Decades of trade deals fail to wean Nigeria off crude oil dependence

• Non-oil exports remain around 10% despite multiple trade deals
• Data reveals weak competition, not access
• Repeated naira devaluations mask decades of poor export growth
• AfCFTA, AGOA and UK trade schemes deliver little for manufacturing
• Experts warn new UAE deal may follow old pattern

Despite two decades of being handed preferential access to global markets, Nigeria remains trapped in oil dependence as many deals fail to deliver the much-needed diversification.

Successive administrations, since the return to democracy, have touted trade agreements as the escape route from crude oil dependence.

Exports have grown in leaps since the early 2000s, more than doubling from about $20 billion to $50 billion in 2024. The crude concentration risk, though relatively weaker, continues to undermine the external sector and fuel foreign exchange (FX) earning volatility.

The past two years have been a magical era for non-oil traction. Yet, the effort to grow the sector to the level it can compete with crude remains an aspiration.

In 2024, non-oil accounted for less than 12 per cent of the export, up from less than three per cent in 2000 when the United States’ African Growth and Opportunity Act (AGOA) came into effect.

From AGOA to the ECOWAS Trade Liberalisation Scheme (ETLS), the United Kingdom’s Developing Countries Trading Scheme (DCTS), Nigeria-China Currency Swap Agreement and the African Continental Free Trade Area (AfCFTA), the promise of more aggressive non-oil export growth has been slow and on a snail’s pace at best.

Earlier this month, Nigeria signed another agreement — the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates (UAE) — even as existing trade deals continue to underperform. Data suggests the problem is not access, but execution.

Last week, the Nigerian Export Promotion Council (NEPC) announced that non-oil exports rose to $6.1 billion in 2025, an 11.5 per cent increase from $5.4 billion in 2024. On the surface, the figures look encouraging. But placed in historical context, they tell a more sobering story.

In real dollar terms, Nigeria’s non-oil exports have grown only marginally in more than 20 years, while oil and gas still account for about 90 per cent of total export value — a ratio that has not shifted significantly since AGOA came into effect.

When AGOA was launched in 2000, expectations were high. Nigeria was meant to leverage duty-free access to the U.S. market to build manufacturing capacity, expand agro-processing and revive its textile industry to create jobs.

The transformation never happened. Nigeria’s exports to the United States have fluctuated sharply, largely tracking oil prices.

By the time the programme was extended to 2025, Nigeria was still struggling to achieve meaningful export diversification. Its export to the U.S. was $1.9 billion. It managed to climb up over 100 per cent to $4.2 billion the following year and far less than what the figure was before AGOA took full effect.

Repeated naira devaluations have also masked weak export performance. While export values appear to rise in naira terms, dollar-denominated earnings often stagnate or decline.

When AGOA began in 2000, the naira traded at about N102 to the dollar. By 2015, it had weakened to N195, and by 2016, it dipped to N253. Today, it has fallen further.

A manufacturer exporting N10 million worth of goods in 2000 earned roughly $98,000. In 2015, the same N10 million translated to about $51,000. Today, it is worth barely $7,000.

While global trade deals dominate headlines, experts argued that regional frameworks such as AfCFTA offered more realistic opportunities for Nigeria’s non-oil exports.

The late President Muhammadu Buhari projected that AfCFTA would boost Nigeria’s non-oil exports by over 15 per cent.

So far, that promise remains largely theoretical. By mid-2024, Nigeria had issued just 10 Rules of Origin (RoO) certificates under AfCFTA. South Africa issued 4,658, Egypt 2,852, Tanzania 392, Tunisia 300, Ghana 201 and Kenya 112.

Even where exports exist, petroleum products dominate. South Africa, Côte d’Ivoire and Senegal — Nigeria’s top African trade partners — mainly import energy products. Agricultural exports such as cocoa, sesame seeds and cashew nuts remain marginal in value terms.

In the first half of 2025, Nigeria exported 663 million metric tonnes of non-oil goods to ECOWAS countries and 488 million metric tonnes worth $83.5 million to 21 other African nations. Against annual export receipts exceeding $50 billion, the figures barely register.

What Nigeria practices, experts say, is trade arbitrage — exporting crude, importing refined fuel, and re-exporting some refined products — not structural transformation.

Despite Nigeria’s vast agricultural potential, agriculture contributed just 5.73 per cent of export value in 2024. Manufacturing performed even worse at 2.95 per cent.

By contrast, Kenya — another AGOA beneficiary — earns over $3 billion yearly from agricultural exports such as tea, coffee and horticulture, while its textile exports under AGOA have created tens of thousands of jobs.
Nigeria, with nearly five times Kenya’s population and far more arable land, has failed to convert its advantage into export dominance.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said Nigeria is not short of trade agreements, but lacks the capacity to implement them.

“Nigeria has many bilateral, regional and continental trade agreements, but translating them into concrete outcomes has always been the challenge,” Yusuf said.

According to him, the private sector — expected to drive exports — is crippled by high production costs, poor infrastructure, weak financing and regulatory bottlenecks.

“Our manufacturing handicaps mean we cannot compete on price or quality. That is why these agreements are often one-sided,” he said, adding that AGOA has existed for over 20 years with little to show for it.

Vice-President of the Lagos Chamber of Commerce and Industry (LCCI), Funlayo Bakare Okeowo, said many exporters are unaware of existing trade deals, while access to finance remains a major constraint.

“How do you compete when interest rates are over 20 per cent, while competitors borrow at less than five per cent?” she asked. “Without funding and an enabling environment, trade deals are just promises.”

Former acting national president of the Association of Nigerian Licensed Customs Agents (ANLCA), Kayode Farinto, blamed poor sensitisation, over-regulation and irregularities. He noted that many traders are more familiar with Nigeria’s currency swap deal with China than AGOA or the U.K. trade framework.

Trade with China continues to surge, dominated by imports. Between January and October 2025, trade between Nigeria and China rose to $22.3 billion, dwarfing Nigeria’s trade volumes with the U.S. and U.K.
Even China’s zero-tariff access for African exports, announced last year, has gone largely unused.

Experts agree that Nigeria’s infrastructure deficit cripples competitiveness. Manufacturers battle unreliable electricity, poor roads and congested ports. In some cases, it costs more to transport goods from Benue to Lagos than to ship them from Lagos to Europe.

Foreign exchange scarcity has further disrupted supply chains, raising costs and eroding competitiveness. Meanwhile, Nigeria continues to export raw materials, such as cocoa beans, sesame seeds, and cashew nuts, while importing finished products.

Efforts to mandate local value addition before export have drawn mixed reactions, with experts warning that coercive policies could fuel smuggling rather than industrialisation.

In real dollar terms, Nigeria’s export growth remains inconsistent. Export baskets are narrow, value addition is limited, and utilisation of trade preferences is weak.

Until Nigeria addresses its production environment, manufacturing capacity, infrastructure, financing, and port efficiency, experts warn that new trade agreements will simply follow the path of old ones — making bold announcements with minimal impact. (Guardian)