The Tariff and FX Reality: Why Pricing Strategies in Nigeria Need Rethinking

Nigeria’s business environment, far from static, has been a volatile landscape characterized by rapid swings. But the pace of structural change over the past few years has been particularly sharp. The country’s currency reforms and changing tariff regimes have broken the old pricing playbook, meaning any company treating pricing strategies as static and foreign exchange (FX) as a background detail puts margin, market share, and repatriation at risk.

In June 2023, the decision by President Bola Tinubu’s administration to float the Naira and unify the country’s various FX windows set off a chain of consequences that, today, still work through corporate balance sheets, pricing models, and supply chains. Add to this the changing global tariff landscape, including the 14% levy the United States placed on Nigerian exports in April 2025, and that means a commercial environment requiring rethinking of how companies price their goods, source their inputs, and manage financial risks.

While this may not, strictly, be a theoretical concern, it means an everyday operational verity for firms importing raw materials, selling finished goods in naira, reporting earnings in foreign currency, or relying on dollar-denominated contracts. Understanding how this new terrain works is, therefore, the first step towards building a strategy that holds up within it.

From managed rate to free float, what changed?

For nearly a decade before 2023, the Central Bank of Nigeria (CBN) managed the naira at an artificially strong level against the dollar, maintaining different FX rate windows, while rationing access. The result, then, was a parallel black market that traded above the official rate, a backlog of unpaid foreign currency obligations estimated at over $7 billion, and foreign capital making a quiet exodus.

Between mid‑2023 and 2025, CBN unified different FX windows into a more market-driven investors and exporters’ window and cleared billions of dollars in FX backlogs. There was greater transparency, but also a steep depreciation of the naira. The currency weakened from roughly 460 naira per dollar, and by the end of 2024, the official rate had settled at 1,535 naira per US dollar, quite a huge depreciation in a single calendar year. Against the parallel market, the dollar was trading at around 1,656 naira by the same point, so import cost structures were forced to immediately reset.

The logic behind CBN’s reform was that a misaligned exchange rate had been suppressing government oil revenues, discouraging formal remittance flows, and making Nigeria an unattractive destination for foreign direct investment. The World Bank had also argued that the distorted rate cost Nigeria’s budget more than its fuel subsidies. In allowing the market to set the price, the government sought to restore credibility and attract foreign capital for the economy.

The antidote has, however, been painful as inflation touched a high of 34.8% in December 2024. Food prices surged more than 80% from pre-reform levels. And for companies operating in the country, the sudden repricing of dollar-denominated costs disarrayed financial planning.

The pricing and margin crisis

The impact on corporate profitability was significant. An analysis of eight major consumer goods companies listed on the Nigerian Exchange showed that their combined operational costs grew from 952 billion naira in the first half of 2023 to 1.58 trillion naira in the first half of 2024, a nearly 67% increase driven almost entirely by the higher cost of imported raw materials.

That was not all. Finance costs also skyrocketed. Seven publicly traded consumer goods firms saw their combined net finance expenses jump from 32.18 billion naira in Q1 2023 to 465.11 billion naira in Q1 2024, as companies carrying foreign-currency-denominated debt were hit by massive revaluation losses. For the full 2023 financial year, leading consumer goods firms on the Nigerian Exchange reported a combined FX loss of 839.24 billion naira, equivalent to at least 18% of their combined revenue.

The import tariffs’ pressure

Sitting alongside the FX shock was a tariff environment that was growing more complex (and less predictable). Nigeria operates under the ECOWAS Common External Tariff (CET) framework (pdf), which maintains five tariff bands ranging from 0% on essential capital goods and medicines to 35% on goods in sectors that the government seeks to protect. Outside of the base rates, the government applies additional charges, including levies, excise duties, and a 7.5% VAT, meaning the effective landed cost of imports can be considerably higher than the headline tariff figure suggests.

Nigeria also applies supplementary protectionist policies through its import substitution program, which grants preferential treatment to domestic manufacturers in public procurement and extends local content requirements beyond oil and gas into ICT, advertising, and other industries. Companies report that non-transparent valuation procedures and frequent policy changes by the Nigerian Customs Service create additional uncertainties that complicate import planning.

