Decades of Trade Deals Fail to Free Nigeria from Crude Oil Dependence

Despite more than two decades of preferential access to major global markets, Nigeria remains firmly dependent on crude oil, as successive trade agreements have failed to deliver meaningful export diversification.

Since the return to democracy, successive administrations have promoted trade deals as a pathway to reducing Nigeria’s reliance on oil. While total exports have more than doubled from about $20 billion in the early 2000s to roughly $50 billion in 2024, the export base remains heavily concentrated in crude oil, leaving the economy vulnerable to price shocks and foreign exchange volatility.

Non-oil exports have shown modest momentum in recent years, but remain far from challenging crude oil’s dominance. In 2024, non-oil exports accounted for less than 12 per cent of total exports, compared with under three per cent in 2000 when the United States’ African Growth and Opportunity Act (AGOA) came into effect.

From AGOA and the ECOWAS Trade Liberalisation Scheme (ETLS) to the UK’s Developing Countries Trading Scheme (DCTS), the Nigeria–China currency swap and the African Continental Free Trade Area (AfCFTA), expectations of accelerated non-oil export growth have largely gone unmet.

Earlier this month, Nigeria signed yet another agreement, the Comprehensive Economic Partnership Agreement (CEPA) with the United Arab Emirates, even as existing trade frameworks continue to underperform. Data increasingly suggests that market access is not Nigeria’s core challenge; execution is.

Last week, the Nigerian Export Promotion Council (NEPC) reported that non-oil exports rose to $6.1 billion in 2025, an 11.5 per cent increase from $5.4 billion in 2024. While the figures appear encouraging, a longer-term view paints a less optimistic picture.

In real dollar terms, non-oil exports have grown only marginally over the past two decades, while oil and gas still account for roughly 90 per cent of total export earnings, a ratio that has barely changed since AGOA was introduced.

When AGOA was launched in 2000, Nigeria was expected to leverage duty-free access to the U.S. market to expand manufacturing, deepen agro-processing and revive its textile industry. Those expectations were never realised. Instead, Nigeria’s exports to the U.S. have largely mirrored fluctuations in oil prices.

Data from the Office of the United States Trade Representative shows that total trade in goods and services between Nigeria and the U.S. stood at $13 billion in 2024, before falling to about $10.4 billion in 2025, below the $11.5 billion recorded in 2000, when the U.S. absorbed over 40 per cent of Nigeria’s exports.

By contrast, South Africa recorded $55.9 billion in non-crude exports under AGOA between 2000 and 2022, according to the U.S. International Trade Commission.

Nigeria’s experience with China reflects a similar imbalance. Exports to China rose from N613 million in 2017 to $2.3 billion by 2023, representing a 275 per cent increase. However, with China exporting more than $20 billion worth of goods to Nigeria, the trade balance remains heavily skewed in Beijing’s favour.

The UK’s DCTS, which took effect in June 2023, has yet to demonstrate sustained impact. Nigeria’s exports to the UK rose from £2.2 billion in 2022 to £2.7 billion in 2023, before falling back to £1.9 billion in 2024, close to pre-DCTS levels.

Across all trade relationships, crude oil remains the dominant driver. When oil exports falter, overall trade weakens. Agricultural products, textiles and manufactured goods, the very sectors these trade deals were designed to promote, remain marginal.

Repeated naira devaluations have further obscured weak export performance. While export values appear to rise in naira terms, dollar earnings often stagnate or decline. A manufacturer exporting goods worth N10 million earned about $98,000 in 2000, $51,000 in 2015, and barely $7,000 today.

Although AfCFTA was projected to boost Nigeria’s non-oil exports by more than 15 per cent, progress has been slow. By mid-2024, Nigeria had issued just 10 Rules of Origin certificates under the agreement, compared with thousands issued by South Africa, Egypt and other African peers.

Even within Africa, Nigeria’s exports are dominated by petroleum products. Agricultural exports such as cocoa, sesame seeds and cashew nuts remain low in value, while manufacturing contributes less than three per cent of total export earnings.

Experts describe Nigeria’s trade model as arbitrage rather than transformation, exporting crude, importing refined fuel and re-exporting limited refined products.

Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said Nigeria’s problem lies not in the number of trade agreements, but in the inability to implement them effectively.

“Nigeria has many trade agreements, but converting them into tangible outcomes has always been the challenge,” Yusuf said, citing high production costs, poor infrastructure, weak financing and regulatory bottlenecks.

Vice-President of the Lagos Chamber of Commerce and Industry (LCCI), Funlayo Bakare Okeowo, added that many exporters are unaware of existing trade frameworks, while high interest rates and limited access to finance undermine competitiveness.

Former acting national president of the Association of Nigerian Licensed Customs Agents (ANLCA), Kayode Farinto, blamed poor sensitisation, over-regulation and weak enforcement, noting that traders are often more familiar with currency swap arrangements than trade preference schemes.

Experts agree that until Nigeria addresses its infrastructure deficit, production costs, financing constraints and port inefficiencies, new trade agreements will merely repeat the failures of old ones, generating headlines without delivering real economic transformation.