Trade expansion in Africa: Legal and regulatory considerations for businesses entering Nigeria under the African Continental Free Trade Area (AfCFTA)

Introduction

The African Continental Free Trade Area (AfCFTA) prides itself as a landmark instrument aimed at restructuring Africa’s fragmented trade landscape into a unified continental market. Birthed in 2019 and operationalised in 2021, the AfCFTA seeks to eliminate tariff and non-tariff barriers progressively, liberalise trade in services, facilitate investment, and promote sustainable development across African economies. Being the world’s largest free trade area by the number of participating States, the AfCFTA represents a fundamental shift from regional economic communities towards continent-wide economic integration.

Nigeria, as Africa’s most populous nation and one of its largest economies, occupies a pivotal position within this framework. Although Nigeria initially adopted a cautious stance toward the agreement, due to concerns over domestic industry protection and border management, it has now ratified the AfCFTA and made important legal and institutional changes to meet the commitments required under the deal.

For foreign and regional businesses seeking to enter Nigeria or expand within Africa under AfCFTA preferences, a nuanced understanding of the legal and regulatory environment is indispensable. This article examines the AfCFTA Agreement and its attendant opportunities for trade expansion into Nigeria while critically analysing the domestic and continental legal frameworks governing market entry. It explores regulatory compliance requirements, trade facilitation mechanisms, and key risk areas, offering practical insights for businesses navigating Nigeria’s AfCFTA landscape.

Objectives and Legal Architecture of AfCFTA

The AfCFTA Agreement is underpinned by multiple protocols, including those on trade in goods, trade in services, dispute settlement, investment, competition policy, intellectual property rights, and digital trade. Article 3 of the agreement specified the General objective, while Article 4, known as the Specific Objective, was set out to realise Article 3. These articles aim to eliminate customs duties, reduce non-tariff barriers through regulatory cooperation, establish predictable and transparent trade rules, and promote industrialisation and value-chain development.

The Agreement draws its inspiration from the World Trade Organisation rules by adopting a rule-based approach and tailoring it to the African developmental context. This hybrid structure requires member states, including Nigeria, to harmonise domestic legislation with continental obligations.

Nigeria’s Strategic Importance

Under AfCFTA, Nigeria is positioned not only as a destination market but also as a regional production hub serving West and Central Africa, with its economy characterised by a large consumer base, a growing manufacturing sector, and increasing diversification beyond oil and gas. Nigeria offers access to a vast domestic market, better proximity to multiple AfCFTA member states, and an established financial, logistics, and professional services sector.

However, these opportunities are not inherent in themselves but contingent upon sound regulatory compliance and effective engagement with Nigeria’s legal institutions.

Legal Entry Requirements for Businesses in Nigeria

Under the AfCFTA, while investment liberalisation is encouraged, domestic laws continue to regulate entry conditions. Accordingly, AfCFTA does not eliminate Nigeria’s sovereign right to impose licensing, capital requirements, or local participation rules.

First, Rules of Origin and Preferential Market Access are central to AfCFTA’s operation, determining whether goods qualify for preferential tariff treatment. These rules prevent trade deflection and ensure that benefits accrue to genuine African producers. The rule requires that only goods made in Africa are eligible for preferential treatment under the AFCFTA.

For businesses entering Nigeria, failure to comply with Rules of Origin requirements may result in loss of tariff preferences, customs penalties, or delays.

Second, businesses seeking to operate in Nigeria must comply with the Companies and Allied Matters Act (CAMA) 2020, which governs corporate formation and governance. Foreign companies are generally required to incorporate a local subsidiary unless operating under limited exemptions.

These registrations include, but are not limited to, registrations with the Corporate Affairs Commission (CAC) and the Nigerian Investment Promotion Commission (NIPC), as well as obtaining sector-specific licences where applicable, and relevant tax registration with the Nigeria Revenue Service (formerly Federal Inland Revenue Service).

Import, Export, and Customs Compliance

With respect to businesses engaging in cross-border trading, compliance with Nigeria’s customs laws, including documentation, valuation, and inspection requirements are mandatory. While AfCFTA aims to streamline customs procedures, implementation remains incremental, necessitating careful compliance planning.

