tickets are available with a 20% discount.
With strategic investments in value addition, full activation of trade blocs, and upgrading infrastructure, Nigeria can overcome its major hurdles to non-oil export growth and progressively realize its global trade ambitions.
- To complement its global trade ambitions, Nigeria needs to invest in processing capacity and capital goods for value-added products like processed palm oil and cocoa powder, and machinery for production.
- By supporting Small and Medium Enterprises (SMEs) in upgrading technologies to meet international compliance standards, Nigeria can seize duty-free access opportunities in foreign markets and export higher-quality, value-added goods.
- To boost non-oil exports, Nigeria should harmonize trade policies, enhance regional cooperation, and encourage technological adoption within trade blocs to better integrate Nigerian exporters into global value chains.
- Addressing inadequate infrastructure, especially at customs and logistics points, is crucial for increasing export capacity and efficiency. Key actions include investing in modern customs infrastructure, developing reliable transport networks, and streamlining export procedures.
- SMEs in Nigeria are often reluctant to pay for warehousing due to unguaranteed sales. Platforms like SOUQ OS must innovate and devise new warehouse models to accommodate SMEs without excluding them from opportunities.
