17 hours Ago By Damilola Aina
Nigeria’s participation in the African Growth and Opportunity Act is under serious concern following the announcement of the newly imposed 14 per cent tariff by US President Donald Trump. This policy, which threatens to erode the advantages AGOA provides, raises concerns about the country’s trade diversification efforts. In this interview with DAMILOLA AINA, the President, Nigerian-American Chamber of Commerce, Alhaji Sheriff Balogun offers some insight on the global trade strategy What is the total value of Nigeria’s exports to the U.
S. under AGOA since its inception? Since the African Growth and Opportunity Act began in 2000, Nigeria has exported an estimated $277bn worth of goods to the United States under AGOA. The vast majority of this value has come from crude oil shipments.
In fact, petroleum products have overwhelmingly dominated Nigeria’s AGOA exports each year – oil alone accounts for practically all of Nigeria’s exports under the programme by value. Non-oil exports (such as agricultural and manufactured goods) have been only a small fraction of the total. This means that over two decades, Nigeria’s participation in AGOA has been heavily tied to oil exports.
What is the annual average value of Nigeria’s AGOA exports to the U.S.? Nigeria’s AGOA exports average roughly $10–12 billion per year in value.
However, this average hides big swings over time. In the mid-2000s, during the oil boom, Nigeria’s exports to the U.S.
under AGOA were extremely high – for example, in 2008, Nigeria exported over $35 billion in goods (mostly oil) to the U.S. After 2010, as U.
S. demand for Nigerian crude fell (due to rising U.S.
improved oil production), Nigeria’s AGOA exports plummeted – dropping from about $17.2 billion in 2009 to just $1.4 billion in 2015.
They rebounded somewhat in later years (e.g. back up to $6.
1 billion by 2017 as oil prices and exports rose again). In short, while the long-term average is around $10 billion annually, Nigeria’s yearly AGOA export figures have fluctuated dramatically, driven largely by oil market trends. How could the new 14% U.
S. tariff on Nigerian exports affect Nigeria’s AGOA benefits? A blanket 14 per cent tariff on Nigerian goods would undercut the duty-free access that AGOA currently provides. Under AGOA, eligible Nigerian exports enter the U.
S. tariff-free, giving them a price advantage. Imposing a 14 per cent import tax erodes that benefit by making Nigerian products more expensive in the U.
S. market. This loss of preferential treatment could have several impacts, ranging from higher costs.
Nigerian exporters (and U.S. importers) would suddenly face a 14 per cent cost increase on their goods, which may force them to raise prices or absorb losses.
For example, a Nigerian apparel item that used to enter the U.S. duty-free would now incur a 14 per cent tariff, wiping out much of its competitive margin.
Also, there will be reduced competitiveness. Nigerian goods would become relatively more expensive than exports from other AGOA countries that are still tariff-free. Sectors that rely on thin margins would be hardest hit.
Our analysts have noted that African countries’ apparel and automotive exports would be hit hard by a sudden rise in tariffs, as these industries depend on AGOA preferences to compete. The same logic applies to Nigeria’s nascent non-oil exports – even a moderate tariff can make them uncompetitive. Thirdly, there will be lower export volumes.
Over time, the tariff could lead U.S. buyers to reduce orders from Nigeria or switch to alternative suppliers with duty-free access.
Nigeria’s exporters might see diminished sales in the U.S. market, reversing the gains made under AGOA.
In essence, the 14 per cent tariff effectively nullifies much of Nigeria’s AGOA advantage, putting its exporters at a disadvantage and potentially shrinking Nigeria’s U.S.-bound exports if it remains in effect.
In summary, the tariff undermines the core benefit Nigeria enjoys under AGOA – duty-free entry – and could negatively impact export revenues and diversification efforts. How many Nigerian firms have participated in AGOA, and how many are active now? Current figures indicate relatively few Nigerian companies have taken part in AGOA trade, aside from the oil sector. Over the entire period since 2000, the total number of Nigerian firms that have exported to the U.
S. under AGOA is likely less than a hundred at most. Many of these are one-off or occasional exporters.
Utilisation of AGOA by Nigerian businesses has been consistently low. For example, in one recent year, it was reported that only 37 Nigerian companies exported goods under the AGOA scheme, totaling about £38 million worth of products. This is an extraordinarily small number given the size of Nigeria’s economy.
Notably, those exports were all non-oil products – illustrating how few Nigerian non-oil firms export to the U.S. According to the Nigerian Export Promotion Council, only a few Nigerian exporters have benefited from the U.
