Nigerian SMEs Race for Competitiveness as AfCFTA Opens New Trade Frontiers Across Africa
Story written by Uzuh Rita October 10,2025
As the African Continental Free Trade Area (AfCFTA) gains momentum, Nigerian Small and Medium Enterprises (SMEs) are stepping up efforts to strengthen their competitiveness and relevance in the rapidly integrating African market.
The AfCFTA, which connects over 1.4 billion people and a combined GDP exceeding $3 trillion, offers immense opportunities for Nigerian entrepreneurs to expand their market reach beyond national borders. However, it also presents new challenges, as local businesses must now compete with firms from other African countries that are equally eager to dominate the continental market.
Experts say the key to success for Nigerian SMEs lies in innovation, quality improvement, and access to trade finance.
“AfCFTA is both an opportunity and a wake-up call,” said Dr. Bamidele Adesina, a trade economist. “Nigerian SMEs need to upgrade their production standards, strengthen value chains, and leverage technology to compete effectively across Africa.”
Positioning for Growth
Nigeria, home to more than 39 million SMEs, holds one of the largest SME sectors in Africa, contributing nearly 50% of national GDP and over 80% of employment. But despite their scale, many businesses still face constraints such as poor infrastructure, limited access to credit, and regulatory bottlenecks.
Analysts warn that unless these challenges are addressed, Nigerian firms risk losing out to competitors from South Africa, Kenya, Egypt, and Ghana, who are already optimizing production for cross-border trade.
To close this gap, the federal government and private sector stakeholders have begun rolling out initiatives to support SME competitiveness under AfCFTA. These include trade facilitation programs, export readiness training, and partnerships with development finance institutions to improve access to affordable loans.
Digital Trade and Innovation
Technology is also becoming a game-changer. Nigerian startups are increasingly using digital platforms to reach new African markets, while e-commerce and fintech innovations are making it easier for SMEs to trade across borders.
According to the Nigerian Export Promotion Council (NEPC), digital integration under AfCFTA could unlock over $10 billion in new trade value for Nigerian businesses over the next five years if fully implemented.
“Digital tools will define the future of intra-African trade,” said Olufunke Olayemi, Director of Trade Promotion at NEPC. “SMEs that embrace e-commerce, online payments, and logistics automation will gain a competitive edge.”
Building Capacity and Standards
To thrive in the AfCFTA era, Nigerian businesses are being urged to prioritize international standards, packaging quality, and certification. The Standards Organisation of Nigeria (SON) has intensified efforts to help manufacturers meet export requirements and reduce rejections at regional entry points.
The Bank of Industry (BOI) has also increased its funding for export-oriented SMEs, while the Nigerian Export-Import Bank (NEXIM) continues to support businesses seeking to expand into new African markets through the Nigerian Creative and Entertainment Facility and other financing programs.
Regional Collaboration and Policy Support
Policymakers emphasize that government reforms are crucial to helping SMEs succeed under AfCFTA. The Federal Ministry of Industry, Trade and Investment has pledged to harmonize trade policies, simplify customs procedures, and improve infrastructure to reduce logistics costs.
“The AfCFTA is about creating a single African market,” said Minister Doris Uzoka-Anite. “Nigeria’s SMEs must not only compete—they must lead. Our role as policymakers is to ensure the right environment for that to happen.”
The Road Ahead
While challenges such as weak transport links, multiple taxation, and energy costs persist, the overall outlook for Nigerian SMEs in the AfCFTA era remains positive. With rising investment in infrastructure, digital trade, and regional collaboration, experts believe Nigeria can emerge as a continental hub for innovation and manufacturing.
“The future of Nigeria’s economy depends on how well its SMEs adapt to AfCFTA,” Adesina noted. “Those that build capacity, leverage technology, and think beyond borders will drive the next phase of Africa’s economic growth.”
As the free trade area continues to expand, Nigerian businesses are at a crossroads—either evolve to capture continental opportunities or risk being left behind in an increasingly competitive African marketplace.
