Dr. Yemi Kale, the Group Chief Economist and Managing Director of Research and Trade Intelligence at Afreximbank, stated on Tuesday that Nigeria should strategically utilise the current banking sector recapitalisation drive to help close Africa's annual trade finance deficit, which ranges from $80 billion to $120 billion. This move, he explained, would position the continent as a key player in intra-African trade under the African Continental Free Trade Area (AfCFTA).
Speaking at the Ecobank Customer Forum in Lagos, Kale emphasised that Nigeria, as Africa's largest economy and consumer market, has a crucial role in mobilising capital and supporting domestic producers, which will significantly influence the continent's trade trajectory.
"Nigeria is a very large economy. Not only do we have a big domestic market, but we also have a potentially large market that can benefit the entire continent. The policies being introduced to stabilise the macroeconomic environment are helpful, and I would advise that those policies be retained. We have to keep faith with the reforms," he remarked.
He argued that addressing the substantial trade finance shortfall across Africa necessitates stronger bank balance sheets, more robust capital reserves, and increased financing for exporters and small to medium-sized enterprises (SMEs).
"Recapitalisation of the banks is important. You cannot lend to businesses to grow, expand or import machinery if you do not have enough capital. How do Nigerian banks support deepening intra-African trade if they do not have enough capital?" he questioned.
Kale elaborated that augmenting banks' capital bases would enhance their capacity to finance local businesses, scale up export-oriented production, and support SMEs aiming to join regional value chains.
"By increasing recapitalisation, you increase the ability of banks to lend more to domestic businesses and exporters. There are significant benefits for the Nigerian economy, especially in improving intra-African trade," he added.
Kale also connected Nigeria's long-term economic aspirations, including the government's objective of achieving a $1 trillion economy, to improvements in competitiveness and production efficiency.
"There are two ways to grow: You produce goods and services and sell them to consumers within Nigeria, across the continent, and preferably outside the continent. But the only way you can sell goods outside Nigeria is if they are competitive," he pointed out.
He suggested that reducing structural impediments in infrastructure, regulation, and logistics would lead to lower production costs, more stable inflation, and increased purchasing power.
"If you fix the Ease of Doing Business, you reduce the cost of production. Goods become cheaper, inflation comes down, and purchasing power improves. Higher demand leads to higher production, more jobs and more income. That is how you significantly grow the economy and move towards a $1 trillion target," Kale explained.
Regarding Nigeria's trade patterns, he stressed the importance of moving beyond exporting raw materials and importing finished goods.
"The reason we export raw materials and import finished goods is that we do not have a production structure that is competitive," he stated.
"If it is cheaper to import something than to produce it locally, consumers will import."
He advocated for accelerated industrialisation and value addition, proposing that Nigeria should process its raw materials domestically, satisfy local demand, and then export surplus manufactured products.
Citing the Dangote Refinery as an example of successful implementation, Kale indicated that a combination of aligned policies, capital mobilisation, and economies of scale can transform sectors from import-reliant to export- competitive.
He suggested applying this strategy to sectors such as pharmaceuticals, agribusiness, automotive and electric vehicle components, textiles, digital services, and the processing of green minerals like lithium and cobalt, with an emphasis on local production for domestic needs and export of finished goods.
While the AfCFTA offers a unified legal framework and market access across the continent, Kale asserted that its success for Nigeria hinges on continuous reforms, sound macroeconomic management, building industrial capacity, and a robust banking sector capable of financing trade on a large scale.
In his welcome address, Mr. Bolaji Lawal, Managing Director of Ecobank Nigeria, stated that the forum was organised to explore practical strategies for boosting trade and strengthening Nigeria's continental integration.
"Our second customer forum in the series focuses on strengthening Nigeria’s economic transformation. We would like to explore how we can drive exports, promote regional integration, and, most importantly, support Nigeria’s economic transformation, as we all work together towards the shared objective of building a $1 trillion economy," he said.
Lawal noted that Ecobank's extensive presence across Africa uniquely positions it to facilitate cross-border commerce.
"At Ecobank, we pride ourselves on being the bank with a footprint in 33 African countries, and trade is at the heart of everything we do. We are keen to share knowledge and discuss how our platform can better support trade across Africa and beyond," he added.
During a panel discussion, an official from the Central Bank of Nigeria (CBN) underscored the necessity of enhanced regional coordination and financial integration to unlock Africa's trade potential.
Tiku Allu, from the CBN's Import and Trade Relations Office, Trade and Exchange Department, remarked that Africa's primary opportunity lies in deepening cross-border collaboration and reinforcing backward integration within the continent.
"The opportunity we have as a continent lies in better collaboration and integration. There are opportunities in areas such as backward integration, where banks can play a critical role by providing access to the capital and financing structures required to support production within the region, rather than relying on imports from outside," he stated.
He further commented that financial institutions need to be more proactive in developing solutions that support regional production and value addition.
"These are opportunities that banks like Ecobank and others can begin to capitalise on more intentionally," Allu concluded.
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