Nigeria Seeks $5 Billion Trade Facility From Saudi Arabia to Support Tinubu Reforms

President Bola Ahmed Tinubu is Currently seeking a $5 billion trade facility from the Kingdom of Saudi Arabia to support the country’s ongoing economic reforms.

Bloomberg reports President Tinubu who recently met with Saudi Crown Prince Mohammed bin Salman in Riyadh during the joint Arab-Islamic Summit discussed the modalities to obtain the trade facility as also confirmed by the presidency in a statement issued on Tuesday.

The trade facility is part of both countries’ efforts to enhance cooperation in the Oil and Gas, Infrastructure, and Agricultural sectors.

Tinubu’s Oil and Gas Reforms

President Bola Tinubu’s oil and gas sector reforms in Nigeria are aimed at revitalizing the industry and stimulating investment. A key move towards this was the removal of the longstanding fuel subsidy on May 29, 2023, with the funds saved to be redirected towards infrastructure, education, and healthcare.

Additionally, President Tinubu signed executive orders to encourage investments in the sector by streamlining processes and timelines for project contracting from 36 months to six months. These orders include fiscal incentives for Deepwater, midstream, and non-associated gas projects.

Tinubu’s administration have also pursued economic diplomacy, resulting in investment commitments exceeding $16 billion, with significant international partnerships such as a gas supply agreement with Germany while efforts to tackle oil theft and vandalism have also contributed to increased oil production, improving from about 1.1 million barrels per day when Tinubu took office to around 1.3 million barrels per day​ way short of the country’s 1.7 million barrels per day target.

Tinubu’s government also recently launched its project 2 Million barrels per day aimed at scaling up the country’s production capacity.

Tinubu’s Agricultural Reforms

In the Agricultural sector, President Tinubu has also introduced initiatives like increased agricultural  funding, including N50 billion each, to cultivate 150,000 hectares for rice and maize, and another N50 billion for 100,000 hectares of wheat and cassava to encourage large scale cultivation all with the aim of ensuring food security, reducing import dependency, and stabilizing food prices​ which have been skyrocketing out of control.

The administration also launched a Presidential Committee on livestock reform which has led to the creation of a dedicated Ministry of Livestock Development to help modernize livestock farming across the country while also reducing incidences of Farmer-Herder conflicts

To support and encourage small scale farmers, initiatives like distributing fertilizers, seedlings, and other inputs, alongside facilitating access to strategic grain reserves have been implemented. There has also been collaborative efforts with private sector stakeholders and financial institutions aimed at supporting farmers with resources and market integration​.

Tinubu’s Infrastructural Reforms

On assumption of office, Tinubu established the Renewed Hope Infrastructural fund to bridge Nigeria’s annual $25 billion infrastructure funding gap. This initiative focuses on vital projects spanning roads, rail, ports, aviation, and agriculture, supported by budgetary adjustments for sustainable financing​

Tinubu’s administration has also launched ambitious road networks, such as the Lagos-Calabar Super Highway and the Sokoto-Badagry Superhighway, enhancing regional connectivity and boosting economic activities across different zones. These projects, some of which trace back to past administrations but remained dormant, are now being actively constructed​. This is in addition to efforts aimed at revitalizing the country’s railway network by operationalizing routes like the Port Harcourt-Aba rail line as well as initiatives to modernize ports to facilitate trade.

How the Saudi Trade Facility Comes in

Under the trade arrangement, the Saudi Kingdom would be brought in to replicate infrastructural projects it has carried out in other countries like India and Pakistan.

The Saudi Agricultural and Livestock Investment Company (SALIC) would look to close certain investments in Nigeria before the end of the year while the Saudi Government would also provide other forms of financial support for Tinubu’s Economic Reforms especially in terms of the foreign exchange challenges faced by Nigeria.

Nigeria-Saudi Business Council

The Nigeria – Saudi Business Council was formed in 2023 to serve as a pivotal link fostering business ties between Nigeria and Saudi Arabia, facilitating economic relationships between both nations by providing crucial trade insights and consultancy services.

The council is aimed at building, safeguarding, and advancing investment and trade connections between Nigeria and Saudi that will amplifies mutually beneficial outcomes.

Conclusion

With the latest trade facility arrangement between Nigeria and Saudi Arabia, it is expected that the Saudi Government would commit towards helping President Tinubu achieve the goals of his ongoing economic reforms by providing financial and other needed aid.

 

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