This article is part of TechCabal’s ongoing coverage of the impact of Trump’s tariffs on Africa’s technology landscape.
President Donald Trump’s 14% tariff on Nigerian exports, such as cocoa, fertilizers, and ginger, could have unintended consequences for Nigeria’s banking sector. Although currently on hold for 90 days, the tariff could impact trade finance, a key source of revenue for banks.
Major Nigerian banks, including First Bank, Access Bank, and Nigerian Export-Import Bank (NEXIM), are heavily involved in trade finance, providing services, including credit, payment guarantees, and insurance, to both domestic and international importers and exporters. According to the African Development Bank Group (AfDB), trade activities generate almost 15% of total bank income.
Under the African Growth and Opportunity Act (AGOA) legislation, Nigerian exporters enjoyed duty-free access for non-oil sectors like agriculture and manufacturing. That window has now closed, leaving Nigerian exporters—and their financiers—exposed. With trade volumes likely to dip as U.S. buyers pull back, banks that offer trade finance services could see their margins squeezed.
“Trade financing is one of the revenue earners for the banks. The inflow of FX is more important to the banks than the interest they will get from giving out credit,” said a former head of Trade and Exchange department at the Central Bank of Nigeria (CBN), who asked not to be named.
He added that banks are primarily interested in export activities because they result in an inflow of FX through the exporters’ domiciliary accounts. “These banks are always looking for abundant FX inflow so that they can meet their obligation to sell to willing buyers.”
Nigeria mainly exports crude petroleum and petroleum gas to the US. Besides energy-related products, the country also exports nitrogenous fertilizers, cocoa beans, ginger, oil seeds, and oleaginous fruits. Data from the National Bureau of Statistics (NBS) shows that non-oil exports more than tripled to ₦309.1 billion ($196.6 million) in 2024 from ₦86.4 billion ($54.9 million) in 2023.
With the added cost of tariffs, US importers may reduce or delay purchases from Nigerian suppliers. This would slow the volume of trade finance transactions, leading to fewer letters of credit, reduced foreign exchange, and a shrinking pipeline of trade-related revenues for banks.
Fewer dollars depreciate the value of the naira, which has been relatively stable since December 2024 until recent weeks. A weaker naira also increases the cost of imports, fueling inflation and complicating banks’ risk management.
“Trade finance will be a major change for the banks,” Tajudeen Ibrahim, director of research and strategy at Chapel Hill Denham, said.
At the Nigeria Foreign Exchange Market (NFEM), the naira had been depreciating to ₦1,639.3 per dollar on April 9, 2025, from ₦1,531.6 on April 2. The CBN responded by injecting $197.71 million through sales to authorised dealers to support the naira.
Ibrahim argued that banks should take advantage of the weak naira, which has boosted exports from other African countries. “Intra-African trade is the key to Africa’s future,” he said. “By increasing regional trade transactions, we can reduce our dependence on countries outside the continent.”
As Nigerian banks brace for the ripple effects of Trump’s tariff on non-oil exports, the real risk is the erosion of a key foreign exchange pipeline and a vital source of earnings. But there’s also a chance to deepen intra-African trade ties, diversify risk, and future-proof trade finance strategies beyond the whims of US policy.
