An Overview of the Pan-African Trade Agreements for Trade Facilitation in Nigeria

Contributor: Betseabasi Asuquo

INTRODUCTION

In the context of the evolving global economy, trade facilitation is increasingly recognized as a fundamental element of sustainable development, especially within emerging markets like Nigeria.^[1] As one of the largest economies on the African continent and a key catalyst for its growth, Nigeria’s engagement in regional and international trade agreements is essential for realizing its full economic potential.^[2] Notably, two frameworks, the African Growth and Opportunity Act (AGOA) and the Economic Community of West African States (ECOWAS) Trade Liberalization Scheme (ETLS), play a significant role in influencing Nigeria’s export landscape.^[3]

AGOA, initiated by the United States in 2000, provides duty-free access for a broad spectrum of goods from sub-Saharan African nations to the U.S. market, thereby fostering export diversification and stimulating industrial growth,^[4] and in tandem with this is the ETLS, a trade facilitation initiative that promotes smoother trade among ECOWAS member states by removing obstacles such as tariffs and quantitative restrictions.^[5] Collectively, these agreements improve Nigeria’s market access while also supporting regional integration and fostering economic collaboration.

This article aims to explore these frameworks, and the regulatory contexts surrounding them, emphasizing their effects on Nigeria’s export competitiveness.

The African Growth and Opportunity Act^[6]

The African Growth and Opportunity Act, enacted in May 2000, serves as a foundational element in the trade relationship between the United States and sub-Saharan Africa.^[7] Its primary objective is to foster economic development in eligible African nations by offering duty-free access to the U.S. market for over 6,400 products. This diverse range includes agricultural products, textiles, motor vehicle parts, chemicals, and steel.^[8] To be eligible for the benefits provided by AGOA, countries must adhere to specific criteria, which include promoting democratic governance, maintaining a market-oriented economy, and implementing policies designed to protect workers’ rights and mitigate corruption. Furthermore, the agreement encourages regional integration and collaborative production among participating nations, with the overarching aim of establishing sub-Saharan Africa as a competitive player in global trade.^[9]

Recent developments indicate that as AGOA approaches its expiration in 2025, discussions about its renewal have gained momentum, focusing on how African countries can fully leverage its benefits.^[10] Recent U.S.-Africa trade summits have emphasized the importance of enhancing the capacity of African exporters to comply with stringent U.S. market standards, particularly in regard to processed and high-value goods. Nevertheless, export data suggests a gradual decline in the total volume of AGOA-related trade for several beneficiary countries.^[11] This decline can be attributed to challenges such as inadequate infrastructure, limited value addition, and competition arising from other trade agreements, notably the African Continental Free Trade Area (AfCFTA).^[12] Despite these challenges, Nigeria remains a significant beneficiary of AGOA, with oil comprising a substantial portion of its exports and there are ongoing efforts to diversify into non-oil sectors, with a particular focus on agriculture and light manufacturing.

Nigeria has made significant strides in enhancing its trade relations with the United States through AGOA, particularly in the agricultural sector.^[13] By providing duty-free access, AGOA has created new avenues for the export of highly sought-after products such as cocoa, sesame seeds, cashew nuts, and shea butter. According to a report, Nigerian exports to the U.S. in 2022 under the auspices of AGOA were over $4 billion.^[14] Nonetheless, the country encounters several structural challenges, including logistical inefficiencies and the necessity to adhere to U.S. safety and quality standards etc.^[15] Despite these obstacles, the agreement remains crucial in supporting Nigerian exporters, providing them with substantial tariff benefits over non-AGOA competitors and fostering their involvement in regional value chains. An example of the impact of the Act is FTN Cocoa Processors, a leading Nigerian exporter of cocoa, which has adeptly utilized AGOA’s duty-free provisions to significantly increase its market presence in the United States.^[16] This achievement has not only enhanced financial returns but has also stimulated job creation within Nigeria’s cocoa-producing regions. Moreover, there has been a remarkable rise in the export of sesame seeds and shea butter, largely attributable to micro, small, and medium enterprises that directly benefit from AGOA incentives.^[17] These exports, which frequently originate from rural communities, exemplify how the agreement fosters inclusive economic growth by connecting smallholders with international markets. Furthermore, while the export of Nigerian apparel and textiles remains relatively modest, there is substantial potential for growth as the nation seeks to enhance production quality and align with AGOA’s rules of origin requirements.

