The African Continental Free Trade Area (AfCFTA) is aimed at boosting intra-African trade and promoting regional development. However, the distribution of its benefits and costs across member states and household groups is uneven, and it presents opportunities and threats to different sectors of the economy. This report assesses the impact of the AfCFTA on the Nigerian economy, with particular reference to the agri-food sectors. Analysis performed using the MAGNET and DEMETRA economy-wide models calibrated on the GTAP 10 database and Nigeria s 2019 Social Accounting Matrix, respectively, shows that the AfCFTA has a negligible impact on Nigerian gross domestic product, notably in the case of a liberalisation scenario that eliminates tariffs but does not include non-tariff measures (NTMs) cost reduction. Contrary to expectations, government revenue increases, as revenue from other sources offsets the fall in customs revenue, and this effect is larger under the intermediate input liberalisation schedule. The outputs of the industry, utilities, construction, services and agriculture sectors increase, while the outputs of the public services, extractive industry and processed food sectors decrease. The reduction in the output of the processed food sector leads to an increase in imports of processed food commodities. The increase in output is larger under the agricultural trade liberalisation schedule. The employment effects also mirror the output effects, with the sectors experiencing output contraction also experiencing a fall in employment, and vice versa. Low-skilled labour will be affected due to adverse effects on output of sectors where they are employed. The welfare impact is larger for rural households than for urban households. For urban households, some outlier households face welfare losses in 2025 and 2030. But these negative welfare effects turn positive in the transition to 2035 as the AfCFTA benefits expand.
Authors
Joint Research Centre, European Commission, Omoju, Oluwasola E, Ikhide, Emily E, Osigwe, Augustine C, Nghargbu, Rifkatu, Nechifor, Victor, El Meligi, Andrea, Ferreira, Valeria, Boysen, Ole, Simola, Antti, Ferrari, Emanuele
- Catalogue number
- KJ-NA-32-035-EN-N KJ-NA-32-035-EN-C
- Citation
- European Commission: Joint Research Centre, Omoju, O., Ikhide, E., Osigwe, A., Nghargbu, R. et al., The impacts of the Africa Continental Free Trade Area on the Nigerian economy , Publications Office of the European Union, 2024, https://data.europa.eu/doi/10.2760/55522
- DOI
- https://data.europa.eu/doi/10.2760/3670648 https://data.europa.eu/doi/10.2760/55522
- ISBN
- 978-92-68-20212-8
- ISSN
- 1831-9424
- Pages
- 54
- Published in
- Belgium
- Themes
- Africa, Caribbean and Pacific , Trade — Competition
Table of Contents
- Contents 3
- Abstract 4
- Executive summary 5
- 1. Introduction 8
- Table 1. Commodity imports and exports as a share of total imports and exports Nigeria 2018 2022 9
- Figure 1. Nigeria s imports and exports by region fourth quarter of 2022 10
- Imports 10
- Exports 10
- 2. Overview of the literature on the economic impacts of the AfCFTA 12
- 3. Methodology 15
- 3.1. DEMETRA and MAGNET models 15
- 3.2. Data 16
- 3.3. Definition of scenarios 17
- 4. Results 18
- 4.1. Impact on intra-Africa trade flows 18
- Table 2. Top changes in Nigeria s exports by destination 2035 USD billion 19
- REV AGR INT RCA 19
- Tariff-only 19
- Tariffs NTMs 19
- Table 3. Top changes in Nigeria s exports by commodity 2035 USD billion 20
- REV AGR INT RCA 20
- Tariff-only 20
- Tariffs NTMs 20
- Table 4. Top changes in Nigeria s agricultural exports by destination 2035 USD million 21
- Table 5. Top changes in Nigeria s agricultural exports by commodity 2035 USD million 22
- REV AGR INT RCA 22
- Tariff-only 22
- Tariffs NTMs 22
- Table 6. Top changes in Nigeria s processed food exports by destination 2035 USD billion 23
- REV AGR INT RCA 23
- Tariff-only 23
- Tariffs NTMs 23
- Table 7. Top changes in Nigeria s processed food exports by commodity 2035 USD billion 24
- Beverages and tobacco 24
- 0.91 Beverages and tobacco 24
- 0.93 Beverages and tobacco 24
- 0.92 Beverage s and 24
- 0.92 24
- Other food 24
- 0.85 Other food products 24
- 0.81 Other food products 24
- 0.84 Other food products 24
- 0.85 24
- Dairy products 24
- 0.18 Dairy products 24
- 0.17 Dairy products 24
- 0.18 Dairy products 24
- 0.18 24
- Other food 24
- 1.00 Beverages and tobacco 24
- 1.02 Beverages and tobacco 24
- 1.00 Other food products 24
- 1.01 24
- Beverages and tobacco 24
- 1.00 Other food products 24
- 0.96 Other food products 24
- 1.00 Beverage s and 24
- 1.00 24
- Dairy products 24
- 0.18 Dairy products 24
- 0.18 24
- Table 8. Top changes in 25
- REV AGR INT RCA 25
- Tariff-only 25
- Tariffs NTMs 25
- Table 9. Top changes in Nigeria s imports by commodity 2035 USD billion 26
- Table 10. Top changes in Nigeria s agricultural imports by source 2035 USD billion 27
- REV AGR INT RCA 27
- Tariff-only 27
- Tariffs NTMs 27
- Table 11. Top changes in Nigeria s agricultural imports by commodity 2035 USD billion 28
- REV AGR INT RCA 28
- Tariff-only 28
- Tariffs NTMs 28
- Table 12. billion 29
- REV AGR INT RCA 29
- Tariff-only 29
- Tariffs NTMs 29
- Table 13. Top changes in Nigeria s processed food imports by commodity 2035 USD billion 30
- REV AGR INT RCA 30
- Tariff-only 30
- Tariffs NTMs 30
- 4.2. Impacts for the Nigerian economy 31
- Figure 2. Aggregated macroeconomic impacts of the AfCFTA in 2035 31
- Figure 3. Impacts of the AfCFTA on commodity exports in 2035 32
- Figure 4. Impacts of the AfCFTA on commodity imports in 2035 33
- Figure 5. Impacts of the AfCFTA on sectoral output in 2035 34
- Figure 6. Impacts of the AfCFTA on employment in 2035 by liberalisation 35
- Figure 7. Impacts of the AfCFTA on employment by skill category in 2035 36
- Figure 8. Impacts of the AfCFTA on household welfare 2025 2035 37
- Figure 9. Impacts of the AfCFTA on regional household welfare 2025 2035 38
- Figure 10. Impacts of the AfCFTA on household food demand 2035 39
- Figure 11. Impacts of the AfCFTA on government revenue sources 2025 40
- Figure 12. Impacts of the AfCFTA on government revenue sources 2035 40
- 5. Conclusions 41
- 6. Recommendations 43
- References 44
- 16 No 1 44
- W. and Winters L. A. eds 44
- 159 171 45
- List of abbreviations 47
- List of figures 48
- List of tables 49
- Annexes 50
- Figure A1. Impact on output of industrial subsectors 50
- Figure A2. Impact on regional agricultural activities 51
- Getting in touch with the EU 53
- Finding information about the EU 53
- The Joint Research Centre JRC provides independent evidence-based knowledge and science supporting EU policies to positively impact society 54
