Exports to the United States from Nigeria under the duty-free policy have declined by 88 per cent from $2.5billion in the first eight months of 2019 to $300.48 million in the corresponding period in 2020. According to the latest African Growth and Opportunity Act (AGOA) policy trade statistics, oil export under the policy accounted for 99.7 per cent of Nigeria’s AGOA exports to the United States in 2019.
It was gathered that United States’ import of Nigeria crude oil plunged by 63.03 per cent in the first quarter of this year, compared to the last quarter of 2019. However, following the coronavirus-induced crash in oil prices earlier this year and declining demand, Nigeria has been struggling to sell its crude oil cargoes. Also, prior to the lockdowns and collapse in crude oil demand caused by coronavirus crisis, the production of US shale oil had led to a significant reduction in the exportation of Nigerian crude oil. The AGOA, a United States’ trade policy, enacted in 2000, is a legislation that facilitates a duty-free trade between exporters from sub-Saharan Africa and the United States. Annual trade data showed the largest contribution towards AGOA-eligible trade commodities is usually oil exports mainly from Angola and Nigeria, and to a lesser extent, Chad and the Republic of Congo. Within the period, oil and gas products valued at $3.12billion were exported to the US under the policy in 2019.
However, South Africa, Kenya, Ethiopia, Lesotho, Ghana and Madagascar were among the leading non-oil AGOA exporters, while Kenya, Ethiopia and Madagascar dominate the apparels sector. Also, data from the United States Energy Information Administration (USEAI) revealed that the country imported 5.53 million barrels of crude oil from Nigeria in Q1’20, down from 15.07 million barrels in Q4’19.
It would be recalled that the Executive Director and Chief Executive Officer, Nigerian Export Promotion Council, Mr Olusegun Awolowo, had explained that only a few Nigerian exporters had benefitted from the duty-free trade opportunity despite series of sensitisation carried out by the council. He noted that an assessment of the impact of coronavirus on agricultural exports revealed that the corona virus pandemic would lead to a fall in export of cocoa beans, cashew nuts and sesame seeds this year. According to him, the crash in oil prices as a result of the pandemic was an indication that a mono-product economy is not sustainable and that there is an urgent need to develop non-oil export. Awolowo stressed: “We cannot rely on crude oil export as both our major source of government revenue and foreign exchange generation.
We must diversify our export base.” He identified the export of services as a rapidly growing export industry that could generate more revenue for the government. Awolowo suggested the realignment of the exporters’ foreign exchange window with the prevailing foreign rate. Meanwhile, between 2015 and 2017, exporters in the country earned N284.5billion ($813.05million) in foreign exchange from cashew.