Economic development is not restricted to benefits harnessed from technology and labour factor productivity; trade is a factor that makes several countries, regions, governments, and entities foster beneficial relationships among themselves.
Global trade across different countries accounts for over $34 trillion in 2024 and is expected to increase at a CAGR of 3% over the next five years. From the view of economic developmental actors such as geopolitics, countries’ behaviour and approach could be at different ends of cooperation and globalisation. Based on these two stances, a matrix can be presented on countries’ behaviour to be classified as autarky, hegemony, bilateralism, or multilateralism. The geopolitics situations that emerged in 2024 were unique, as the ruling political party or government lost in the polls of most developed markets such as Sweden, Finland, New Zealand, Australia, Belgium, India, Japan, the United Kingdom, and the US, resulting in an adjustment to the existing trade practices and policies across the globe.
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Trade has been around the globe for thousands of years, with different countries and regions having the most significant influence on global trade across dispensations, eras and times. Before July 1776, America was a British colony where people across the globe immigrated to for greener pastures. Several regions of the United States of America (USA) were called No Man’s Land even after the neutral strip incident. It took several years of hard work, resilience, collaboration, war, and support provided to other colonies in the Southern American Continent before the USA emerged as a colonial power in 1898 under the leadership of the 25th POTUS, Wiliam McKinley, before his assassination in 1901.
This prepared the environment for the 26th POTUS, Theodore Roosevelt, who was the youngest to achieve that feat at 42. He overcame health challenges while growing up, recorded several victories as a naval commander, was recognised as the first American to win the Nobel Prize for Peace, and had other significant feats in transitioning the USA to a world power before he passed on in 1919 due to deteriorating health conditions.
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The USA collaborated resources and partnerships with France, the United Kingdom, Japan, and Italy under the umbrella of the Allies to displace Germany, Austria-Hungary, and the Ottoman/Turkish Empire from their global leadership. The Allies reinforced their victory in the Second World War before the birth of the United Nations in 1945, which had ratifications from 29 nations as of 24 October 1945. The bilateral trade relationship between China and the USA., reinforced in 1979, grew by leaps and bounds from $4 billion to $750 billion within 43 years. China’s economy plummeted in the early 20th century and has been on the path of recovery since the 1970s after the nation became more attractive as a global market hub. This has caused a lot of concerns for the USA as the 45th POTUS rolled out stringent measures on trade in 2018 with China with reciprocation of similar measures from the Chinese market in 2019, setting the right path for the emergence of a trade war between the USA and China.
Upon the assumption of office by the 47th POTUS, 26 executive orders were signed on the inauguration day, and about 50 executive actions were in due process within the first week in office. The executive actions in the process are to address concerns around energy, criminal justice, immigration, gender, foreign policy, government, social issues, and trade. The current POTUS has issued a memo among the presidential actions tagged as the America First Trade Policy.
As we await the actions that will be taken from the reports that will be presented to the POTUS on Tuesday, 1 April 2025, this presents an opportunity for Nigeria as a nation to review her trade policies in line with the new global dimensions to trade and an assessment of the related impact. Based on available data from the Nigerian Bureau of Statistics (NBS), the USA has the 2nd largest share of Nigerian exports; 88.46% of the total export to the USA was crude oil. On a YTD-Sept 2024 analysis, the USA accounts for 8.02% of total exports from a 6.81% full-year position in 2022. On the imports side, the risks and concerns from the USA regarding imports to Nigeria are considerable. 7.12% of total imports from the US to Nigeria within YTD-Sept 2024 is relatively significant. Nigeria is heavily dependent on China for imports; as for Q3-2024, imports to Nigeria from China were ₦3.574 trillion (24.36% of the total), and YTD-Sept 2024 was ₦9.535 trillion (22.63% of the total).
2024 was very remarkable for Nigeria concerning foreign trade, as the foreign trade balance as of YTD Sept 2024, despite being lower than the trade balance in 2017 and 2018 in USD terms, has been the highest in both naira and USD terms since 2019. This result is hinged on higher exports of other petroleum products achieved by the relative peace experienced in 2024 across the oil-producing regions.
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Manufactured and agricultural products also delivered significant growth when compared with 2023 performance. The exportation of services is a new mine shaping global trade, as global services trade recorded year-on-year growth of 9% when year-on-year growth of goods declined by 5% in 2023. The NBS has not published any report providing insights and information on the Nigerian foreign trade in services statistics. The U.S.A. is the largest importer and exporter of global services in 2023. Insightful thoughts require further interrogation of what distinguishes China as a leader in exporting electrical machinery and equipment, including computers. India is diversifying away from agricultural products to record double-digit growth in the export of digital services. Urgent actions are required to harness opportunities for Nigeria within agriculture and manufactured products in the short to medium term to enable Nigeria to displace South Africa as an African trade leader.
A review of the current stance and the market realities for Nigerian foreign trade shows that glorious days lie ahead. There is a need for active collaboration and synergy between the public and private sectors to stimulate local and global consumption of Nigerian-made products and services.
To maintain and deliver more trade surplus even above the record in 2025, there is a need for active collaboration of stakeholders to address issues around borderers, tariffs, duties, exchange rate stability, security, correct and meaningful incentives for the core producing sectors of the economy, interest rate management, access to funds and growth capital, ultimate consumer affordability, and competitiveness within Nigeria.
Tosin Oladetan, Ascenix Consulting
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