WTO completes sixth review of the trade policies and practices of Nigeria

All the countries and customs territories that are members of the World Trade Organization (WTO) have their trade policies periodically reviewed, the frequency of which varies depending on their share of world trade in goods and services. Reviews are based on two documents: a report prepared independently by the WTO Secretariat and a policy statement by the Member under review.

Compared to other African countries, Nigeria has managed to achieve a certain degree of diversification of its economy, despite its economic growth continues to be closely dependent on the oil and gas sector, which accounted for 5.7% of its GDP in 2023, 90% of goods exports by value, and 45% of government revenue. The agriculture sector registered a modest growth in 2023, accounting for 23.2% of GDP (in 2017 accounted for 21.1% of GDP), and absorbing around 38% of all employment. Despite this, Nigeria continues to be a net importer of agricultural products, at the point that the government requested to be included in the WTO list of net food-importing developing countries. Another sector of the economy that is continuing to gain global prominence is the film industry, as well as music artists and fashion designers. The film industry (Nollywood) produced more than 2,500 titles in 2023 and films are increasingly included in international streaming services. Regarding the informal economy, this sector continues to play an important role, estimated to account for between 41% and 65% of GDP.

For what concerns the trading environment, the WTO trade policy review assessment notes that considerable challenges persist. Import procedures are lengthy and cumbersome. In 2023, around 90% of consignments were physically inspected and an additional 9% scanned. The use of risk analysis remains marginal. Export procedures are equally cumbersome.

Nigeria implements the ECOWAS CET with certain deviations such as Import Adjustment Taxes (IATs) added to nearly 200 tariff lines in 2023 (in 2017 it was applied to 97 tariff lines) affecting 8.7% of imports (by value). Tariffs applied on imported goods are subject to frequent changes and discretionary exemptions. Moreover, nearly every year, the Federal Government issues fiscal policy measures that include changes to the IATs, duty rebates, and import prohibitions. At present, several restrictive measures are in place, with many goods that are banned for import and export, although goods contained in a list of items (25 categories covering approximately 5% of tariff lines at the 10-digit level) can be imported by obtaining a non-automatic license (or "waiver") using a non-automated process. Imports of goods covered by this import prohibition list accounted for approximately 6% to 7% of all imports in 2023. Also, some of Nigeria's land borders are subject to frequent closures. This situation makes trade and taxation applied at borders particularly unpredictable. In addition, external trade costs due to transport, port congestion, currency measures, and complex regulatory requirements, are between 50% and 75% higher compared to the world's largest economies.

This situation poses huge challenges in the Nigeria’s attempts to increase economic integration with regional and continental markets, including in the context of the AfCFTA. This is not exactly a good news for one of the biggest African economies that should instead set an example and act as a driver of integration in the continent.