Nigeria’s long-standing participation in the African Growth and Opportunity Act (AGOA) is under threat following the introduction of a 14% tariff on Nigerian exports by U.S. President Donald Trump. The tariff, which undermines the benefits Nigeria receives under AGOA, raises concerns about the nation’s trade diversification strategies and its future trade relationship with the U.S.
In this exclusive interview, Alhaji Sheriff Balogun, President of the Nigerian-American Chamber of Commerce (NACC), shares valuable insights on the effects of the tariff and the challenges ahead for Nigerian exporters.
Nigeria’s AGOA Exports: A Story Dominated by Oil
Since the inception of AGOA in 2000, Nigeria has exported a staggering $277 billion worth of goods to the United States, primarily in the form of crude oil. Petroleum products have consistently accounted for almost all of Nigeria’s exports under the program, leaving non-oil exports, such as agricultural and manufactured goods, in the minority.
Balogun highlights the narrow focus of Nigeria’s export strategy:
“While AGOA has provided valuable duty-free access, Nigeria’s exports have largely been driven by oil, with non-oil sectors struggling to benefit from the scheme.”
Fluctuating Export Values: The Role of Global Oil Markets
On average, Nigeria’s AGOA exports range between $10–12 billion annually, but this figure masks significant fluctuations, largely due to global oil market dynamics. Balogun elaborates:
“During the oil boom of the mid-2000s, exports were as high as $35 billion in 2008, but as U.S. domestic oil production increased after 2010, our exports dropped dramatically.”
In 2015, Nigeria’s AGOA exports plummeted to just $1.4 billion, only to rise again in recent years as oil prices recovered. This volatility underscores the vulnerability of Nigeria’s trade relationship with the U.S. and its heavy reliance on oil.
The 14% Tariff: A Serious Blow to Nigeria’s AGOA Benefits
The newly imposed 14% tariff is set to significantly undermine the duty-free access that Nigeria has long enjoyed under AGOA. Balogun explains the potential consequences:
“This tariff will make Nigerian goods more expensive in the U.S., eroding our competitive advantage. A Nigerian apparel item, for example, that once entered duty-free will now face a 14% tax, reducing its price competitiveness.”
Additionally, he highlights the risk of diminished trade volumes:
“As prices rise, U.S. buyers may reduce orders or turn to other countries with continued tariff-free access.”
Low AGOA Participation Among Nigerian Firms
Despite Nigeria’s prominent role in AGOA, participation by Nigerian businesses remains surprisingly low. Only a few dozen Nigerian firms are actively exporting to the U.S. under the scheme, and most of these exports are oil-related. Balogun reveals:
“Since 2000, fewer than 100 Nigerian firms have exported goods under AGOA, and only a small core of companies continues to engage with the program. This highlights the underutilization of AGOA by Nigerian businesses.”
Even non-oil exporters, who have access to duty-free entry, are relatively few, with agricultural exports like cocoa, sesame seeds, and cashew nuts making up a small fraction of Nigeria’s AGOA trade.
Non-Oil Sectors: Underperforming Despite AGOA Opportunities
While oil continues to dominate Nigeria’s AGOA exports, non-oil sectors like agriculture, apparel, and manufacturing have yet to capitalize on the preferential treatment offered by AGOA. According to Balogun:
“Nigeria’s agricultural exports to the U.S. are still very small. In 2020, Nigeria’s agricultural exports to the U.S. under AGOA were just $63 million, rising to about $95 million in 2021. In comparison, oil exports are worth billions.”
Similarly, Nigeria’s apparel and manufactured goods exports under AGOA have been minimal, far behind countries like Kenya, which has built a thriving apparel industry under the program.
Comparing Nigeria’s AGOA Performance to Other Countries
In terms of value, Nigeria has ranked among the top AGOA beneficiaries, but its heavy reliance on oil sets it apart from other top-performing countries like South Africa, which has leveraged AGOA to boost a wide range of exports, including autos, chemicals, and agricultural products.
Balogun contrasts Nigeria’s situation with that of Kenya, which has successfully developed a textile industry and now exports substantial quantities of garments to the U.S. under AGOA. Other countries like Lesotho and Ethiopia have also benefited significantly from AGOA by focusing on specific sectors such as textiles.
A Future of Diversification: The Need for Action
Despite its current over-reliance on oil, there is hope for trade diversification through AGOA. Encouraging growth in sectors like agriculture shows that Nigerian businesses can succeed in non-oil exports, but they require increased support, better infrastructure, and help in meeting U.S. standards.
Balogun urges the government to double down on policies that will support non-oil exporters:
“We need to focus on improving infrastructure, providing export incentives, and ensuring that Nigerian products meet international standards. These steps will empower more businesses to benefit from AGOA.”
However, with AGOA set to expire in September 2025, Nigeria’s window for making the most of this trade opportunity is shrinking, and Balogun calls for urgent action.
Conclusion: Leveraging AGOA for Long-Term Growth
The looming 14% tariff presents a significant challenge to Nigeria’s participation in AGOA, threatening to undermine the program’s key benefits. Yet, there is still time for Nigeria to diversify its exports, but only if the country actively engages with the program and pursues a broad-based export strategy. The future of Nigeria’s trade under AGOA depends on how quickly the country can shift away from its dependence on oil and expand into new sectors.
With proactive policies and strategic investments in agriculture, manufacturing, and infrastructure, Nigeria could unlock the full potential of AGOA before it’s too late.
