While official figures can vary, Nigerian government officials indicate the United States is the largest foreign investor in Nigeria, with U.S. foreign direct investment concentrated largely in the petroleum, mining, and wholesale trade sectors. At $3.89 billion in 2021, Nigeria is the second largest U.S. export destination in Sub-Saharan Africa. In 2021 the two-way trade in goods between the United States and Nigeria totaled over $7 billion. U.S. exports to Nigeria include wheat, vehicles, machinery, kerosene, lubricating oils, jet fuel, civilian aircraft, and plastics. Nigerian exports to the United States included crude oil, cocoa, cashew nuts, and animal feed.
Regional Trade Agreements
In the bid to diversify its economy from its dependence on crude oil, which accounts for nearly all the value of exports, Nigeria strives to build its agricultural, mining, and manufacturing sectors, especially in the automotive assembly, cement, textile, and clothing sectors. This has led to talks and negotiations of international trade agreements to grow these sectors and increase GDP.
Nigeria signed the African Continental Free Trade Area Agreement (AfCFTA) in July 2019 and ratified the agreement in December 2020. When fully implemented, the AfCFTA will require member countries to remove tariffs from 90% of goods, allowing free access to commodities, goods, and services across the African continent.
International Trade Agreements
Nigeria and the United States both belong to several international organizations, including the United Nations, International Monetary Fund, World Bank, and World Trade Organization. Nigeria also is an observer to the Organization of American States.
Nigeria has been a member of the World Trade Organization since January 1, 1995, having been a member of the General Agreement on Tariffs and Trade (GATT) since November 18, 1960. Nigeria ratified the WTO Trade Facilitation Agreement on January 20, 2017, and the amended WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994 (TRIPS) Agreement on January 16, 2017. Conversations to reduce trade barriers in Nigeria are ongoing within these fora.
On May 18, 2000, the U.S. Congress passed the African Growth and Opportunity Act, commonly known as AGOA, into law. AGOA is a trade program meant to establish stronger commercial ties between the United States and Sub-Saharan Africa. Nigeria is eligible for preferential trade benefits under the AGOA.
The Act establishes a preferential trade agreement between the U.S. and selected countries in the Sub-Saharan region. AGOA is reauthorized through 2025. The Act authorizes the President to designate countries as eligible to receive the benefits of AGOA if they are determined to have established, or are making continual progress toward establishing, the following:
- market-based economies
- the rule of law and political pluralism
- elimination of barriers to U.S. trade and investment
- protection of intellectual property
- efforts to combat corruption
- policies to reduce poverty, increasing availability of health care, and educational opportunities
- protection of human rights and worker rights
- and elimination of certain child labor practices.
Bilateral Trade Agreements
Nigeria has bilateral investment agreements with 31 countries, 15 of which are in force. The country also has double tax treaties with 13 countries and is a signatory to 21 investment-related instruments.
In 2000, Nigeria and the United States signed a Trade and Investment Framework Agreement (TIFA). This agreement provides for dialogue on improving and enhancing trade and investment opportunities between the two countries.