Nosmot Gbadamosi/ Africa Brief
Nigeria signed minerals deal with South Africa last Thursday as it seeks to diversify from oil, which currently accounts for around 90 percent of Abuja’s exports.
According to the pact, the two countries will share technology to boost mineral extraction in Nigeria—a nation rich in gold, lithium, and iron ore that goes largely untapped, as mining contributes less than 1 percent to its GDP.
The cooperation comes at a time when U.S. President Donald Trump’s tariff war has roiled global markets. Although Nigeria’s more than $4 billion in annual crude oil exports to the United States will be exempt from Trump’s paused 14 percent tariff for the country, those tariffs will affect Nigerian agricultural exports such as cocoa. More importantly, Trump’s trade war has caused oil prices to plunge, threatening revenue for Nigeria and other oil-exporting states.
So far, Nigeria has been cautious in its approach to negotiating a trade deal with the United States. Nigerian President Bola Tinubu recently met with Massad Boulos—Trump’s new Africa czar—in Paris, where the two reportedly discussed forging closer economic ties. But Tinubu’s critics want him to be more proactive in negotiations.
As Nigerian politicians come to see the United States as an unreliable trade partner, they are looking to create a plan for economic growth that is less vulnerable to Washington’s whims.
“Most importantly, what is even destabilizing the market is inconsistencies in the way [Trump] also sends his policies. He moves today. Tomorrow, he reverses. So, it’s been challenging to predict the next level,” Farouk Ahmed, who oversees Nigeria’s midstream and downstream oil regulatory body, told reporters at a press briefing.
After a sell-off sparked by Trump’s tariffs, Nigeria’s central bank released nearly $200 million into local markets earlier this month to stabilize its currency, the naira.
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Nigeria is also revising its economic strategy. “[W]e are going back to the drawing board to look at our budget all over again,” said Finance Minister Wale Edun, who drafted a fiscal policy in January based on oil being around $75 a barrel.
The downstream effects of Trump’s tariffs threaten Nigeria’s economy as well. For instance, Indonesia—which imports large quantities of crude oil from Nigeria—plans to cut Nigerian imports and buy more U.S. oil as a way to negotiate with Trump and avoid his proposed 32 percent tariff.
Instead of sealing a trade deal with Washington, however, Abuja has so far prioritized broadening its economic partnerships elsewhere. It has sought greater ties with its former colonial power, the United Kingdom, and nations within the BRICS group, including China, India, and South Africa.
But mostly, Nigeria has turned to other African nations. Trump’s tariffs are “a lesson for us that we need to trade among ourselves,” Edun said. “We need to be resilient.”
Last week, Tinubu committed to removing duties on 90 percent of goods traded within Africa as part of a major push to accelerate the implementation of the African Continental Free Trade Area, the world’s largest free trade area.
Nigeria has also quietly resumed talks on economic and security cooperation with junta-led Niger, which were paused after the latter country’s 2023 military coup. Last week, Nigerian Foreign Minister Yusuf Tuggar traveled to Niamey to discuss, among other subjects, the planned 2,500-mile trans-Saharan pipeline to transport gas from Nigeria to Algeria via Niger.
Like other commodity-exporting economies, Nigeria is less reliant on U.S. trade and therefore better insulated from Trump’s tariff roller-coaster than many industrialized economies—such as South Africa—that export cars and machinery.
“You really don’t need a foreign policy for selling crude oil,” Cheta Nwanze, the founder of Lagos-based political analysis firm SBM Intelligence, told Foreign Policy. “Oil is one of those things that are sanctions-exempt [under Trump’s tariffs], so Nigeria doesn’t need some coordinated meetings and trade discussions” with the United States.
Still, for decades, Nigeria did not invest in the infrastructure to diversify and build sustainable growth from markets beyond oil and gas. Nigeria’s new agreement with South Africa is a major step forward as demand for lithium and cobalt increases amid the global energy transition. It’s also a blueprint for inter-African innovation that is less reliant on Western nations.
But, Nwanze warned, “there’s a huge gap between intention and ability to enforce.” If oil prices continue to drop due to Trump’s policies, Nigeria’s economic future will depend on its ability to reverse a decadeslong legacy of trade protectionism and fully embrace continent-wide free trade.
