.As government policies lack consistency

Nigeria’s import levels have increased by 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 analysis seen on Wednesday .

This growth was mainly fueled by refined petroleum imports, which accounted for 38.3% of total imports.

The WTO notes that the Nigerian government’s trade and economic policies have lacked coherence in the past, which has affected the achievement of the government’s ambitious goals.

The report said some of Nigeria’s restrictive and interventionist policies appeared to counter broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.

Nigeria’s Sixth Trade Policy Review, based on reports from the WTO Secretariat and the Government of Nigeria, underlines 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 gases accounted for 10.5 percent. Exports have grown by nearly 50% over the past 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 grew by nearly 50% to $65 billion. Services exports, about 6% of total exports, are dominated by transport and travel (58.2%), as well as increasingly financial services (22.9%, predominantly digitally traded).

“The share of non-oil exports in total exports doubled between 2017 and 2023, consisting mainly of agricultural products, fertilizers and metals. Imports also rose sharply from USD 31 billion to USD 56 billion, with refined oil 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 service imports), followed by other business services (20.1% , predominantly digitally traded)”, the report states.

The review highlights the Nigerian government’s ambitious Agenda 2050, which aims to diversify the economy and reduce dependence on oil by promoting manufacturing, connecting domestic raw materials with industries and expanding the domestic market.

Despite these efforts, some restrictive policies appear to be countering the goal of economic diversification, according to the WTO 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 sometimes seem to lack coherence and have not, in the past, fully achieved their ambitious goals. Some restrictive and interventionist policies appear to counter broader government strategies to support economic diversification and the integration of more productive manufacturing enterprises into global value chains.

“Nigeria’s trade in intermediate goods grew 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 continued its downward trend and have 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 exchange rate system. According to the report, in 2023, Nigeria eliminated its complex multi-tiered exchange rate system, which led to significant foreign exchange shortages.

“In 2023, the Government initiated important reforms regarding the exchange rate, fuel subsidies and fiscal discipline. In June, it scrapped a complex system of exchange rates that used multiple windows and rates that had led to significant foreign exchange (FX) deficits. The largely unaffordable official naira rate quickly aligned with the parallel rate at which most foreign exchange transactions actually took place, and by March 2024, the official exchange rate had lost about 70% of its USD value. In 2023, the Central Bank of Nigeria (CBN) also removed restrictions on the use of FX for the importation of 43 commodity groups, affecting over 900 tariff lines that were 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 currency 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 ineffective fuel subsidies in mid-2023, but set retail fuel price caps in late 2023, effectively reintroducing a some form of support. These subsidies had accounted for about 15% of government spending in 2022.

The Nigerian government has also decided to end a practice of financing a significant share of its spending through overdrafts from the Central Bank of Nigeria (CBN), which have contributed to the debt-to-GDP ratio rising to 30%. At below 9%, 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 has aligned with the parallel rate until March 2024, has seen a rapid devaluation of the naira. In June 2023, Nigeria also removed long-standing foreign exchange restrictions on 43 groups of imports to facilitate access to foreign exchange. These reforms were intended to create a more stable economic environment, although some currency 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 the Economic Community of West African States (ECOWAS), reflects its continued commitment to regional integration. However, there remain areas for improvement in the notification of regulatory changes and trade agreements to the WTO, with pending notifications in the area of ​​anti-dumping, subsidies and import licences.

“On 12 June 2023, becoming the second African WTO member to do so. While Nigeria submitted 49 notifications under 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 presented in the review may also be notified.

The WTO report also indicates that Nigeria has taken steps to diversify and stabilize its economy, but challenges remain. While recent policy adjustments reflect an effort to stabilize 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.