Navigating Cross-Border Trade Finance: Oil and Non-Oil Sectors in a Shifting Global Order

Nigerian companies, both in the oil and non-oil sectors, are encountering significant hurdles in accessing adequate trade finance, often preventing them from capitalizing on lucrative opportunities.

A mid-sized oil services firm recently secured a subcontract on a major offshore project but found the payment terms of 90 days unworkable against immediate mobilization, labor, and vendor costs. The available financing options were either too expensive, leading to deal dilution, or non-existent, forcing the firm to consider walking away.

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Transactions exist, but the financing structures required to execute them often do not.

This situation reflects a broader pattern in Nigeria where transactions exist, but the necessary financing structures are lacking. Trade finance, crucial for improving capital flow across value chains, is constrained by structural inefficiencies, particularly as global markets undergo significant shifts.

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Pre-export facilities are now subject to restructuring, longer tenors, and revised pricing. Lenders are increasingly cautious, and transactions are more likely to involve guarantees from multilateral institutions.

In the oil sector, once Nigeria's economic anchor with production exceeding 2.5 million barrels per day, financing structures have weakened due to output volatility caused by infrastructure gaps, underinvestment, and crude theft. Lenders are now more cautious, favoring risk-adjusted frameworks, longer tenors, and often requiring guarantees from multilateral institutions. Financing demand is also shifting downstream, with a growing need for working capital, receivables discounting, and inventory-backed lending for refined products.

Beyond oil, Nigeria's export base is slowly expanding with agricultural commodities and solid minerals gaining international traction. However, financing remains a critical bottleneck. Aggregators and processors in the agricultural value chain struggle to access affordable pre-shipment finance, as collateral requirements and perceived risks push them toward informal lending arrangements. This lack of accessible finance impedes their ability to connect smallholder producers with global markets effectively.

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Collateral requirements and perceived risks push them toward interm