Nigeria dangers commerce restrictions, greater tariffs on U.S. exports – PwC report warns 

The report, titled ‘International Financial Coverage Modifications and Implications for Nigeria’, highlights looming financial challenges for the nation as potential modifications to President Donald Trump’s U.S. commerce insurance policies might disrupt entry to essential markets.

The report emphasised that Nigeria’s financial vulnerability is tied to the way forward for the African Progress and Alternative Act (AGOA), a U.S. commerce program that facilitates duty-free entry to American markets for items originating from eligible sub-Saharan African nations.

Influence of AGOA Elimination on Nigeria’s Financial system 

If AGOA advantages should not renewed, Nigeria could lose key commerce privileges, severely impacting its exports of crude oil, agricultural merchandise, and manufactured items.

• Nigeria has traditionally been a significant beneficiary of AGOA, exporting $1.76 billion value of products to the US in 2024, making it the second-largest AGOA exporter after South Africa.
• The elimination of AGOA advantages might drastically scale back Nigeria’s competitiveness within the U.S. market, resulting in a decline in export volumes and overseas change earnings.

This loss would hit oil exports notably onerous, a important income supply for Nigeria.

Broader Penalties of Commerce Coverage Modifications 

The report warns of potential U.S. crude oil import bans or sanctions, which might additional isolate Nigerian exports from American markets.

• Such actions could lead to a pointy contraction of overseas change inflows and a major decline.
• Compounding these dangers are world provide chain disruptions fueled by U.S. tariff insurance policies, which might enhance the price of importing gas, equipment, and important items into Nigeria, probably triggering hyperinflation.
• Moreover, large-scale deportations of Nigerian staff from the U.S. might considerably scale back remittance inflows, a significant part of Nigeria’s overseas change reserves.

Decrease family spending as a consequence of declining remittances might exacerbate financial instability, inserting additional stress on Nigeria’s fiscal framework.

The report additionally highlights the devastating influence of a suspension of U.S. help, which might negatively have an effect on important sectors equivalent to healthcare, training, and infrastructure. Such a suspension would widen fiscal deficits and heighten Nigeria’s reliance on exterior debt.

Oil Value Volatility and Fiscal Disaster Dangers 

On the oil entrance, the report factors to a surge in U.S. home oil manufacturing that will result in a world oversupply, driving oil costs beneath Nigeria’s price range benchmark.

The ensuing plunge in export revenues might severely devalue the naira and amplify Nigeria’s fiscal challenges. Declining oil revenues might set off elevated authorities borrowing, investor exit, and capital flight, additional destabilising the foreign money and financial outlook.

The discount in overseas change earnings and restricted entry to capital inflows could go away companies struggling to safe overseas foreign money, worsening capital outflows and threatening the steadiness of Nigeria’s monetary system.

Attainable Alternatives Amidst Challenges 

• Regardless of the awful outlook, the report suggests potential alternatives if Nigeria is granted preferential commerce agreements or AGOA is strengthened.
• These measures might enhance export volumes, enhance Nigeria’s commerce steadiness, and stabilise the naira.
• Moreover, a rise in U.S. oil imports or encouragement of bilateral commerce agreements might result in greater overseas change inflows, revitalising GDP development.
• Relaxed visa insurance policies for Nigerians migrating to the U.S. can also drive remittance inflows, supporting overseas change liquidity and family spending.

What it’s best to know 

• Moreover, diminished U.S. tariffs on imports or improved commerce relations between the U.S. and China might decrease import prices for Nigeria, serving to to curb inflation and supply reduction to customers.
• The report concludes that proactive and strategic engagement with world financial shifts can be important for Nigeria to navigate these challenges and capitalise on potential alternatives.