A recent U.S. Trade Representative (USTR) report has identified persistent trade barriers created by the Nigeria Customs Service (NCS) as a significant obstacle to bilateral trade between the United States and Nigeria.
Published in the 2025 National Trade Estimate (NTE) Report on foreign trade barriers, the findings also highlight the broader challenges stemming from Nigeria’s restrictive foreign exchange policies, which have negatively impacted American firms operating in the country.
Customs challenges hinder trade
The report pointed to several inefficiencies within the NCS, including inconsistent application of customs regulations, lengthy clearance processes, and an overreliance on outdated manual processing systems.
These issues, coupled with allegations of corruption, have significantly hindered the smooth flow of goods through Nigerian ports.
“These factors sometimes contribute to product deterioration and result in significant losses for importers of perishable goods,” the report stated.
Despite attempts by the customs authority to modernize its processes, the report noted that many critical procedures remain paper-based and unreasonably time-consuming.
Additionally, disputes among Nigerian government agencies regarding regulatory interpretations and frequent updates to customs guidelines further compound delays.
In September 2020, the Nigerian government approved a $3.1 billion customs modernization project aimed at automating these paper-based processes within 36 months.
However, this ambitious initiative has faced repeated implementation delays and remains entangled in domestic litigation, hampering its potential to improve trade facilitation.
Foreign exchange and investment hurdles
The report also highlighted the impact of Nigeria’s restrictive foreign exchange (FX) policies on U.S. businesses, particularly those relying on imported goods or international financing.
U.S. companies have struggled to access necessary FX for importing finished or semi-finished goods for their Nigerian operations. Borrowers with dollar-denominated debt obligations have also faced difficulties due to the scarcity of foreign exchange.
The report observed that Nigerian importers often must agree to domestic production schemes to qualify for government import permits or access FX via the Nigerian Foreign Exchange Market.
Although this policy is aimed at encouraging local production, it has introduced additional complexity and delayed trade operations.
Government actions and remaining barriers
Acknowledging these challenges, the Central Bank of Nigeria (CBN) has taken steps to address FX limitations. In June 2023, the CBN implemented a market-based FX regime, consolidating multiple exchange rates into a single system called the Nigerian Foreign Exchange Market.
- Furthermore, in October 2023, the CBN lifted an eight-year restriction on accessing U.S. dollars for the importation of 43 items, including rice, dairy products, and steel. However, some of these products remain prohibited under Nigeria Customs Service regulations.
- Despite these reforms, a backlog of foreign currency orders—estimated at $7 billion—has persisted, creating additional challenges for companies seeking to repatriate earnings.
- By March 2024, the CBN had validated and settled $4.6 billion of these claims, while $2.4 billion remained under investigation as of December 2024.
The report highlighted ongoing frustrations with the repatriation process, stating, “Companies report that the approval process for the repatriation of funds remains a significant barrier to investment by U.S. entities, as it is frequently subject to delays and denials.”
Call for streamlined processes
While Nigeria has taken strides to address systemic inefficiencies, the U.S. report emphasized the pressing need for further reforms to enhance transparency and efficiency within the customs and foreign exchange systems.
These measures will be vital in fostering stronger bilateral trade relations and unlocking investment potential between the two nations.
