For many years, Nigeria has relied heavily on crude oil exports while importing many of the finished products it consumes, leaving much of the value creation, jobs and industrial opportunities to other countries. But as global supply chains are being reshaped by geopolitical tensions, the implementation of the African Continental Free Trade Area (AfCFTA) and growing demand for value-added products, Africa’s largest economy stands at a critical turning point. In this exclusive interview with Eromosele Abiodun, the Group Chief Economist of Afreximbank, Dr. Yemi Kale, argues that Nigeria has the scale, resources and entrepreneurial capacity to emerge as one of Africa’s leading manufacturing and export hubs—provided it accelerates reforms, invests in industrial infrastructure and strengthens trade finance. He also speaks on the continent’s widening trade finance gap, the transformative potential of the Pan-African Payment and Settlement System (PAPSS), the China Plus One opportunity, and why the next decade could redefine Africa’s role in global trade if governments choose production over commodity dependence. Excerpts
Nigeria remains heavily dependent on crude oil exports, yet the African Trade Report 2025, argues that Africa must move away from exporting raw commodities. How would you assess Nigeria’s progress in building value-added industries around oil, gas, agriculture, and minerals?
Nigeria’s progress has been meaningful but remains incomplete. While it has begun laying the foundations for a transition from a resource-exporting economy to a value-adding industrial economy, the pace of transformation still falls short of its potential and aspirations.
For decades, Nigeria exported crude oil while importing refined products, effectively exporting jobs and value addition. However, the development of domestic refining capacity creates opportunities not only for import substitution but also for regional exports of refined petroleum products, petrochemicals, fertilisers and industrial feedstocks under African Continental Free Trade Area (AfCFTA).
Agriculture presents an even larger opportunity. Nigeria remains a major producer of cocoa, cassava, sesame, shea, ginger, and several other commodities, however most exports still leave the country with limited processing. The real opportunity lies not in exporting more raw commodities, but in exporting processed foods, industrial starches, cocoa derivatives, edible oils, beverages, nutraceuticals and branded consumer products. The same applies to solid minerals. The global energy transition is increasing demand for critical minerals, including lithium and other battery-related inputs. Nigeria can leapfrog from being an exporter of unprocessed minerals or become part of the global value chain through beneficiation, refining and manufacturing. Critical reforms have already commenced. The next phase of reform should focus on industrial infrastructure, energy reliability, logistics efficiency, standards certification, export finance and skills development.
The report highlights a continent-wide trade finance gap. How much of this challenge is concentrated in Nigeria, and what practical measures should Nigerian banks and policymakers adopt to narrow the gap?
Nigeria represents one of the largest concentrations of unmet trade finance demand on the continent. This is partly because of the size of its economy, the scale of its SME sector and the country’s role as both a major importer and an increasingly important exporter within Africa. However, the challenge is not merely a shortage of liquidity. Many viable Nigerian businesses are unable to access the instruments that facilitate trade (letters of credit, guarantees, export credit insurance, receivables finance and working capital facilities). As a result, commercially viable transactions often fail to materialise. Closing this gap requires coordinated action.
Nigerian banks must move beyond traditional collateral-based lending and embrace more sophisticated trade-finance instruments, including supply-chain finance, factoring, warehouse receipt financing and digital trade-finance platforms. At the same time, policymakers also have a critical role. For instance, customs modernisation, improved documentation systems, stronger export credit guarantees, and greater interoperability with continental payment systems can significantly reduce transaction costs. The broader objective should be to create an ecosystem in which export-oriented firms can access affordable financing throughout the production and trade cycle. This is especially important under the AfCFTA, where competitiveness increasingly depends on speed, reliability and scale. This is where our role at Afreximbank is so crucial. We are playing an important catalytic role through risk-sharing mechanisms, trade-finance facilities and liquidity support, but sustainable progress ultimately requires deeper domestic financial-market development.
Nigeria is listed as a key African crude oil exporter with moderate dependence on the Suez trade corridor. Given ongoing geopolitical tensions in the Middle East, how exposed is Nigeria’s trade sector to disruptions in global shipping routes?
Nigeria’s exposure is best described as moderate but could increasingly be consequential indirectly. Direct exposure is lower than in other African countries whose trade is heavily dependent on the Red Sea or the Suez Canal routes. However, much of Nigeria’s hydrocarbon exports are Atlantic-oriented and therefore less vulnerable to disruptions in those corridors. A sizeable portion is also used domestically to support local refining efforts, thereby also reducing its impact. However, the indirect effects can be substantial.
