It is common knowledge that cross-border trade has a direct impact on Nigeria’s economic development, especially with the help of technology.
However, this impact has been undercut by multifaceted challenges in the supply chain that are not commonly talked about and, as such, hinder the adoption of emerging technologies like agentic artificial intelligence for the utmost maximization of supply chain efficiency and efficacy, specifically in the Marketplace space.
From a hyper-focus on consumer goods for export and less attention to value-added goods, underutilized and unrealized trade blocs, to inadequate infrastructure that would inherently work in other markets but not in Nigeria.
We shall look at how these 3 hurdles have been a recurring uphill battle in Nigeria’s global trade ambitions, specifically in the context of Non-Oil export.
Hyper-Focus on Consumer Goods for Export: There is a gross imbalance between the focus on consumer goods for export and the focus on value-added goods for export.
For this article, let’s look into these 3 types of goods in economics: 1. Consumer goods, 2. value-added goods, and 3. capital goods.
Consumer goods are finished products for direct use or consumption after purchase by end users, e.g, Biscuit, Plantain Chips, Soap, Garri, etc.
Value-added goods represent the increase in the economic worth of a product as it moves through production.
Think of Non-Oil produce like Cassava, Cocoa (pod, husks, beans, leaves, etc.), Palm Nuts, Shea Nuts, etc. Capital goods are used in the processing of value-added goods to produce consumer goods.
For example, the machinery used in processing Cassava to produce Garri, or Plantain to get Plantain powder, is capital goods.
Compared with a country like China, which has high capital goods, which directly impacts the high volume of consumer goods they churn out for exports, Nigeria is struggling to meet the volumes that can visibly impact the economy.
Even with the recent announcement by the UK government that over 3,000 Nigerian products can enter the UK duty-free or at reduced tariffs, if the focus is more on consumer goods than value-added goods and the imbalance is not managed, the economic impact would not be as significant as anticipated.
For instance, there are thousands of SMEs producing the same products and trying to penetrate the international market; however, they are unable to penetrate successfully because of limitations in meeting the requirements of importing countries/regions.
A good example is Europe. By law, certain products are required to comply with steam sterilisation conditions for them to be imported into Europe.
Sadly, to get the right equipment for this, it costs about 90 million Naira per equipment. The question is how many of these businesses can afford this, among other requirements needed to export their goods to Europe.
Why then is there so much focus on consumer goods over value-added goods, as we do not have adequate machinery for mass production of international standard consumer goods at the volume that would impact the economy significantly, among other obvious impediments preventing the full optimization of the potential impact export of consumer goods could make.
Underutilized and Unrealized Trade Blocs: In a bid to foster seamless trade cooperation and integration, countries come into agreement to reduce and eliminate trade barriers like tariffs, non-tariff barriers, e.g., quotas, among themselves.
These agreements are called Trade Blocs. Case in point, The African Growth and Opportunity Act (AGOA), a US trade program that provides eligible sub-Saharan African countries with duty-free access to the US Market on Clothes and Textiles, Food and Agriculture, Vehicles and Auto Parts, Oil and Natural Resources, Handmade Goods and Crafts, Beauty and Natural products.
Unfortunately, only a few non-oil export businesses in Nigeria have taken advantage of it actively in the last 3 years since it was enacted in 2000 and extended from 2015 to September 30, 2025. It goes without saying that it was grossly underutilized by Nigeria.
Another example is the African Continental Free Trade Area (AfCFTA), the largest trade agreement in Africa with an annual GDP of more than $3 trillion.
The agreement aims to include the free movement of people, establish a single common currency, boost intra-African trade, and increase manufacturing on the continent by lifting the tariffs on 90% of goods and streamlining border crossings. Although 54 of Africa’s 55 countries have signed the agreement, they are gradually ratifying it on paper; the practicality of it is yet to be realized.
Imagine a trade between Nigeria and Rwanda in large volumes, because Rwanda is landlocked and does not have a seaport, goods sent by air will be too expensive for obvious reasons, and goods sent by sea would have to land at a nearby port in Kenya or Tanzania. From there, the goods would have to go by rail or road to Rwanda.
