Economy
Impact of Nigeria-South Africa Trade on NGN and ZAR Exchange Rates
Nigeria and South Africa are two of the largest economies in Africa. Their trade interactions hold a significant influence on the continent’s economic landscape. Notably, their bilateral trade relationship greatly impacts their respective currencies, the Nigerian Naira (NGN) and the South African Rand (ZAR). In this article, we will explore the impact of the Nigeria-South Africa trade on the NGN and ZAR exchange rates. Let’s jump in.
A Brief Look at the Trade Relations Between Nigeria and South Africa
Trade between Nigeria and South Africa has evolved significantly over the past few decades. Historically, Nigeria’s economy has been heavily reliant on oil exports, which account for a substantial portion of its GDP and foreign exchange earnings. Understandably, Nigeria is one of South Africa’s key suppliers of crude oil. In contrast, South Africa’s economy is more diversified, with strong mining, manufacturing, and agricultural sectors. South Africa exports manufactured goods and fruits to Nigeria.
Historically, trade volume has been skewed in favour of South Africa due to the diversity of its exports. However, Nigeria’s oil exports are significant in value and the trade volume is turning in favour of Nigeria. In 2022, Nigeria exported $1.72 billion to South Africa, while South Africa only exported $447 million to Nigeria. Notably, this is one of the biggest factors that impacts the exchange rate between the Naira and the Rand. Let’s take a look at other exchange rate dynamics between the Naira and the Rand.
Exchange Rate Dynamics Between NGN and ZAR
Exchange rates are influenced by a variety of factors. For Nigeria and South Africa, bilateral trade plays a crucial role in influencing the exchange rates of NGN and ZAR. Here is a brief look at how this works.
Trade Balance and Currency Valuation
The trade balance is the difference between exports and imports. It directly impacts the demand and supply of currencies. A trade surplus, where exports exceed imports, leads to higher demand for the exporting country’s currency, thereby appreciating its value. Conversely, a trade deficit can depreciate the currency.
In the context of Nigeria-South Africa trade, Nigeria currently experiences a trade surplus due to its oil exports to South Africa. This surplus increases demand for the Naira, contributing to its appreciation. On the other hand, South Africa’s importation of Nigerian oil increases the supply of Rands in exchange for Naira. This potentially leads to a depreciation of the Rand.
Currency Valuation Policies
Monetary policies set by the Central Bank of Nigeria (CBN) and the South African Reserve Bank (SARB) are critical in managing exchange rates. Their central banks intervene in the market to maintain some degree of control over currency fluctuations. Different monetary policies can influence currency values. For instance, if the CBN adopts a tighter monetary policy compared to the SARB, it could lead to higher interest rates in Nigeria. This can attract foreign capital and lead to an appreciation of the Naira.
Commodity Prices
Nigeria is a major oil exporter, and fluctuations in global oil prices can significantly impact its economy and currency. Higher oil prices tend to strengthen the Naira due to increased export revenues. On the other hand, South Africa is a major exporter of gold and other minerals. The prices of these commodities can influence the Rand. Higher gold prices usually strengthen the Rand.
Political and Economic Events
Political stability and significant economic events in Nigeria and South Africa have a direct bearing on their currencies. Elections, policy changes, and economic reforms can lead to fluctuations in the NGN and ZAR exchange rates. For example, political instability, corruption, and militant activities in oil-producing regions have historically affected investor confidence in Nigeria.
On the other hand, economic challenges, such as power shortages and high unemployment, also affect investor confidence in South Africa. Positive developments, such as successful economic reforms and political stability, can enhance the value of the Rand.
Beyond Bilateral Trade: External Factors
Several external factors can also influence the NGN and ZAR exchange rates beyond the Nigeria-South Africa trade. Here is a brief look at some of these factors:
- Speculative Trading – Currency markets are influenced by traders’ expectations about future movements in exchange rates. Both in Nigeria and South Africa, traders are always exchanging currencies and pushing their value. Notably, brokers with low ZAR minimum deposits and low NGN deposits are popular in these countries.
- Global Economic Conditions – A strong global economy can lead to increased demand for South African manufactured goods, boosting the Rand. Conversely, a global slowdown can have a negative impact.
- Foreign Investment Flows – Foreign investments in Nigeria’s oil sector can strengthen the NGN. Similarly, foreign direct investment (FDI) in South Africa can influence the Rand’s value.
- Market Sentiment – Sentiment about economic prospects in Nigeria and South Africa affects investor behaviour. Positive sentiment, driven by factors such as economic reforms or favourable economic data, can attract investment and strengthen currencies. Conversely, negative sentiment can lead to capital flight and currency depreciation.
Conclusion
Nigeria-South Africa trade presents a multifaceted relationship impacting their exchange rates. For Nigeria, oil exports remain a dominant force influencing the Naira, while South Africa’s diversified economy provides a broader base for the Rand. While the trade structure creates a demand-driven influence, external factors and policy interventions play a crucial role. Nigeria and South Africa will continue to strengthen their trade ties and each will navigate the complexities of the global economy. Either way, their exchange rates will remain sensitive to a multitude of factors.
By Adedapo Adesanya
Nigeria imported about 61.7 million barrels of crude oil from the United States between January 2024 and January 2026, according to data from the US Energy Information Administration (EIA).
This came even as the country continued to export significantly larger volumes within the same period, exposing a growing imbalance in the country’s oil supply chain.