Global shipping disruptions affect freight rates, insurance premiums, inventory management, supply chain reliability, and commodity prices. Even when Nigerian exports are not directly rerouted, Nigerian businesses still bear higher import costs for machinery, industrial inputs, pharmaceuticals and intermediate goods. At the same time, as argued in our Africa Trade Report 2026, geopolitical fragmentation is reshaping trade patterns worldwide.
The recent global disruptions have demonstrated that supply-chain resilience is becoming as important as efficiency. For Nigeria, this creates both risks and opportunities. The risk lies in higher costs and greater uncertainty. The opportunity lies in accelerating regional value chains, reducing excessive dependence on extra-African suppliers and strengthening intra-African trade networks.
The report argues that geopolitical fragmentation presents an opportunity for Africa to attract manufacturing and supply-chain diversification. Is Nigeria currently positioned to benefit from the global ‘China Plus One’ strategy, and what obstacles still stand in the way?
The short answer is yes, but only if Nigeria can convert its structural advantages into competitive advantages. Global companies are increasingly seeking to diversify supply chains beyond a single production location. This creates an opportunity for countries capable of offering scale, market access and operational reliability. Nigeria has several strengths in this regard, it has one of Africa’s largest domestic markets, abundant labour, significant natural resources and access to the broader AfCFTA market. These factors position it as a potentially attractive destination, particularly for manufacturing investment. However, investment decisions are driven more by competitiveness than size or demographics. Investors compare Nigeria not only with other African countries but also with emerging manufacturing hubs in Asia, Latin America and Eastern Europe. Key factors such as reliable power, efficient ports, policy predictability, foreign-exchange stability, strong contract enforcement and workforce productivity remain critical investment decisions. Nigeria’s opportunities are strongest in sectors where it has natural advantages, including petrochemicals, fertilisers, agro-processing, pharmaceuticals, building materials, textiles, automotive components and digital services. The main challenge, however, is execution. While the fundamentals are in place, Nigeria has yet to translate them into the level of operational efficiency needed to become a primary China-plus-one winner. Although Africa’s foreign direct investment (FDI) inflows rose significantly in 2024, by 75% to a record $97 billion in 2024, even after adjusting for Egypt’s mega-project, which is still rising, at 12%, to about $62 billion. My judgment is that Nigeria is credible as a future China Plus One platform, but not yet sufficiently reliable to be a first-choice destination for large-scale manufacturing relocation. Sustained commitment to ongoing reforms will be essential to unlock this potential.
Nigeria has championed the African Continental Free Trade Area (AfCFTA), yet intra-African trade remains relatively low. What are the biggest barriers preventing Nigeria from becoming a leading exporter within the AfCFTA framework?
The most significant barriers are domestic rather than continental. The AfCFTA has substantially improved market access, but market access alone does not guarantee competitiveness. Nigerian firms must be able to produce efficiently, meet standards consistently and deliver products reliably. However, Nigeria’s manufacturers continue to face some of the highest production costs on the continent due to energy constraints, logistics inefficiencies, infrastructure deficits and financing costs. These challenges affect export competitiveness.
Standards and certification also remain important constraints. Modern trade increasingly depends on compliance with quality standards, traceability requirements and rules of origin. Nigerian exporters need to demonstrate consistent compliance across multiple markets. Transport connectivity presents another challenge. Trade competitiveness is determined not only by tariffs but by how quickly and cheaply goods move from factory gates to final markets. Perhaps most importantly, Nigeria must strengthen its export culture. Historically, much of the economy has been oriented toward serving the domestic market. Exploiting the opportunities from the potentially larger AfCFTA market, however, requires firms to think regionally and globally from the outset. The task now is to ensure that Nigerian firms are positioned to capture a larger share of that expanding market through greater productivity, improved competitiveness and stronger integration into regional value chains.
The report highlights PAPSS as a tool for reducing dependence on the dollar and euro. Given Nigeria’s long-standing foreign exchange challenges, how transformative could PAPSS be for Nigerian businesses engaged in cross-border African trade?
