Macroeconomic Policy Implications of African Continental Free Trade Area (AfCFTA) for Nigeri

Abstract

This research analysed the macroeconomic policy implications
of the African Continental Free Trade Area (AfCFTA) for
Nigeria from 2019 to 2023. A quantitative study methodology
was utilised, employing regression analysis to examine the
association between AfCFTA and essential macroeconomic
variables. The study's findings indicated that AfCFTA
significantly enhanced Nigeria’s GDP and trade balance,
implying that greater trade liberalisation might foster economic
growth and elevate Nigeria’s foreign trade performance. The
study revealed no significant correlation between AfCFTA and
inflation, suggesting that inflation in Nigeria is predominantly
affected by local factors, including fiscal and monetary policy,
rather than external trade agreements. The regression model
successfully passed essential diagnostic tests for
multicollinearity, heteroskedasticity, and autocorrelation,
hence affirming the dependability of the results. The study
concludes that Nigeria can benefit from AfCFTA through
economic growth and trade expansion; however, the country
must implement suitable macroeconomic policies to tackle
current challenges, including infrastructure deficits and
industry preparedness, to fully leverage the agreement's
potential. The study advocated for the enhancement of trade
facilitation infrastructure, the support of export-oriented
industries, the promotion of public-private partnerships, the
maintenance of fiscal discipline to control inflation, and the
improvement of the overall business environment to ensure
Nigeria's competitiveness in the AfCFTA market. These
strategies will empower Nigeria to optimise the advantages of
AfCFTA while alleviating potential risks and challenges linked
to heightened trade liberalisation.