As global economic disruptions appear to be in the offing sequel to United States’ President Donald Trump’s hawkish economic policies and expected retaliation by large economies, economists are cautioning that Nigeria may be yet facing its toughest backward integration tests.
Donald Trump’s proposed tariff policies, including a 25 per cent levy on imports from Canada and Mexico and additional tariffs on Chinese goods, have sparked widespread concern over their potential global repercussions. While aimed at protecting U.S. industries and promoting an “America First” trade policy, these tariffs risk triggering significant disruptions in global trade and economic stability as economies like China, the EU, Russia and others brace up for retaliation. For countries like Nigeria, these developments underscore the need to re-evaluate economic strategies and focus on ramping up domestic production to safeguard against external shocks.
Trump’s tariff plan is expected to raise consumer prices, as businesses importing goods from targeted countries will pass increased costs onto buyers. Goldman Sachs estimates that a 1 per cent rise in effective tariffs could elevate consumer goods prices by 0.1 per cent. Furthermore, domestic producers in the U.S. are likely to exploit reduced competition by raising prices, exacerbating inflationary pressures. This economic burden is compounded by the projected job losses, reduced household incomes, and potential recession in the U.S, as forecasted by Moody’s and the Peterson Institute for International Economics.
These global economic disruptions will have ripple effects, particularly for developing nations like Nigeria. Rising costs for imported goods—ranging from machinery to electronics—will strain foreign reserves and widen trade deficits. Additionally, retaliatory tariffs by countries like China could destabilise global supply chains, creating further uncertainty. This volatile environment necessitates a shift toward self-reliance, with Nigeria leveraging its resources and population to strengthen its local economy.
For Nigeria— a country rich in resources but weighed down by decades of infrastructural decay, policy instability, and corruption—this global shift could either spell disaster or ignite an economic renaissance, depending on how effectively it can harness the potential of its Backward Integration Plan (BIP).
In the past, Nigeria’s Backward Integration Plan promised to be the key to self-sufficiency, a strategy aimed at reducing dependence on foreign imports by ramping up local production. Yet despite having vast natural resources like oil, gas, and fertile agricultural land, the country has consistently struggled to make this vision a reality. While the country should be reaping the benefits of these resources, it continues to import processed goods—oil products, food, and even machinery—despite its wealth of raw materials.
As rising tariffs push up the price of imported goods, Nigeria’s dependence on foreign products only becomes more glaring, and its foreign reserves are stretched even thinner.
While the challenges are formidable, they also present a significant opportunity for Nigeria. The turmoil in global trade is a stark reminder of the country’s vulnerability in relying too heavily on imports. As other countries become more protectionist, the need for nations like Nigeria to strengthen their local industries, especially through backward integration, has never been more urgent. But can Nigeria seize the opportunity, or will its long history of failed plans continue?
Experts argued that the crux of the matter is that Nigeria’s backward integration efforts have been undercut by poor governance, inadequate infrastructure, and inconsistent policies. Take the oil sector, for instance. Despite being one of the world’s largest producers of crude oil, Nigeria still imports refined petroleum products due to the inefficiencies and underperformance of its local refineries. This situation has drained the country’s foreign reserves and perpetuated its reliance on foreign oil products, even though the country has the raw materials to be self-sufficient.
Agriculture offers another telling example. Nigeria is one of the world’s largest producers of crops like cassava, cocoa, and yams. Yet, it remains a net importer of processed food products. This is despite the fact that the nation has ample arable land and a large, young population that could serve as a labor force for a burgeoning agro-processing industry. Instead of building up this local capacity, the country imports a significant portion of its food, undermining its potential as an agricultural powerhouse.
Similarly, the automobile sector was once viewed as a key area for backward integration. Local car manufacturing plants were established by foreign companies like Peugeot and Volkswagen in the 1970s and 1980s. However, due to inconsistent government policies, high production costs, and poor infrastructure, the sector collapsed. The dream of a thriving local car manufacturing industry faded, and today Nigeria remains heavily reliant on imported vehicles.
The experts said the reasons for Nigeria’s failure to implement a successful backward integration plan are manifold. First, there is the issue of policy inconsistency. Successive Nigerian governments have launched backward integration programs but failed to stick with them. Each change in administration has led to shifts in policy, often abandoning or altering previous strategies, leaving businesses and investors uncertain about the future. A key example is the automobile sector, where the government’s attempt to foster local production through high import duties was undermined by fluctuating exchange rates, poor infrastructure, and rising production costs. These factors made locally produced vehicles uncompetitive, forcing the country to continue importing them.
According to them, corruption and mismanagement of resources have been another significant barrier. In the oil industry, for example, Nigeria’s state-owned refineries have remained inefficient for decades. Despite the country being one of the world’s largest oil producers, these refineries have been plagued by poor management, dilapidated infrastructure, and a lack of investment, which has kept the country dependent on the importation of refined oil products.