PAPSS has the potential to be one of the most consequential innovations in financial infrastructure in Africa’s modern trade history. Its significance extends beyond payments; it addresses one of the structural constraints that has historically limited intra-African trade: the reliance on external currencies to settle transactions between African countries. Previously, a Nigerian company exporting to Ghana, Kenya, Rwanda or Zambia often had to convert naira into dollars and then convert those dollars into the destination currency. This increases transaction costs, creates settlement delays and places additional pressure on scarce foreign-exchange reserves. PAPSS changes that equation by enabling African businesses to trade and settle in local currencies while facilitating efficient cross-border clearing. For Nigeria, where foreign-exchange constraints have periodically affected business operations, this represents a major opportunity. The benefits are likely to be particularly significant for SMEs, which often face the greatest challenges in accessing foreign currency.
By lowering transaction costs and reducing currency-conversion risks, PAPSS can make regional markets more accessible to smaller businesses that previously found cross-border trade prohibitively expensive. However, PAPSS should not be viewed as a substitute for macroeconomic reforms. Rather, it is an enabler. Its transformative impact will depend on broad adoption by commercial banks, integration into digital payment platforms, regulatory coordination and increased awareness among businesses. Moreover, as geopolitical fragmentation continues to reshape global trade and financial flows, Africa’s ability to settle more of its trade within the continent strengthens economic resilience and reduces external vulnerabilities. In that sense, PAPSS is not merely a payment platform but an important component of Africa’s economic integration architecture.
Nigeria has one of Africa’s largest populations and consumer markets. In your view, which sectors offer the greatest unrealised potential for Nigeria to become a regional value-chain hub under AfCFTA?
Nigeria’s greatest opportunities lie in sectors where it combines scale, resource endowments, entrepreneurial capacity and proximity to regional demand. First is agro-processing. Nigeria possesses one of the continent’s largest agricultural bases, yet much of its production remains under-processed. Opportunities exist across cocoa processing, cassava derivatives, edible oils, dairy alternatives, livestock value chains, packaged foods and industrial agricultural inputs. As Africa’s food-import bill continues to rise, regional food processing represents a major growth opportunity.
Second is petrochemicals and industrial chemicals. With expanding refining and petrochemical capacity, Nigeria is well-positioned to become a regional supplier of refined fuels, plastics, fertilisers and industrial feedstocks. This could significantly deepen regional manufacturing value chains.
Third is pharmaceuticals and healthcare products. Africa continues to import a large proportion of its medicines and medical inputs. Nigeria’s large domestic market provides a strong foundation for building competitive pharmaceutical manufacturing capabilities to meet regional demand.
Fourth is digital services. The country’s fintech ecosystem, technology talent pool, and growing digital economy position it to become a continental hub for financial technology, business process outsourcing, software development, and digital trade services. Fifth is light manufacturing, including textiles, garments, leather products, household goods and consumer products. These sectors can benefit significantly from AfCFTA’s expanded market access.
If Nigeria successfully implements current reforms and fully leverages AfCFTA, where do you see the country’s share of African trade and industrial output over the next decade, and what benchmarks should policymakers be targeting today?
Nigeria has the potential to become one of the principal engines of Africa’s industrialisation over the next decade. However, this outcome is not guaranteed; it will depend on the consistency and effectiveness of the reforms implemented today. The Africa Trade Report 2026 shows that Africa’s merchandise trade reached approximately US$1.5 trillion in 2025, while intra-African trade exceeded US$213 billion. These figures are expected to expand significantly as AfCFTA implementation deepens. Against this backdrop, Nigeria should aim to become one of Africa’s leading non-oil export platforms by 2035. Policymakers should therefore focus on measurable outcomes rather than policy announcements. Key benchmarks should include:
- Doubling or tripling non-oil export earnings within the next decade.
- Increasing manufacturing value-added as a share of GDP and exports.
- Significantly increasing Nigeria’s share of intra-African trade.
- Reducing logistics and port costs to levels comparable with leading emerging-market competitors.
- Expanding access to trade finance, particularly for SMEs and export-oriented firms.
- Increasing participation in regional value chains across manufacturing, agriculture and services.
The most important benchmark, however, is structural transformation. Success should be measured not simply by GDP growth, but by whether Nigeria becomes a more diversified, export-oriented and industrial economy. Sustaining current reforms will ensure that Nigeria emerges as West Africa’s primary manufacturing and trade hub and one of the leading industrial centres on the continent.
