.As government policies lack consistency
Nigeria’s import levels surged 80.65 percent in six years, rising from $31 billion in 2017 to $56 billion in 2023, according to the World Trade Organization (WTO) Trade Policy Review seen on Wednesday.
This surge was primarily fueled by imports of refined petroleum, which made up 38.3 percent of total imports.
The WTO notes that the Nigerian government’s trade and economic policies lacked consistency in the past, affecting the achievement of ambitious government goals.
The report says some of Nigeria’s restrictive and interventionist policies seemed to counteract broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.
The sixth Trade Policy Review of Nigeria, based on reports by the WTO Secretariat and the Government of Nigeria, emphasises the critical role of trade in Nigeria’s economic development strategy.
According to the WTO, Nigeria, with a nominal GDP of $363 billion, remains one of Africa’s largest economies, largely due to its oil and gas exports, which continue to dominate its portfolio. Crude oil alone accounted for 80.6 percent of goods exports, while gas made up 10.5 percent. Exports have risen by nearly 50 percent over the last six years, reaching $65 billion.
“Exports of goods continue to be dominated by crude oil (80.6%) as well as gas (10.5%). Between 2017 and 2023, they increased by nearly 50% to USD 65 billion. Services exports, about 6% of all exports, are dominated by transport and travel (58.2%), as well as increasingly financial services (22.9%, predominantly traded digitally).
“The share of non-oil exports in total exports doubled between 2017 and 2023, consisting primarily of agricultural products, fertilizer, and metals. Imports also grew strongly from USD 31 billion to USD 56 billion, with refined petroleum accounting for the largest share (38.3%). Services imports, which accounted for more than 20% of total imports, are also dominated by transport and travel services (63.7% of services imports), followed by other business services (20.1%, predominantly traded digitally),” the report says.
The review highlights the Nigerian government’s ambitious Agenda 2050, which aims to diversify the economy and reduce reliance on oil by promoting manufacturing, linking domestic raw materials with industries, and expanding the domestic market.
Despite these efforts, some restrictive policies seem to counter the goal of economic diversification, according to the WTO’s report. For example, the share of intermediate goods in non-oil imports fell from 44 percent to 32 percent between 2017 and 2023, indicating limited progress in expanding manufacturing’s contribution to the economy.
“Government strategies and policies at times seem to lack consistency and, in the past, did not fully achieve their ambitious objectives. Some restrictive and interventionist policies seem to counteract broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.
“Nigeria’s trade in intermediary goods developed little between 2010 and 2021 and the share of intermediate goods in total non-oil imports declined from 44% to 32% between 2017 and 2023. FDI has continued its downward trend and virtually ceased in 2022, with few disaggregated figures available,” the report said.
The WTO explains that economic reforms have been underway in Nigeria, including the removal of fuel subsidies and a restructuring of the foreign exchange rate system. According to the report, in 2023, Nigeria eliminated its complex multi-tiered exchange rate system, which had resulted in significant foreign exchange shortages.
“In 2023, the Government initiated important reforms regarding the foreign exchange rate, fuel subsidies, and fiscal discipline. In June, it eliminated a complex exchange rate system using multiple windows and rates which had led to significant foreign exchange (FX) shortages. The largely inaccessible official rate of the naira rapidly aligned with the parallel rate at which most FX transactions had effectively taken place and by March 2024, the official exchange rate had lost around 70% of its value in USD terms. In 2023, the Central Bank of Nigeria (CBN) also removed restrictions on the use of FX for the import of 43 groups of commodities, affecting more than 900 tariff lines that had been in place since 2015.
“A price verification system for imports and exports to avoid under- or over-invoicing was in place between August 2023 and June 2024. However, some FX restrictions remain in place, including repatriation requirements,” it said.
The report added that following an earlier failed attempt in 2020, the government also removed costly and inefficient fuel subsidies in mid-2023 but established retail price caps for fuels at the end of 2023, effectively reintroducing some form of support. These subsidies had accounted for about 15 percent of government expenditure in 2022.
The Nigerian government also decided to end a practice of financing a significant share of its spending via overdrafts from the Central Bank of Nigeria (CBN), which had contributed to increasing debt as a share of GDP to 30%. At below 9 percent, the revenue-to-GDP ratio in Nigeria remains very low and the Government aims to increase it significantly by 2025.
The official exchange rate, which aligned with the parallel rate by March 2024, saw a rapid devaluation of the naira. In June 2023, Nigeria also removed longstanding foreign exchange restrictions on 43 groups of imports to ease access to foreign currency. These reforms were intended to create a more stable economic environment, though some foreign exchange restrictions remain, including repatriation requirements for companies.
The WTO report indicates that Nigeria’s participation in global trade organisations, including the African Continental Free Trade Area (AfCFTA) and Economic Community of West African States (ECOWAS), reflects its ongoing commitment to regional integration. However, areas for improvement remain, with respect to notifying regulatory changes and trade agreements to the WTO, with pending notifications in anti-dumping, subsidies, and import licensing.
“In 12 June 2023, becoming the second African WTO Member to do so. While Nigeria submitted 49 notifications across various agreements between 2017 and 2023, a large number of regular notifications remained pending in the areas of anti-dumping, agriculture, subsidies, state trading enterprises, quantitative restrictions, and import licensing. Some regulatory changes outlined in the Review could also be notified,”
The WTO report also indicates that Nigeria has taken steps to diversify and stabilise its economy, but challenges remain. While recent policy adjustments reflect an effort to stabilise trade and encourage growth, the WTO underscores the need for a more coherent policy framework to support long-term goals and enhance Nigeria’s role in global trade.
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