S. duty-free trade opportunity. This statement underscores that the number of companies utilising AGOA is very limited.
As of today, only a handful of Nigerian firms remain active exporters under AGOA. Aside from the major oil producers, which account for petroleum shipments, the active non-oil AGOA exporters are just a few dozen companies, primarily in agriculture and small manufacturing. In short, Nigeria’s participation in AGOA at the firm level is highly concentrated – a small core of exporters is involved, and the vast majority of Nigerian businesses have not engaged with the programme.
Related News Tariff dispute: Macron calls for suspension of French investment in US ITUC condemns Trump's new tariffs, warns of job losses Trump imposes 14% tariff on Nigerian exports to US On average, how many Nigerian companies export to the U.S. via AGOA each year? The annual participation is very low, on the order of only a few dozen companies per year.
If we spread out the numbers, it works out to roughly 20–40 Nigerian firms at most exporting to the U.S. under AGOA in a typical year.
For context, Nigeria has tens of thousands of exporters in total (most ship to other markets, not the U.S.), yet only a tiny fraction of these are tapping into AGOA annually.
In many years, the count of Nigerian AGOA exporters has been in the tens, not hundreds. For example, as noted, one report showed just 37 companies in a year. Even if that figure varies from year to year, it consistently indicates that fewer than 50 companies (outside of oil shipments) take advantage of AGOA in any given year – a very low average participation rate for an economy of Nigeria’s size.
This highlights a major challenge: the AGOA preference is under-utilized by Nigerian businesses. Which sectors have benefited most from AGOA in Nigeria, and how have they performed? Like I said earlier, oil is by far the biggest beneficiary. Nigeria’s AGOA exports have been overwhelmingly oil and gas.
Crude oil and related petroleum products make up the lion’s share of the value. For instance, between 2000 and 2022, Nigeria’s oil exports under AGOA amounted to about $277 billion. Even in recent years, the pattern holds – in 2023, Nigeria exported $3.
8 billion under AGOA, of which $3.6 billion was crude oil. In other words, over 95 per cent of Nigeria’s AGOA exports are petroleum.
Non-oil sectors have seen only limited gains under AGOA. A few agricultural products have started to make inroads. Nigeria exports a modest selection of agricultural goods to the U.
S. duty-free, including items like cocoa beans, sesame seeds, cashew nuts, and shea butter. These are areas where AGOA’s tariff exemptions have opened avenues for Nigerian farmers and agro-processors.
However, the volumes are still very small relative to Nigeria’s potential. For example, the total value of Nigeria’s agricultural exports to the U.S.
under AGOA was about $63 million in 2020, rising to roughly $95 million in 2021 – tiny figures compared to oil exports. While growth in agro-exports is a positive sign, Nigeria’s agricultural engagement with AGOA remains at an early stage. Despite being eligible for AGOA’s textile and apparel benefits, Nigeria has hardly made a dent in this sector.
Neighbouring countries have built garment factories to ship clothes under AGOA, but Nigeria’s textile/apparel exports to the U.S. are minimal (virtually zero in many years).
Challenges with production cost, compliance, and infrastructure have kept Nigeria’s apparel industry from capitalising on AGOA so far. Similarly, Nigeria’s exports of manufactured or value-added products under AGOA are very limited. A small number of firms have sent products like leather goods, processed foods, or cosmetics, but again, these amounts are negligible in scale.
There’s been no significant automotive or machinery export from Nigeria under AGOA in contrast to South Africa, for example. In summary, Nigeria’s AGOA exports are still almost entirely in the oil and gas sector, with non-oil sectors contributing only a sliver of the total. The performance of non-oil categories – agriculture, apparel, etc.
– has been underwhelming, though there are some recent improvements in agricultural exports. Nigeria clearly has not yet leveraged AGOA to develop broad-based export industries beyond petroleum. How does Nigeria’s AGOA performance compare to other top AGOA countries? In terms of export value, Nigeria has often ranked near the top of AGOA beneficiaries, but for very different reasons than others.
Nigeria’s high export values come from oil, whereas several other countries have excelled in diversified, non-oil exports. Currently, South Africa is the largest AGOA beneficiary by value most years. It exported about $3.
