Strengthening Port-Supply Chain Relationships to Maximize AfCFTA Benefits in Nigeria

Abstract

Logistics infrastructure deficiencies in Nigeria result in costs for traders ranging from 40-60% of product value, with transportation from seaports to inland areas making up 40 to 80% of total container shipping expenses. This situation detrimentally affects trade competitiveness and undermines the effectiveness of the African Continental Free Trade Agreement (AFCFTA). Strengthening relationships in the port-supply chain by linking hinterland transportation to the port system at Lagos seaports is vital for improving regionalization efforts. This study explores the relationship between hinterland logistics and port clearance processes in Nigeria and their impact on the effectiveness of the African Continental Free Trade Agreement (AfCFTA). The study utilized a survey research design involving 43 import-dependent businesses listed on the Nigeria Exchange Group that transport goods via seaport and land. Pearson correlation analysis was used to examine the relationship between transportation costs and port clearance costs. The results indicate a negligible correlation (r = 0.056), with only 0.3% of the variation in clearing costs attributed to transportation expenses. Transportation costs have minimal impact, suggesting that efforts should be focused on other factor including tariffs and documentation.