Despite Nigeria’s economic size, its non-oil exports remain relatively modest compared with its potential. What are the most critical reforms required to make Nigeria a globally competitive export-led economy, and how can Afreximbank support that transformation?
Export competitiveness is ultimately determined by productivity, reliability and cost. The first priority is therefore macroeconomic stability. Investors and exporters require a predictable environment in which to plan production and investment. Exchange-rate stability, lower inflation and improved policy consistency are therefore fundamental.
Second is infrastructure. Reliable electricity, efficient ports, modern logistics corridors and digital trade infrastructure directly influence export competitiveness. Every delay at a port and every additional logistics cost reduces a firm’s ability to compete internationally.
Third is access to finance. Exporters need working capital, trade finance instruments, export credit guarantees, and long-term industrial financing. Without adequate financing, even competitive firms struggle to scale.
Fourth is standards and quality infrastructure. Participation in regional and global value chains increasingly depends on compliance with technical standards, certification requirements and traceability systems.
Fifth is an industrial policy focused on value addition. Countries that export raw materials capture only a small portion of total value creation. The objective should be to process, manufacture and innovate domestically before exporting.
At Afreximbank, we are actively supporting this transformation through multiple channels. These include trade-finance facilities, industrialisation financing, export- development programmes, guarantees, risk-sharing mechanisms, project-preparation support, and the expansion of PAPSS. Our role extends beyond financing individual transactions; we seek to support building and enabling ecosystem that allow African businesses to compete effectively within Africa and globally.
If there is one message policymakers, investors and business leaders should take away from the Africa Trade Report 2025, what would it be?
The central message is that current geopolitical disruptions should not be seen merely as a risk for Africa to navigate but more as an opportunity to exploit. With the global economy undergoing profound restructuring, supply chains are diversifying, industrial policies are re-emerging, strategic competition is reshaping investment flows, and countries are placing greater emphasis on resilience and less on cost minimisation.
Historically, Africa has often been affected by these global shifts without significantly influencing them. The Africa Trade Report 2026 argues that this moment can be different this time. This is because Africa possesses the resources, markets, demographics and entrepreneurial capabilities necessary to become a more influential participant in global trade and industrial production. However, realising that potential requires deliberate action.
The continent must move beyond exporting raw materials and importing finished goods. It must deepen regional integration, strengthen industrial capabilities, expand trade finance, invest in infrastructure and build resilient value chains.
- For policymakers, therefore, the message is that reforms matter.
- For investors, the message is that opportunities are expanding.
- For business leaders, the message is that Africa’s future growth will increasingly be driven by production, processing and intra-African trade rather than by commodity exports alone. And the countries and companies that position themselves early for this transition will be the primary beneficiaries.
Investors continue to watch Africa with cautious optimism. What message does the Africa Trade Report send to global investors?
The Africa Trade Report 2026 sends a fundamentally different message from the traditional narrative that has often characterised discussions about Africa. For decades, Africa was viewed primarily as a commodity frontier and a consumer growth story. The report argues that Africa is increasingly becoming a story of industrialisation, supply-chain diversification, and regional integration. Africa’s merchandise trade expanded to approximately US$1.5 trillion in 2025, while intra-African trade grew by 5.5 percent to about US$213.8 billion despite a challenging global environment marked by geopolitical tensions, trade fragmentation and slowing growth in several advanced economies.
The key highlight, however, regarding intra-trade is not just the growth in trade volumes and values, but also the fact that Africa is trading more with itself. More important is the change in the structure of that trade, which is seeing an increase in processed commodities. African countries are visibly trading significantly more value-added goods and services among themselves.
Unlike Africa’s exports to extra-African countries, which remain dominated by primary commodities, intra-African trade now accounts for a larger share of manufactured and processed goods. For investors, this demonstrates resilience. More importantly, it demonstrates structural change. It shows that growth is increasingly being supported by regional markets, expanding manufacturing ecosystems, digital innovation, infrastructure investment and deeper economic integration through AfCFTA.