6bn under AGOA in 2022, slightly more than Nigeria’s $3.5bn. Crucially, South Africa’s AGOA exports are diversified – mainly autos, minerals, metals, chemicals, and agricultural products (e.
g. cars, citrus fruit, wine) rather than one dominant commodity. This industrial diversity means South Africa has created jobs in manufacturing (like car assembly for export) thanks to AGOA.
Like Nigeria, Angola has used AGOA mostly for oil. In the 2000s, Angola was a top AGOA exporter due to crude oil shipments. However, with the U.
S. importing less African oil in recent years, Angola’s AGOA exports have fallen. In 2022, Angola sent around $391 million under AGOA (all of it crude oil) – far less than Nigeria.
Kenya is also a standout example of AGOA-fueled non-oil exports. Kenya exported about $614 million to the U.S.
under AGOA in 2022, composed mostly of textiles and apparel. Through AGOA, Kenya has built a thriving apparel industry (factories producing clothing for U.S.
brands duty-free). This has created tens of thousands of jobs in Kenya. By comparison, Nigeria’s apparel exports are negligible, meaning Nigeria hasn’t tapped the textile opportunity that Kenya did.
Until recently, Ethiopia was another major apparel exporter under AGOA (over $200 million in garments), though it is currently suspended from AGOA. Lesotho, a much smaller country, consistently exports over $250 million in apparel to the U.S.
annually. In fact, AGOA-related textile exports form a significant chunk of Lesotho’s economy. This highlights how even small economies have maximized AGOA in specific sectors.
A country like Ghana exported about $746 million under AGOA in 2022 – much of it oil and some cocoa. Côte d’Ivoire’s AGOA exports (~$127 million in 2022) are mainly cocoa products and some oil. These countries, while exporting less than Nigeria, have a bit more balance between commodities and processed goods.
In summary, Nigeria’s AGOA profile is an outlier. It’s dominated by one commodity (oil), whereas other top AGOA countries have leveraged the program to boost manufactured and agricultural exports. Nigeria’s non-oil AGOA exports are tiny, not just in absolute terms but also relative to peers.
For instance, much smaller economies like Kenya or Lesotho export far more non-oil goods to the U.S. than Nigeria does.
This comparison underlines that Nigeria has underutilised AGOA’s potential for industrial and export diversification. What do these trends mean for Nigeria’s trade diversification and economic outlook under AGOA? The data suggests that Nigeria has yet to truly use AGOA as a tool for diversification. While AGOA has dramatically increased Nigeria’s oil exports in the past when the US demand was high, it has not yet transformed Nigeria’s non-oil export sectors.
Trade diversification remains a key challenge. Nigeria’s economy is still heavily reliant on oil, and AGOA hasn’t changed that equation so far – unlike in some other countries where AGOA spurred new export industries. However, the opportunity for diversification through AGOA is not entirely lost.
There are encouraging signs in recent years, such as the growth, albeit from a low base of agricultural exports like cocoa, cashews, and sesame to the U.S. duty-free.
These niche exports show that Nigerian entrepreneurs can compete in the US market when given tariff advantages and the right support. If Nigeria scales up such efforts – for example, by improving product quality, meeting US standards, and investing in processing – it could significantly increase its non-oil exports under AGOA. That would help create jobs in agriculture and light manufacturing, contributing to Nigeria’s broader goal of reducing over-reliance on oil.
It’s also important to note that AGOA is currently set to expire in September unless renewed by the US Congress. This looming deadline adds some urgency for Nigeria. In the short term, Nigeria would want to maximize use of AGOA before the deadline– essentially, make the most of the duty-free window while it’s open.
In the medium term, if AGOA is renewed or replaced with a similar program, Nigeria will need to be much more proactive in exploiting it. The imposition of a 14 per cent tariff on Nigerian goods if it continues, blunts the incentive for firms to invest in exporting to the US. The Federal Government may need to double down on policies that encourage non-oil exports – improving infrastructure, providing export incentives, ensuring products meet international standards – so that more firms can benefit from initiatives like AGOA.
The goal would be to emulate the success of countries that used AGOA to kick-start new sectors like Kenya’s apparel or South Africa’s autos. Diversifying within AGOA will also prepare Nigeria for a future where preferential access might not be guaranteed. If Nigeria can establish competitive non-oil exports now, those industries could survive even if preferences erode, such as if AGOA lapses or tariffs stay in place.
In essence, Nigeria’s engagement with AGOA highlights a significant untapped potential – with better utilisation, AGOA could support Nigeria’s economic diversification, but without reforms and active participation, Nigeria risks missing out on the full benefits of the programme..