The ECOWAS Trade Liberalization Scheme (ETLS)

The ETLS represents a significant trade initiative aimed at facilitating economic integration across the 15 member states of the Economic Community of West African States.^[18] Established in 1979, the ETLS seeks to dismantle trade barriers, including tariffs and quotas, to promote the unrestricted movement of goods, services, and people within the region.^[19] For a product to qualify under the ETLS, it must originate from member countries and satisfy three critical criteria: a minimum of 60% local content, at least 30% value addition, and a change in tariff classification as outlined in the Harmonized System code.^[20] Through the enhancement of regional trade fluidity, the ETLS aspires to fortify economic relationships and stimulate industrial growth throughout West Africa.

In the last few years, initiatives have been undertaken to streamline the application and certification processes associated with the ETLS. Notably, regulatory refinements aim to standardize procedures and ensure transparency in product origin acknowledgment. This includes the initiation of regional validation meetings tasked with certifying products under the ETLS, thereby promoting increased engagement from businesses.^[21] For Nigeria, being the predominant economy in the region, the ETLS serves as a vital mechanism for enhancing market access and solidifying relationships with neighboring countries such as Ghana, Côte d’Ivoire, and Benin. Nonetheless, challenges persist in the form of non-tariff barriers, including customs delays and infrastructural deficiencies, which impede the full realization of the scheme’s potential.^[22]

Nigeria has effectively utilized the ETLS to enhance its non-oil export portfolio, especially in agricultural and manufactured goods.^[23] The scheme has enabled Nigerian enterprises to export products such as processed foods, fertilizers, and textiles to neighboring nations without encumbrances from tariffs as the Nigerian Export Promotion Council indicated that regional trade constitutes a significant portion of Nigeria’s export activities under the ETLS framework.^[24] What is more, the ETLS fosters regional production collaboration, permitting Nigerian manufacturers to procure raw materials from nearby countries while benefitting from duty-free re-exports.^[25]

CONCLUSION

The African Growth and Opportunity Act and the Economic Community of West African States Trade Liberalization Scheme represent significant opportunities for Nigeria to enhance its trade capacity, diversify exports, and drive economic growth. AGOA has enabled Nigeria to penetrate the U.S. market with duty-free access for key agricultural and industrial products, fostering both export earnings and regional integration. On the other hand, the ETLS has facilitated Nigeria’s active participation in intra-African trade, enabling businesses both large-scale corporations and small-scale enterprises to access regional markets without the burden of tariffs or restrictive quotas.

SNIPPET

The African Growth and Opportunity Act and the Economic Community of West African States Trade Liberalization Scheme represent significant opportunities for Nigeria to enhance its trade capacity, diversify exports, and drive economic growth. AGOA has enabled Nigeria to penetrate the U.S. market with duty-free access for key agricultural and industrial products, fostering both export earnings and regional integration. On the other hand, the ETLS has facilitated Nigeria’s active participation in intra-African trade, enabling businesses both large-scale corporations and small-scale enterprises to access regional markets without the burden of tariffs or restrictive quotas.