The report also highlights a significant shift in global production patterns. As multinational firms seek to diversify their supply chains, Africa’s demographic strength, natural resource base, and expanding consumer markets create opportunities across manufacturing, agribusiness, logistics, energy transition minerals, digital services, and financial infrastructure. However, investors should approach Africa not as a single market but as a collection of diverse economies moving at different speeds. The greatest opportunities will emerge in countries that combine policy stability, infrastructure development, regulatory reform and regional market access. So, the overarching message is that Africa is no longer simply a destination for resource extraction but is increasingly becoming a destination for value creation.
Merchandise trade reached approximately $1.5 trillion, while intra-African trade continued to expand. What is driving this growth and where do you see the greatest untapped opportunities?
Several structural forces are driving this growth. First, African economies have demonstrated remarkable resilience despite an increasingly uncertain global environment. Economic growth across the continent accelerated to approximately 4.5 percent in 2025, supported by stronger domestic demand, infrastructure investment and improving macroeconomic conditions in several countries.
Second, regional integration is beginning to generate tangible results. AfCFTA is gradually reducing trade barriers, improving market access, and encouraging businesses to think beyond national borders.
Third, geopolitical fragmentation is reshaping global trade patterns. As firms diversify sourcing and production locations, African economies are increasingly participating in new trade corridors and supply chains.
Fourth, digitalisation through platforms like PAPPS is reducing transaction costs and connecting businesses to regional markets in ways that were not possible a decade ago. For me, the greatest untapped opportunities lie in sectors where Africa can move up the value chain, such as agribusiness. In this regard, Africa possesses vast agricultural resources yet continues to import large quantities of processed foods. This means greater investment in food processing, storage, packaging and logistics could unlock substantial value.
Mineral beneficiation is another major opportunity. As demand for critical minerals grows, African countries have an opportunity to capture more value through processing and manufacturing rather than simply exporting raw materials. Pharmaceuticals, automotive value chains, petrochemicals, renewable energy components, digital services, and creative industries also represent important growth areas.
Ultimately, the biggest opportunity is not simply increasing trade volumes but increasing the value added before products leave African borders, and that’s where Africa must focus.
The report identifies trade finance constraints as a major challenge. How significant is Africa’s trade finance gap today and what practical interventions are needed to close it?
Trade finance remains one of the most significant barriers to Africa’s economic transformation. The challenge is particularly acute for SMEs, women-owned businesses and firms operating across borders. Many companies have viable products, strong demand and profitable business models, but are unable to access the financing instruments required to participate effectively in trade. The consequence is that substantial volumes of potential trade never materialise. Opportunities are lost not because markets do not exist, but because financing mechanisms are inadequate. Addressing this challenge requires action at multiple levels. First, African financial institutions need greater capacity to provide trade-finance products, including letters of credit, guarantees, supply chain finance, factoring, and receivables financing.
Second, challenges in risk perception must be addressed. International financial institutions often overestimate African trade risks relative to actual performance. Improved data, stronger credit information systems, and risk-sharing mechanisms can help reduce these perceptions.
Third, digitalisation can significantly improve efficiency by reducing documentation costs, increasing transparency and accelerating transaction processing.
Fourth, regional financial infrastructure, such as PAPSS, can reduce settlement costs and improve liquidity across African markets. Development finance institutions such as Afreximbank play a critical role by providing liquidity, guarantees, risk mitigation, and trade-finance support to African banks and businesses. However, closing the trade finance gap ultimately requires a coordinated effort involving governments, regulators, commercial banks, development finance institutions and the private sector. If Africa is to fully realise the opportunities presented by AfCFTA, expanding access to trade finance must remain a strategic priority.
What more needs to happen to move Africa from exporting raw commodities toward becoming a higher value-added manufacturing and processing economy?
Moving beyond exporting raw commodities to becoming a higher-value-added manufacturing and processing economy requires a coordinated strategy built around five pillars.
The first is industrial infrastructure. Manufacturing competitiveness depends on reliable electricity, efficient transport networks, industrial parks, logistics corridors and digital connectivity.
The second is trade and industrial finance. Processing industries are capital-intensive and require long-term financing solutions. Expanding access to industrial finance and trade finance is therefore essential.
The third is skills and technology. Industrialisation requires a workforce capable of operating increasingly sophisticated production systems and technologies.
The fourth is regional market integration. Individual African economies are often too small to support large-scale industrial production. The AfCFTA creates the larger market necessary for industrial economies of scale. The fifth is policy consistency. Investors making long-term manufacturing investments require confidence that policies will remain predictable and supportive over time.