The global tariff landscape is also another variable. When the United States introduced a 14% levy on Nigerian exports under the Donald Trump administration’s Fair and Reciprocal Trade Plan in April 2025, it also raised concerns about the dollar’s strength and wider disruptions to global supply chains. A stronger dollar makes Nigeria’s imports more expensive across the board, not just goods sourced from the US. And as global suppliers facing tariff-related revenue pressure in other markets look to recover costs, Nigerian buyers are exposed to sweeping price increases that have nothing to do with local demand.

Furthermore, Nigeria imports most of its industrial inputs, including electronics, vehicles, machinery, raw materials, and food products, and when global trade patterns adjust under tariff pressure, the country sits at the exposed end of those adjustments. The effect is an economic impasse, with a weaker local currency that inflates the (naira) cost of every dollar of imports, and a rising global price level for the imports.

The repatriation challenge

For multinationals, Nigeria’s FX reforms created a further complication when it comes to getting money out. Nigeria’s legal framework formally permits full repatriation of capital, dividends, and profits, anchored by the Certificate of Capital Importation (CCI) issued by authorized dealer banks.

Under the Godwin Emefiele (former CBN Governor) era, dollar liquidity was so constrained that repatriation was effectively deprioritized. MTN Group was, for instance, unable to repatriate roughly $280 million in 2020 and suspended its final dividend. Dollar repatriations across the major listed companies fell from $821.5 million in 2022 to $578 million in 2023 as the weaker exchange rate eroded dollar values of naira-denominated profits.

But the post-reform environment has improved. External reserves reached roughly $32.8 billion by April 2024, and foreign portfolio inflows hit $1.04 billion in 2025, the first net inflow position in years, and the fear of trapped capital eased. However, companies must ensure their CCI is in place, maintain full tax compliance, including 10% withholding tax on dividends, and process all remittances through authorized dealer banks. For those who did not structure their original investment correctly, the route back remains difficult.

How businesses are adapting

The landscape is challenging but navigable. Several strategic approaches distinguish companies that protected their positions from those that did not. The most common error in the post-float period was absorbing naira cost increases and not passing them through to the market. Protecting short-term volume at the cost of margin destruction proved unsustainable. Companies that rebuilt pricing models to reflect the true cost of imported inputs and tariff burdens maintained the headroom to keep investing.

Firms that reduced the dollar footprint of their cost base through backward integration or domestic supplier development became structurally less exposed to rate movements. Yet formal FX hedging tools through authorized dealer banks provide predictability for companies with significant import exposure.

And with global supply chains under pressure, the African Continental Free Trade Area (AfCTA) offers a framework for developing continental sourcing alternatives that reduce dollar dependency. Underpinning all of this is scenario-based financial planning, where CFOs who run working profit and loss models across a range of rate assumptions and build decision rules at each threshold are better placed to act fast when conditions change.

Grounds for cautious optimism?

By late 2024 and into 2025, when the market began stabilizing and the naira settled into a more predictable band, FX liquidity improved, and the NGX hit 40 trillion naira in market capitalization. IMF projections put Nigeria’s real GDP growth at 3.9% in 2025. MTN Nigeria, which had pushed shareholders’ equity into negative territory, recorded a pre-tax profit of 414.9 billion naira in the first half of 2025 alone.

So, yes, the macroeconomic framework is more coherent today than it has been in years, and companies operating within its logic are finding opportunities where pre-reform distortions had previously closed doors.

Where AMENA AFRICA comes in?

With the picture painted, one now understands how (and why) navigating this environment demands much more than financial acumen. Local knowledge, established networks, and on-the-ground intelligence are essential. This is where AMENA AFRICA is most relevant. As a premier pan-African market advisory firm, we operate from numerous hubs, including a dedicated office in Lagos.

With years of experience across numerous projects and a seasoned expert team, we bring technical rigor and market knowledge that, perhaps, only comes from sustained presence and the capability to provide local solutions for local challenges. For companies reviewing their Nigeria pricing strategy under FX pressure, we suitably provide the much-needed market intelligence because our team has a clear-eyed view of different consumer purchasing power price points, competitor positioning, and the governing regulatory landscape.

For international companies uncertain if Nigeria’s reform environment means opportunity or risk, our market entry services provide the suitable research and data-driven assessment that has helped companies across FMCG, manufacturing, technology, agriculture, and logistics define the right approach and time to enter Africa’s largest economy.

And if you need to rethink your route to market, for reasons like distributor networks not absorbing price increases, or you consider bringing more of your value chain in-house, our distributor search and growth strategy services provide the right approaches to achieve that with minimal disruption. That is what AMENA AFRICA is built for.