Federal constraints choke states’ N128bn export spend

Nigerian states are ramping up spending to boost their exports, but those efforts are being undercut by trade constraints at the federal level that continue to inflate costs and delay shipments for the nation’s exporters.

In its report, ‘Subnational Trade Promotion and Export Barriers in Nigeria’, BudgIT estimates that state spending on trade promotion infrastructure rose from N47 billion in 2020 to N128 billion in 2024. This was alongside the creation of export hubs, special economic zones and more than 180 international trade missions.

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Yet, these investments have not translated into improved export performance.

How bad is it?

From 2021 to 2024, Nigeria’s total trade value inched up only marginally, while non-oil exports remained persistently weak, with crude oil still dominating exports at 82 to 87 percent. Export processing became slower and more expensive as processing time rose from 21 to 26 days, while documentary compliance costs increased by 34 percent.

The report traces this disconnect to a structural imbalance in Nigeria’s trade governance. While states are increasingly responsible for attracting investment and supporting exporters, control over tariffs, customs procedures, port operations and regulatory enforcement remains firmly with federal institutions.

As a result, subnational efforts are concentrated on production and promotion, while the factors that determine whether goods actually leave the country efficiently lie elsewhere.

That imbalance shows up most clearly in the cost and complexity of exporting.

According to the report, exporters must deal with up to 17 federal agencies and complete as many as 23 procedural steps for a single shipment. Processing times typically range between 18 and 26 days, while direct costs can reach between N180,000 and N450,000 per shipment, excluding informal payments.

Effective tariff rates, particularly for manufacturers dependent on imported inputs, can rise to between 30 and 45 percent despite much lower nominal rates.

Exporters bear the brunt

The pattern was noticed across states and sectors. In Anambra, a cassava processor who secured state-backed equipment, training and access to European buyers found that the export stage nearly erased those gains. After producing a shipment valued at over N5 million, she incurred roughly N1.86 million in port charges, regulatory fees, logistics and informal payments, cutting expected margins to a fraction of projections.

In Kano, a textile manufacturer benefiting from subsidised land and power said he pays more to import raw materials than competitors in neighbouring countries and loses further ground at the port, where delays and multiple checkpoints add both time and cost.

An Ogun-based food exporter operating within a free trade zone reported that federal agencies continue to impose full inspection and certification requirements regardless of state-level incentives, while differing labelling standards between Nigeria and export markets force producers to duplicate packaging at additional cost.

From interviews BudgIT conducted as part of its research, most exporters said state interventions addressed only a minority of their constraints, with the bulk tied to federal processes.

The federal government’s National Single Window digital platform, designed to unite trade procedures and promising to solve the problem of overlapping costs, went live on March 27, accepting submissions and approvals of import licenses, certificates and permits. Export processing does not begin till the second quarter, which may extend till the third quarter, the secretariat said.

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Tightening tariffs

When exporters are able to scale the procedural hurdles, they meet tariffs and non-tariff barriers. BudgIT found that import duties on intermediate goods, multiple port charges and commodity-specific levies raise production and export costs for exporters, while overlapping inspections, port congestion and inconsistent policy implementation further erode competitiveness.

Exporters reported routine informal payments at checkpoints and ports, which have become embedded in the cost of doing business.

Foreign shipping companies operating in Nigeria have recently been pushing for tariff increases between 150 percent and 200 percent. While the Nigeria Shippers’ Council said it negotiated a markdown to 30 percent, the companies argue that operational costs, inflation and wage pressures make the approved rate too low to sustain their operations.

The persistence of these barriers, BudgIT reports, despite increased state activity, reflects weak coordination between different levels of government.

Research found that Nigeria lacks a formal institutional framework for aligning federal and state trade policies. Federal agencies design and implement regulations with limited input from states, while state governments pursue export promotion strategies without full visibility into federal requirements.

This disconnect often results in conflicting policies, such as tariff changes or export levies that undermine state-backed investments.

Agencies such as the Nigeria Customs Service operate centralised systems that do not adapt to regional export priorities, and state governments cannot negotiate procedures or create dedicated channels for priority exports. Legislative engagement has also been limited, with few reforms targeted at reducing exporter constraints despite their growing impact on competitiveness.

The result is a system in which increased activity at both federal and state levels produces limited gains. While some states, particularly Lagos and Ogun, have attracted investment and developed infrastructure, capital inflows remain heavily concentrated and most states continue to see little improvement in export outcomes.

Plugging the gap

In May 2025, the Federal government approved Nigeria’s 10-year national policy on marine and blue economy policy, created to encourage the harnessing of Nigeria’s marine resources, including a 853-kilometre coastline.

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The report recommended clearer alignment of roles between federal and state governments, the creation of formal coordination mechanisms to harmonise policy, and targeted efforts to reduce transaction costs in the export process.

It said information flows to exporters must be strengthened, checkpoints and informal payments reduced. BudgIT added that states need stronger advocacy for reforms to tariffs and customs procedures.

Without such changes, the report warns, Nigeria risks continuing to invest in export promotion without resolving the structural constraints that determine whether those exports can compete, limiting its ability to take advantage of opportunities under the African Continental Free Trade Area (AfCFTA).