Lagos, April, 22, 2025 – African countries should hasten the implementation of the African Continental Free Trade Area (AfCTA) to mitigate the effects of the US taariffs.
AfCTA is a free trade area being established in Africa to create a single market for goods and services across the continent, facilitating trade and economic integration among 54 of the 55 African Union nations.
This in one of the recommendations of April 2025 BACITI Economic Insight, a publication of The Bashir Adeniyi Centre for International Trade and Investment of the Nigerian Institute of International Affairs (NIIA) in Lagos.
The Centre also advised African countries to remove non-tariff barriers trade restricting them to export regionally.
It advised Nigeria, to particularly pursue bilateral trade facilitation agreements and tariff reductions with high-potential trade partners.
“These negotiations can unlock new market access opportunities for Nigerian exporters, particularly in non-oil sectors, and reduce over-reliance on traditional markets like the United States.
It said that since the current US tariff war was partly provoked by Nigeria’s import bans, Nigeria should re-examine those restrictions.
“A smarter import policy might achieve the goal of boosting local production without blanket bans that antagonize partners,” it said.
“Government could also replace the outright bans with tariffs or quotas that are WTO consistent, thereby addressing U.S. concerns, “it said.
The Centre also advised the federal government to be proactive to be able to manage the macroeconomic challenges that could arise from the imposition of the tariffs.
“The Central Bank of Nigeria (CBN) should be ready to deploy measures to stabilize the naira if export inflows slow, essentially by coordinating a gradual adjustment of the exchange rate to avoid a sudden shock, curbing speculative demand for forex, and maintaining adequate foreign reserve buffers.
“Nigeria must view the U.S. tariff episode as a catalyst for structural transformation.
“The country’s long-term economic resilience depends on industrialization and a strategic shift from raw commodity exports to value added finished goods.
“To reduce vulnerability to external shocks, Nigeria must accelerate the diversification of both its economy and export base,’ it said.
The Economic Insight urged the federal government to reduce its over-reliance on crude oil to ensure stable macroeconomic and sustainable development.
It said priority growth sectors such as agro-processing, solid minerals, digital services, and manufacturing must be supported through targeted investment, infrastructure development, and supportive policy frameworks.
“It is important to enhance access to quality infrastructure, affordable electricity, and digital tools for manufacturers.
“Additionally, development of Special Economic Zones (SEZs) and Export Processing Zones (EPZs) that will focus on finished goods production is a necessity, where internal source of inputs will be prioritized to reduce exposure to imported inflation.
“The need for government support is critical. Government must cushion Nigerian exporters through financial support such as export rebates, tax breaks, or low-interest loans to affected exporters to help them cope with the tariff’s cost.
“Partnering with the Nigerian Export Promotion Council (NEPC) and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) to identify new markets and build resilience among SMEs will be a right step.
“Additionally, CBN should continue to adopt FX management tools to mitigate arising shocks, while ensuring adequate FX liquidity for manufacturers and exporters.
“Fiscal authorities should engage in scenario-plan for lower oil revenue; this means reprioritizing expenditures and improving non-oil revenue collection to reduce reliance on oil,’ the centre said.
It said it was also essential to accelerate current fiscal reforms to serve as a form of revenue generation diversification.
“Fiscal authorities should engage in scenario-plan for lower oil revenue; this means reprioritizing expenditures and improving non-oil revenue collection to reduce reliance on oil.
“It is essential to accelerate current fiscal reforms which will serve as a form of revenue generation diversification should oil exports to the U.S. (or globally) decline.
“A crucial step is to further pursue oil sector reforms (like the Petroleum Industry Act implementation) to increase efficiency and output.
“This will help Nigeria weather any price or market shifts by keeping production volumes and quality competitive globally,” it said. (GBN)