They noted that Nigeria’s infrastructure deficit is perhaps one of the most critical obstacles in its pursuit of backward integration. The country’s poor power supply, underdeveloped transport networks, and inefficient ports drive up the cost of production and make locally produced goods less competitive. Manufacturing plants and agricultural processing industries suffer due to the high cost of electricity and inefficient logistics, which prevent them from achieving economies of scale. The absence of reliable infrastructure increases the cost of doing business in Nigeria, making it difficult for local industries to compete with imported goods.
Yet, amid these challenges, experts see a silver lining. The very global disruptions that have harmed Nigeria’s economy may also present an opportunity to rethink its approach to backward integration. Professor Tayo Bello, a development economist at Adeleke University, believes that the policies of Donald Trump, while disruptive, could help push Nigeria towards self-reliance.
“Nigeria has vast arable land and demographic advantages,” said Professor Bello. “But instead of taking advantage of these opportunities, we continue to import food. Nigeria has enormous oil and gas resources, but how much of the finished products are we producing? We remain a net importer of petroleum products. The disruption caused by global trade policies should be a wake-up call for Nigeria to set its priorities straight and become self-reliant.”
Dr. Emeka Okengwu, CEO of AntHill Concepts Limited and a member of the NATIONAL ECONOMY Board of Economists agrees that Nigeria has the potential to significantly increase its local production, especially in oil. “We have an opportunity to add value to crude oil.
“Nigeria’s crude oil is a key supply to BRICS economies, but we must go beyond selling crude. We need to refine and process more locally to maximise the benefits.The same principle applies to agriculture and mining, which remain largely underdeveloped,” he said.
The global trade disruptions could also shift trading relationships, presenting opportunities for Nigeria. Dr. Muda Yusuf, chief executive of the Center for the Promotion of Private Enterprise (CPPE), noted that while Trump’s trade actions target China, they do not directly affect Nigeria. He suggested that affected Chinese companies might move operations to countries like Nigeria, providing potential investment opportunities. “If a Chinese company faces high tariffs from the U.S., it may relocate production to Nigeria, allowing it to export freely to the U.S. This could lead to realignment in global trade relationships, potentially strengthening BRICS,” he said.
Yusuf also pointed out that Trump’s immigration policies could drive up inflation in the U.S. as labour shortages push wages higher. This could lead to interest rate hikes by the U.S. Federal Reserve, potentially affecting foreign portfolio investments in Nigeria and causing exchange rate depreciation. He warned that disruptions in global supply chains could lead to increased prices of goods and services, further fueling inflation in Nigeria. “Nigeria must align its fiscal and monetary policies to counter the effects of global disruptions,” he added.
The president of the Independent Shareholders Association of Nigeria (ISAN), Moses Igbrude, stressed that Nigeria can mitigate the adverse effects of global trade disruptions by prioritising policies that stimulate local production. “Investing in manufacturing, agriculture, and technology can reduce dependency on imports while fostering job creation and economic diversification. For instance, boosting domestic production of machinery and electrical equipment could replace imports, reducing vulnerabilities to price surges. Similarly, advancing agro-industries could enhance food security and create export opportunities, positioning Nigeria as a competitive player in regional and global markets,” he said.
Furthermore, the global shift toward economic nationalism presents an opportunity for Nigeria to strengthen its economy. As major economies turn inward to protect their industries, Nigeria must focus on industrialisation and infrastructure development. By fostering public-private partnerships, incentivising local industries, and improving regulatory frameworks, Nigeria can create an environment conducive to sustainable economic growth.
Financial economist at Auchi Polytechnic, Zakari Mohammed, sees Trump’s tariff policies as a turning point for the global economy, with far-reaching implications for trade and market stability. “For Nigeria, these disruptions present both challenges and opportunities. By looking inward and ramping up the production of goods and services, Nigeria can reduce its reliance on imports, improve economic self-sufficiency, and emerge stronger in an increasingly unpredictable global landscape. This strategic pivot will not only shield Nigeria from external shocks but also lay the foundation for long-term prosperity and growth,” he said.
While backward integration presents an opportunity, Nigeria’s past efforts in this regard have been plagued by challenges. Professor Bello pointed out that Nigeria’s auto, rubber, and electronics industries once had the potential for backward integration but were crippled by poor government policies, inadequate infrastructure, and corruption. He expressed skepticism about whether Nigeria could seize the current opportunity unless significant reforms were undertaken.
The challenge for Nigeria lies not only in policy formulation but also in implementation. Infrastructure deficits, unreliable electricity supply, and limited access to credit continue to hinder industrial growth. Without addressing these fundamental issues, backward integration efforts may once again fall short.
Trump’s trade policies serve as a wake-up call for Nigeria to strengthen its economic foundation. While global trade disruptions may lead to inflation and supply chain instability, they also offer Nigeria a chance to deepen its backward integration efforts. By fostering local production, investing in value addition, and implementing pro-industrialisation policies, Nigeria can reduce its vulnerability to external shocks and build a more resilient economy. However, the real test lies in overcoming historical obstacles and ensuring that this opportunity does not become another missed chance in Nigeria’s economic history.
Nigeria’s ability to move forward with backward integration could determine its economic future—and whether it can stand resilient in the face of global uncertainty. The clock is ticking.