Reference

1. Chete, Louis N., John Olatunji Adeoti, Foluso M. Adeyinka, and O. Ogundele. Industrial development and growth in Nigeria: Lessons and challenges. No. 2014/019. WIDER working paper, 2014, available at https://www.econstor.eu/bitstream/10419/96311/1/776930508.pdf ↑
2. Eke, B. U. “Preferential Trade Agreement as Path to Economic Development: The Case of Nigeria’s Response to African Growth and Opportunity Act (AGOA).” PhD diss., Miami University, 2007 available at https://etd.ohiolink.edu/acprod/odb_etd/ws/send_file/send?accession=miami1185563473&disposition=inline ↑
3. See NEPC, Trade Agreements, available at https://nepc.gov.ng/trade-facilitation/trade-agreements/ ↑
4. See NEPC, African Growth Opportunity Act (AGOA), available at https://nepc.gov.ng/blog/trade-agreement/agoa/ ↑
5. See NEPC, ECOWAS Trade Liberalization Scheme (ETLS), available at https://nepc.gov.ng/blog/trade-agreement/ecowas/ ↑
6. The African Growth and Opportunity Act (AGOA) available at https://agoa.info/ ↑
7. Pham, J. P. “The development of the United States Africa Command and its role in America’s Africa policy under George W. Bush and Barack Obama.” The journal of the Middle East and Africa 5, no. 3 (2014): 245-275. ↑
8. Ezekiel, M., and Ehikwe A. E. “The African Growth and Opportunity Act and Marketing Implications for Nigeria.” (December 01, 2017). American Based Research Journal 6, no. 12 (2017) available at https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID3576567_code1873873.pdf?abstractid=3576567&mirid=1 ↑
9. Páez, Laura, Stephen Karingi, Mwangi Kimenyi, and P. Mekalia. “A Decade (2000–2010) of African-US Trade under the African Growth Opportunities Act (AGOA): Challenges, Opportunities and a Framework for Post AGOA Engagement.” African Development Bank (2010) available at https://www.afdb.org/fileadmin/uploads/afdb/Documents/Knowledge/Session%20II.2.2_2.%20A%20decade%20(2000-2010)%20of%20African-US%20Trade%20under%20the%20AGOA.pdf ↑
10. Bill H.R. 10366 – AGOA Extension and Enhancement Act of 2024, available at https://agoa.info/downloads/legal/16537.html ↑
11. Moyo B., Nchake M., Chiripanhura B., “An evaluation of the US African Growth and Opportunity Act (AGOA) trade arrangement with Sub-Saharan African countries”, PSL Quarterly Review, (2018), 71 (287): 389-418. Available at https://www.researchgate.net/profile/Mamello-Nchake/publication/332710230_An_evaluation_of_the_US_African_Growth_and_Opportunity_Act_AGOA_trade_arrangement_with_Sub-Saharan_African_countries/links/6556180ace88b87031ed28d1/An-evaluation-of-the-US-African-Growth-and-Opportunity-Act-AGOA-trade-arrangement-with-Sub-Saharan-African-countries.pdf?_tp=eyJjb250ZXh0Ijp7ImZpcnN0UGFnZSI6InB1YmxpY2F0aW9uIiwicGFnZSI6InB1YmxpY2F0aW9uIn19 ↑
12. Odularu, Adenike. “Addressing trade facilitation commitments and implementation capacity gaps: Issues and evidence from Nigeria.” Trade Facilitation Capacity Needs: Policy Directions for National and Regional Development in West Africa (2019): 25-45. ↑
13. Ikeanyionwu, C. L., Ogechi, E. J., & Josephine, O. N., “Economic Prospects, Growth and Opportunity by Diversifying Into Agricultural Sector in Nigeria.” Journal of Emerging Trends in Economics and Management Sciences 14, no. 3 (2023): 113-120. ↑
14. Bureau of African Affairs, U.S Relations With Nigeria, Bilateral Relation Fact Sheet (2025) available at https://www.state.gov/u-s-relations-with-nigeria/#:~:text=At%20$3.4%20billion%20in%202022,cashew%20nuts%2C%20and%20animal%20feed. ↑
15. Economic Growth and Trade | Nigeria | U.S. Agency for International Development (no date). https://www.usaid.gov/nigeria/economic-growth#:~:text=Nigeria’s%20economic%20potential%20is%20constrained,and%20limited%20foreign%20exchange%20capacity. ↑
16. See OECD available at https://oec.world/en/profile/hs/cocoa-beans ↑
17. Expanding sesame seed and shea nut butter exports | STDF. https://www.standardsfacility.org/PG-172. ↑
18. Maman Adda, Souleymane. “Implementation of ECOWAS Trade Liberalization Scheme and its Influence on ECOWAS GDP.” Implementation of ECOWAS Trade Liberalization Scheme and its Influence on ECOWAS GDP (May 17, 2024) (2024) available at https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID4832582_code6747283.pdf?abstractid=4832295&mirid=1 ↑
19. Ibid. ↑
20. About ETLS – ETLS available at https://etls.ecowas.int/about-etls/. ↑
21. Meeting on obstacle on free movement of goods under ECOWAS Trade Liberalization Scheme (ETLS), 11-12 November 2019 – ETLS .available at https://etls.ecowas.int/meeting-on-obstacle-on-free-movement-of-goods-under-ecowas-trade-liberalization-scheme-etls-11-12-november-2019/. ↑
22. Maman Adda, S. op cit. fn. 18. ↑
23. Ejalonibu, G. L. “Regionalism, Trade, and the Development of Member States: A Perspective of ECOWAS Trade Liberalization Scheme in Nigeria.” In Development and Regional Stability in Africa: Unlocking Potential, pp. 167-195. Cham: Springer Nature Switzerland, 2024. ↑
24. Ibid. ↑
25. Sunday, J. B.  “A Critical Analysis of Nigeria’s Relationship With ECOWAS.” (2023) available at https://www.final.edu.tr/docs/tezler/Johnson%20Busuyi%20Sunday%20THESIS%202023.pdf ↑