The future of Nigeria’s participation in the African Growth and Opportunity Act (AGOA) has come under scrutiny following the announcement of a 14 per cent tariff on Nigerian exports to the United States by President Donald Trump. This new policy, which undermines the advantages previously granted under AGOA, has raised significant concerns about Nigeria’s efforts to diversify its trade and maintain access to the U.S. market. Alhaji Sheriff Balogun, President of the Nigerian-American Chamber of Commerce, has provided critical insights into the potential ramifications of this decision on Nigeria’s economy.
Since AGOA was enacted in 2000, Nigeria has exported an estimated $277 billion worth of goods to the U.S. under the programme. The overwhelming bulk of these exports has been crude oil, which has consistently dominated Nigeria’s trade under AGOA. Non-oil exports, including agricultural and manufactured goods, have contributed only a fraction of the total, demonstrating Nigeria’s continued dependence on petroleum products in its trade relationship with the U.S. On average, Nigeria’s AGOA exports have been valued at approximately $10–12 billion annually. However, these figures have been highly volatile, reflecting fluctuations in global oil markets. In 2008, during an oil boom, Nigeria’s AGOA exports peaked at over $35 billion, but by 2015, following a decline in U.S. demand for Nigerian crude, exports plummeted to just $1.4 billion. A moderate rebound was observed in later years, with figures rising to $6.1 billion in 2017.
The newly imposed 14 per cent tariff is expected to diminish the competitiveness of Nigerian products in the U.S. market, effectively nullifying the duty-free advantage that AGOA provides. Nigerian exporters, who previously benefited from tariff-free access, will now face increased costs, which could either force them to raise prices or absorb financial losses. Analysts predict that industries with already thin profit margins—such as the apparel and automotive sectors—will be disproportionately affected. Furthermore, as Nigerian goods become more expensive than those from other AGOA-participating nations that still enjoy tariff-free entry, U.S. buyers may turn to alternative suppliers. This could lead to a significant decline in Nigerian export volumes, ultimately undermining the country’s revenue and efforts to expand its non-oil export base.
Despite Nigeria’s vast economic potential, relatively few firms have capitalised on AGOA beyond the oil sector. Since 2000, fewer than 100 Nigerian companies have exported goods to the U.S. under the agreement, with many being one-time or infrequent exporters. A report from a recent year indicated that only 37 Nigerian firms exported under AGOA, collectively accounting for just £38 million worth of products. These figures highlight the underutilisation of AGOA by Nigerian businesses. At present, only a limited number of non-oil exporters remain active, primarily engaged in agriculture and small-scale manufacturing.
Nigeria’s AGOA performance stands in stark contrast to that of other African nations that have successfully diversified their exports under the programme. South Africa, for example, consistently ranks as the largest AGOA beneficiary, with exports exceeding $3.6 billion in 2022. Unlike Nigeria, South Africa’s AGOA exports are diversified across multiple sectors, including automobiles, minerals, metals, chemicals, and agricultural products. Similarly, Kenya has leveraged AGOA to develop a thriving textile and apparel industry, exporting over $614 million worth of goods to the U.S. in 2022. Smaller economies such as Lesotho have also outperformed Nigeria in the apparel sector, with AGOA-related textile exports forming a significant portion of their economies.
Agriculture has shown some promise for Nigeria under AGOA, with exports of cocoa beans, sesame seeds, cashew nuts, and shea butter gradually increasing. However, these contributions remain modest compared to Nigeria’s overall trade volume. In 2021, Nigeria’s agricultural exports under AGOA were valued at just $95 million—a mere fraction of its petroleum exports. Similarly, Nigeria’s engagement in the textile and apparel sector remains negligible, despite AGOA’s favourable terms for such industries. Infrastructure challenges, high production costs, and difficulties in meeting U.S. regulatory standards have prevented the country from capitalising on this opportunity.
As AGOA is set to expire in September unless renewed by the U.S. Congress, the window for Nigeria to maximise its benefits under the programme is narrowing. If the tariff remains in place and AGOA is not renewed, Nigerian exporters could face long-term setbacks in accessing the U.S. market. To mitigate these risks, the Federal Government may need to intensify policies that encourage non-oil exports, such as improving infrastructure, providing export incentives, and ensuring compliance with international trade standards. Without a strategic approach to trade diversification, Nigeria risks losing its competitive edge, while other African nations continue to harness AGOA to expand their industrial and export capacities.
Ultimately, Nigeria’s experience with AGOA underscores a significant missed opportunity. While the programme has facilitated billions in oil exports, it has not been effectively leveraged to foster industrial or agricultural diversification. Unless proactive measures are taken to enhance Nigeria’s non-oil exports, the country may struggle to maintain its trade relevance in an increasingly competitive global market.
