Between 2016 and 2017, Australia and Nigeria enjoy a prosperous trade relationship. According to the Nigerian Investment Promotion Commission (NIPC)’s stats on Australian trade transactions, trade between the two countries was worth approximately 100 billion Nigerian nairas (equivalent to AUD$343 million).

But that was two/three long years ago and the financial markets (and the financial outlooks) of both countries have changed plenty since then. It’s worth asking, what do the economic relations between Nigeria and Australia look like today?

How the Australia/Nigeria Trade Partnership Has Grown Strong

Australia has already been heavily invested in Nigeria – and in the continent of Africa as a whole – because of its mining and oil activities. According to The Sydney Morning Herald’s report on Australian mining companies, in 2017, Australia became the biggest international miner on the African continent. Collectively, the 140 Australian companies mining resources in Africa have invested more than $40 billion on the continent over the last decade.

There’s also the issue of oil. Australia’s oil refineries import approximately 83% of their crude oil from international countries with more than a dozen international sovereignties making up this figure. 18% of that crude oil comes from the African continent alone, with Nigeria being one such source of this African oil.

How the Australia/Nigeria Trade Partnership Could Shift

However, while the trade partnership between the two countries has held strong, a series of political decisions over the last 12 months could soon affect it.

One major factor is that Australia is aiming to review how much oil that it imports. The price of commodities on the IG Trading app confirms that oil prices at the moment are incredibly volatile. The highly sought after commodity is expected to reach $61 a barrel in 2019, but this follows a shocking high of $84 a barrel in September 2018. Sanctions and a swing in supply have all led to wildly differing trade prices for the commodity and this is just one reason why Australia seems keen to ensure it’s predominantly processing its own supply.

Another reason is that Australia does not have a 90-day oil stockpile, as is mandated by international law. This means that if there is disruption to the trade of oil between itself and Nigeria – and Africa altogether – the country could be in trouble. There is an incentive there for Australia to import less and use more of its own oil supply.

On a positive note, Australian firms are being encouraged to invest in Nigeria outside of the mining and oil sectors. Logistics, transport, food, health, and finance have all been highlighted by the NICP as areas where Australian businesses have strong reputations and therefore would provide an ideal opportunity for Nigerian investment. Nigeria, given the online infrastructure, could also use e-commerce to sell its local goods to Australia. This could be especially effective given the high level of e-commerce transactions that take place in the region. About 5% of Australian e-commerce is cross-border (from online retailers outside of the country) meaning that there is huge room for growth there, perhaps if Australia is to offer favorable import taxes to Nigerian sellers.

Nigeria and Australia have been close partners for quite some time and it looks as though this will continue. But economic uncertainty could be on the way as both areas try to navigate international developments; hopefully, the partnership between the two countries is still unscathed.

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.