Nigeria, Saudi Arabia Explore $5bn Trade Facility to Strengthen Economic Ties

Nigeria is negotiating a $5 billion trade facility with Saudi Arabia to enhance its economic reform efforts, Bloomberg reports.

This initiative was discussed during President Bola Tinubu’s meeting with Crown Prince Mohammed bin Salman in Riyadh, coinciding with the joint Arab-Islamic Summit, according to Bloomberg reports.

The Nigerian presidency emphasised the need for this financial support to strengthen the nation’s capital base, although specific details of the agreement remain undisclosed

The Nigerian presidency announced the potential deal, but details remain scarce.

Nigeria and Saudi Arabia have an existing trade relationship, with Nigeria exporting $661 million to Saudi Arabia in 2022, primarily crude petroleum. Saudi Arabia, in turn, exported $673 million to Nigeria, mainly refined petroleum and polymers.

According to the presidency, the crown prince assured Nigeria of its support for its economic reform programs.

“The two leaders explored potential areas for cooperation, particularly oil and gas, agriculture, infrastructure and the constitution of the Saudi-Nigeria Business Council,” it said.

Nigeria’s proposed investment deal with Saudi Arabia has been in the works for over a year, dating back to the formation of the Nigeria-Saudi Arabia Business Council.

At the time, Nigerian Budget and Economic Planning Minister Abubakar Atiku Bagudu expressed optimism about the potential for “significant investment” flows from Saudi Arabia.

With nearly 225 million people, Nigeria is the continent’s most populous country, but approximately 40% of its population lives below the national poverty line.

President Bola Tinubu announced last month that the country had secured over $30 billion in foreign direct investment.

The presidency confirmed that the crown prince assured the federal government of Saudi Arabia’s support for its economic reforms.

“The two leaders explored potential areas for cooperation, particularly in oil and gas, agriculture, infrastructure, and the establishment of the Saudi-Nigeria Business Council,” the statement added.

The federal government initially proposed the investment a year ago when Saudi Arabia and Nigeria formed the Saudi-Nigeria Business Council.

At the time, Budget and Economic Planning Minister Abubakar Atiku Bagudu expressed optimism about “significant investment” inflows from Saudi Arabia.

The Memorandum of Understanding (MoU) includes funding in agriculture, oil and gas, energy, telecommunications, and technologies.

“We expect to see significant investment flow worth billions of dollars immediately,” Bagudu told reporters in Riyadh.

The council had been discontinued during the administration of former President Muhammadu Buhari.

In May, the federal government and Saudi Arabia agreed to enhance bilateral relations and explore investment opportunities in agriculture and trade, according to the Ministry of Information. By November 2023, discussions between the two nations expanded to include opportunities in technology, telecommunications, oil and gas, and mining.

The federal government has renewed efforts to strengthen its bilateral relationship with Saudi Arabia. This includes visits by Nigeria’s President, Bola Tinubu, to the Gulf nation, during which he strongly condemned the humanitarian crisis in Palestine and the ongoing Israeli war.

President Tinubu called for an end to the war in Gaza, emphasizing that “the conflict in Palestine has persisted for far too long, inflicting immeasurable suffering.”

He also reiterated Nigeria’s call for an immediate ceasefire in Gaza and reaffirmed the country’s support for a two-state solution, advocating for peaceful coexistence between Israelis and Palestinians in security and dignity.

Last year, the government reestablished the Saudi-Nigeria Business Council, which had been previously discontinued under President Muhammadu Buhari.