Data from the US agency showed a sharp shift in trade flows, with American crude now flowing steadily into Nigeria after nearly a decade of negligible transactions. Before 2024, the only notable supply came in 2016, when exports averaged just 19,000 barrels per day.
The trend changed in 2024 with the start of operations at the Dangote refinery, which industry players say has increasingly turned to foreign crude to bridge gaps in domestic supply.
Within the first six months of that year alone, Nigeria imported 15.7 million barrels from the US, with June recording the highest inflow at 3.96 million barrels.
Imports accelerated further in 2025, accounting for the bulk of the two-year volume. Between February and December, inflows reached 41.06 million barrels, peaking in June at 305,000 barrels per day, equivalent to 9.15 million barrels in one month.
However, volumes dropped sharply towards the end of the year, reflecting fluctuating supply dynamics.
In January 2026, imports rose again to 159,000 barrels per day, translating to 4.93 million barrels, bringing the total volume over the two-year period to 61.7 million barrels.
The figures stand in contrast to Nigeria’s export profile.
According to data from the Central Bank of Nigeria (CBN), the country exported about 306.7 million barrels of crude between January and October 2025, representing roughly 69 per cent of total production during the period. In the first two months of 2026 alone, exports reached 55.39 million barrels.
Despite producing over 443 million barrels within the first 10 months of 2025, only about 137 million barrels were retained for domestic use, leaving local refineries struggling to secure adequate feedstock.
Operators say the Dangote Refinery requires over 19 million barrels monthly to run at optimal capacity, a demand that local supply has failed to meet consistently. This shortfall has forced the facility to source crude not only from the US but also from Ghana and other African producers.
Imports became necessary to stabilise the 650,000 barrels per day refinery operations amid inconsistent domestic allocations, despite the introduction of the Naira-for-crude arrangement. According to the management of the company, only about four to five cargoes were distributed, but this has since changed.
Alongside Dangote Refinery, other smaller operators were also affected, since the country’s crude allocation is tied to joint ventures with International Oil Companies (IOCs).
The development underscores a persistent structural challenge in Nigeria’s oil sector, exporting large volumes of crude while struggling to supply domestic refineries, raising fresh concerns about policy coordination, upstream allocation, and the long-term viability of local refining.
By Aduragbemi Omiyale
The outgoing Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, has thanked President Bola Tinubu for giving him the opportunity to serve in his administration.
In a statement personally signed by him on Tuesday, Mr Edun said it was an honour to be called by the President to help put the Nigerian economy on the path of recovery after facing difficult economic circumstances.
“It has been an honour to contribute to the implementation of the administration’s economic agenda at a pivotal moment in Nigeria’s journey,” a part of the statement made available to Business Post read.
The Minister noted that he was “proud of what we achieved alongside colleagues in the Federal Executive Council (FEC), State Governors, our partners in the public and private sectors, and the many dedicated professionals whose work continues to support the nation’s economic transformation. While much remains to be done, the direction is clear, and the foundations are firmly in place.”
While reaffirming his commitment to the service of the nation and to supporting Mr President, he declared that, “The work of economic reform is, by its nature, a continuous process,” expressing optimism about Nigeria’s trajectory.
“I wish my successor and the entire government the very best as they continue the work of improving the lives of Nigerians,” he stated.
In 2023, Mr Edun first served as the head of the Presidential Transition Committee, and later became the Special Adviser to the President on Monetary Policy, before his appointment as Finance Minister.
During his time as Minister, he worked to advance critical reforms that stabilised the macroeconomic environment, strengthened fiscal sustainability, and laid the foundation for inclusive and long-term growth.
Key results of these efforts included growth improving from a rate of 2 per cent to over 4 per cent, and inflation falling from 35 per cent to 15 per cent.
These outcomes were driven by a shared commitment to restoring public trust and enabling faster and inclusive growth through greater investor confidence and improved economic coordination.
By Adedapo Adesanya
A price appreciation recorded by Central Securities Clearing System (CSCS) Plc lifted the NASD Over-the-Counter (OTC) Securities Exchange by 0.56 per cent on Tuesday, April 21.
Data showed that the Nigerian depository company gained N4.13 during the trading day to close at N63.15 per share compared with the preceding session’s N59.02 per share.
As a result, the NASD Unlisted Security Index (NSI) added 21.81 points to close at 3,935.27 points compared with Monday’s closing value of 3,913.46 points, and the market capitalisation expanded by N12.99 billion to finish at N2.354 trillion, in contrast to the previous day’s N2.341 trillion.
Yesterday, the price of 11 Plc went down by N21.08 to settle at N191.00 per unit versus N212.08 per unit.
There was a 48.9 per cent decline in the value of transactions on Tuesday to N5.7 million from N11.1 million, as the volume of transactions dipped by 48.9 per cent to 185,420 units from 245,830 units, while the number of deals shrank by 4.2 per cent to 23 deals from 24 deals.
Great Nigeria Insurance (GNI) Plc remained the most active stock by value on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by CSCS Plc with 58.9 million units exchanged for N4.0 billion, and Okitipupa Plc with 27.8 million units traded at N1.9 billion.
GNI Plc was also the most traded stock by volume on a year-to-date basis with 3.4 billion units valued at N8.4 billion, followed by Resourcery Plc with 1.1 billion units sold for N415.7 million, and Infrastructure Guarantee Credit Plc with 400 million units transacted for N1.2 billion.
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