This means a multi-modal transport chain will be needed, which will result in an increase in cost, risk, and delivery time. Moreover, most shipping lines are set up for Africa to Europe, Africa to Asia, and Africa to North America, but very few have efficient intra-African Sea shipping routes.
In reality, a container leaving Lagos to Kigali (through Mombasa) might transit through Europe or the Middle East before landing in East Africa (Just like going on a trip to Kenya and taking Qatar Airways, you would have to land in Qatar first before coming back to Africa to get to Kenya).
This extends the product delivery and viability, shipping time, and increases costs, defeating the point of “free trade.”
It is safe to say that although the intention behind Nigeria joining these trade blocs is clear, it has, however, been underutilized and unrealized, and has prevented the country from making the most of them to obviously impact the economy.
Inadequate Infrastructure: The most common infrastructure when it comes to global supply chain cuts across sourcing, inventory management, and payments (both administered through technology), logistics, and warehousing.
Cross-border payment and warehousing have been recurring issues for the most part. With marketplaces, payment is more magnified as you have hundreds/thousands of vendors to pay after their products have been sold.
Beyond market penetration, vendors want to be paid in foreign currency, which demands the need for a reliable cross-border payment. Initially, Mercury facilitated US account opening, which could be integrated with payment gateways like Stripe and disbursed to Nigerian Domiciliary accounts until it removed Nigerian-owned businesses (among others) from its serving customer base.
Then came Raenest, which came in to fill the gap Mercury left, and recently launched a feature for payouts from US accounts owned by Nigerian businesses directly to vendors. Hopefully, this is a permanent solution to the persistent issue.
Warehousing, on the other hand, is still a major challenge, as most marketplaces, especially cross-border, have adopted subscription models for their vendors to stock up their products at their warehouses, just like Amazon and other international marketplaces have done for easy delivery fulfillment in the country of import.
While this seems like an obvious and reasonable revenue model alongside other forms, Nigeria is yet to become an avid subscription economy as most vendors would not pay a monthly recurring amount in foreign currency without a guarantee of sales which does not stop the incurring costs of the warehouses stocking these products in the country of imports.
This leaves a gap for marketplaces to come up with creative ways to manage or solve this challenge.
It is safe to say that these foundational hurdles have not just limited Nigeria’s global ambition, but it has also impeded the potential of creating innovative technology to solve bigger problems beyond the basic functions currently being provided.
As it stands, Nigeria is not one of the top 50 Countries importing into the largest buying country in the world, the US. We are competing with countries like Mexico and China annually, yielding over $500 billion and $400 billion respectively, as opposed to us trading about $5 billion worth in Non-Oil exports in 2024.
With Mexico making good use of the North American Free Trade Agreement (NAFTA), and China with the strong influence of its government has an unimaginable access to diverse machinery for it to have the capacity to produce for various countries and export accordingly, it has created an opportunity for these countries to explore emerging technologies to foster their respective market on a complex level.
While these challenges are evident, addressing them presents a critical opportunity to enhance our global competitiveness and substantially grow our share in international trade.
To unlock this potential, a strategic shift is required: small and medium-sized enterprises (SMEs) should be encouraged to form consortia, enabling them to pool resources and aggregate supply volumes that meet the demands of international buyers.
Simultaneously, it is essential to establish more production and processing hubs equipped with the appropriate machinery and technical capacity.
These hubs should operate in close collaboration with the consortia to ensure that products consistently meet the quality, safety, and regulatory standards required by global markets.
Additionally, while the export of consumer goods continues to grow, greater emphasis must be placed on trade in value-added goods. These products typically face fewer regulatory barriers, offer increased adaptability to various market needs, and have broader appeal due to their diverse applications. Prioritizing value addition will not only lower the entry threshold for exporters but also position our offerings more competitively on the global stage.
*Omowumi Omidiji is the founder of SOUQ OS, a B2B cross-border supply chain management platform leveraging technology to build trust and streamline trade between the diaspora and Africa and she can be reached via oo@souqos.com