Product Standards and Technical Regulations

Nigeria enforces product standards through agencies such as the Standards Organisation of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC). These regulations cover product safety and quality, labelling and packaging, health and environmental compliance.

NAFDAC regulates food, beverages, pharmaceuticals, cosmetics, medical devices, and other regulated products to ensure they are safe for public consumption and use. In compliance with NAFDAC, manufacturers and importers are required to register products on the NAFDAC e-Registration Portal, undergo facility inspections to confirm compliance with Good Manufacturing Practices (GMP), and submit key documentation such as certificates of incorporation, trademark registration, certificates of manufacture and free sale (for imported goods), and comprehensive certificates of analysis. Products must also meet strict labelling and packaging requirements as stated above, including clear ingredient disclosure, production dates, and approved NAFDAC numbers. Post-market surveillance is conducted to ensure continued compliance, and under NAFDAC’s “5+5” policy, importers may be required to translate product labels to English language and to transition to local production after five years.

On the other hand, SON regulates the standards by developing and enforcing industrial standards for products, processes, and materials, including non-food FMCGs. Compliance with SON includes product testing, factory inspections, and conformity assessment through schemes such as the Mandatory Conformity Assessment Programme (MANCAP) for locally manufactured goods and the SON Conformity Assessment Programme (SONCAP) for imports.

These key regulators play a critical role in safeguarding consumers, promoting quality assurance, and shaping market access conditions for FMCG operators in Nigeria.

While AfCFTA promotes regulatory harmonisation, national standards remain enforceable, and non-compliance can constitute a de facto barrier to market entry.

Digital Trade, Data Protection, and Technology Regulation

Digital trade represents a growing component of AfCFTA’s agenda. Nigeria’s digital economy is governed by the Nigeria Data Protection Act (NDPA), cybersecurity regulations, and sector-specific rules. Businesses providing digital services must ensure lawful processing of personal data, compliance with cross-border data transfer regulations, and adequate cybersecurity safeguards.

As AfCFTA develops continent-wide digital trade rules, companies operating in Nigeria must remain adaptable to evolving regulatory standards.

Intellectual Property and Competition Law Considerations

The intellectual property regime in Nigeria and across Africa has become more robust. However, increased intra-African trade has led to greater exchange of data, information, and product designs, thereby exposing businesses to heightened risks of intellectual property infringement. While AfCFTA seeks eventual harmonisation of intellectual property (IP) regimes, enforcement remains primarily national. Businesses should proactively register trademarks, patents, and copyrights in Nigeria to mitigate infringement risks.

Furthermore, to ensure healthy competition in the Nigerian market space, the Nigeria’s Federal Competition and Consumer Protection Act (FCCPA) establishes rules against anti-competitive practices and protects consumer rights. Cross-border businesses must ensure compliance, particularly in pricing, advertising, and market competition.

Dispute Resolution and Legal Certainty

AfCFTA’s Dispute Settlement Mechanism provides state-to-state remedies for trade disputes, enhancing predictability in continental trade relations. However, private businesses largely rely on domestic courts, arbitration, and contractual dispute resolution mechanisms. In Nigeria, arbitration remains a preferred option for commercial disputes, supported by a modern legislative framework and growing judicial support.

Strategic Considerations for Businesses

To maximise AfCFTA benefits when entering Nigeria, businesses should:

Conclusion

The AfCFTA offers unprecedented opportunities for trade expansion across Africa, with Nigeria playing a central role in shaping continental commerce. However, the benefits of AfCFTA are not automatic; they depend on effective legal compliance, regulatory alignment, and strategic planning.

For businesses entering Nigeria, understanding the interaction between AfCFTA obligations and domestic legal frameworks is critical. By carefully navigating regulatory requirements and proactively engaging with Nigeria’s evolving trade environment, businesses can position themselves to benefit from Africa’s emerging single market and contribute to sustainable economic integration across the continent.

Marvis Oduogu is a Team Lead in the Fast-Moving Consumer Goods (FMCG) Sector at Stren & Blan Partners, Chibudike Anene is a Senior Associate while Vincent Ozoanimalu and Confidence Edeh are Associates in the same sector.

Stren & Blan Partners is a full-service commercial Law Firm that provides legal services to diverse local and international Clientele. The Business Counsel is a weekly column by Stren & Blan Partners that provides thought leadership insight on business and legal matters.

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