72730 v1 World Trade Indicators 2009/10 Nigeria Trade Brief Trade Policy stands at 12 percent. The maximum applied MFN tariff (excluding alcohol and tobacco) has also Nigeria’s tariff policy is mostly governed by the decreased in the last decade and was 50 percent as of recently revised Common External Tariff (CET) 2008. The country’s trade policy space, as measured by regime of the Economic Community of West African the wedge between bound and applied tariffs (the States (ECOWAS). Initially adopted in 2005, the four- overhang), is very large at 106.4 percent, compared to band CET with a maximum rate of 20 percent, was 48.1 percent on average for its regional neighbors and revised in June 2009 to include a fifth band of 35 29.5 percent for the lower-middle-income countries. percent, primarily at the behest of Nigeria. Nigeria The country ranks 91st (out of 148) on the GATS applies the 35 percent rate to 167 (of 5,671) tariff line Commitments Index, reflecting ample room for items, and the new CET covers about 80 percent of committing to further multilateral liberalization in the country’s tariff lines that had non-zero import services trade. values in 2008.1 Besides tariff barriers, Nigeria has a long list of prohibited imports (and a shorter list of Faced with high food prices in 2008, the government prohibited exports), making smuggling prevalent in the drastically lowered the import tax on rice from 100 country. Smuggled imports typically enter Nigeria percent to 2.7 percent and allocated a special fund for from its regional neighbors (Benin, Niger, Cameroon, rice imports to fight food shortages. and Chad). In September 2008, the trade regime was amended to lower tariffs for a wide range of goods and replace a number of import bans by tariffs. Based External Environment on the country’s latest (2006) MFN Tariff Trade More than 95 percent of Nigeria’s exports are oil and Restrictive Index (TTRI)2 of 11.4 percent, it ranks 98th gas, which face very few barriers of entry in overseas (where 1st is least restrictive) of 125 countries. Based markets. This is reflected in the country’s Market on this index, Nigeria is as open to trade as the Access TTRI3 (including preferences) of 0.8 percent, average sub-Saharan Africa (SSA) country but is more which is significantly below the SSA and lower- restrictive than the average lower-middle-income middle-income country group averages of 3.9 percent country (TTRI of 8.6 percent). With the government’s and 2.3 percent, respectively. The weighted average aim of enhancing food security, the agricultural sector rest of the world tariff faced by Nigerian exports is is afforded a high level of tariff protection (TTRI of also low at 0.2 percent, driven primarily by the low 28 percent) compared to the non-agricultural sector tariff of 0.2 percent faced by its non-agricultural (TTRI of 8.5 percent). exports. Agricultural exports face a higher tariff of 1.7 The country’s average MFN applied tariff (including percent. Over the course of 2008, the Nigerian naira ad valorem equivalents of specific duties) has appreciated by 10.7 percent in real, trade-weighted decreased dramatically from the late 1990s and early terms, reducing the competitiveness of the country’s 2000s when it was well over 20 percent and now exports. As negotiations between ECOWAS and the EU towards a comprehensive Economic Partnership Unless otherwise indicated, all data are as of August 2009 Agreement (EPA) stalled prior to the December 2007 and are drawn from the World Trade Indicators 2009/10 deadline, Nigeria opted not to sign a bilateral ―interim‖ agreement with the EU. As a result, the Database. The database, Country Trade Briefs and preferences under the Cotonou Agreement elapsed. Trade-at-a-Glance Tables, are available at Nigeria’s non-oil exports, as those of a non–least http://www.worldbank.org/wti. developed country (LDC), may now only benefit from If using information from this brief, please provide the lower preferences under the General System of following source citation: World Bank. 2010. ―Nigeria Preferences (GSP) scheme. The country continues to Trade Brief.‖ World Trade Indicators 2009/10: Country Trade negotiate an EPA with the EU as part of the Briefs. Washington, DC: World Bank. Available at ECOWAS. http://www.worldbank.org/wti. World Trade Indicators 2009/10 Nigeria Trade Brief Behind the Border Constraints Exports did improve in Q2 2009, as oil prices rose. Services exports did not perform as well as goods Global rankings point to a somewhat weak exports in 2008, growing by an estimated 1.3 percent institutional environment, with Nigeria being ranked after increasing by 49.4 percent in 2007, and are 125th in the 2010 Ease of Doing Business index, which expected to fall by 6.2 percent in 2009. The drop in looks at the business environment in 183 countries. goods imports was less steep than that of exports, with The Logistics Performance Index (LPI), a measure of a 24.5 percent reduction in the first half of 2009 the extent of trade facilitation, rates Nigeria at 2.4, on compared to the same period in 2008. Foreign direct a scale of 1 to 5, compared with 2.35 for the SSA investment as a share of GDP was 3.7 percent in 2007. region and 2.47 for countries in the lower-middle- income group. It ranked 93rd (out of 150) in the world and 14th (out of 39) in the SSA region (with South Notes Africa leading the regional group). Among the LPI 1. Nigeria Customs Service 2009, and WITS Database. subcategories, its best performance was in lowering 2. TTRI calculates the equivalent uniform tariff that domestic logistics costs while its weakest performance would keep domestic welfare constant. It is weighted by was in the quality of transport and IT infrastructure import shares and import demand elasticity. for logistics and the efficiency and effectiveness of 3. MA-TTRI calculates the equivalent uniform tariff of customs procedures. trading partners that would keep their level of imports constant. It is weighted by import values and import Trade Outcomes demand elasticities of trading partners. Real growth (in constant 2000 U.S. dollars) of trade in goods and services increased slightly from 3.5 percent References in 2007 to an estimated 3.9 percent in 2008. Although Afrique en Ligne. 2009. ―ECOWAS Leaders Approve exports fell by an estimated 0.6 percent in 2008, this New Common External Tariff Regime.‖ June 22, was a significant improvement over the contraction of 2009. . than the growth rate of 14.9 percent in 2007. The Andriamananjara, S., P. Brenton, J. von Uexküll, and P. performance of both exports and imports is expected Walkenhorst. 2009. ―Assessing the Economic to worsen in 2009. Impacts of an Economic Partnership Agreement on In nominal terms, growth of the trade in goods and Nigeria.‖ April 2009. World Bank, Washington, DC. services accelerated from 9.9 percent in 2007 to an Central Bank of Nigeria. 2009. ―International Economic estimated 26.6 percent in 2008, but a large decline in Cooperations.‖ Abuja, Nigeria. trade of 26.1 percent is expected in 2009. Export of Europa. 2009. ―Fact Sheet on the Interim Economic goods and services registered an impressive growth of Partnership Agreements.‖ Europa. an estimated 31.1 percent in 2008, after a growth of Food and Agriculture Organization of the United only 2.9 percent in 2007, while import growth Nations (FAO). 2008. ―Policy Measures Taken by remained at an estimated 20.5 percent. The bulk of Governments to Reduce the Impact of Soaring export growth came from goods exports which Prices—Africa—Nigeria. FAO, New York. increased by an estimated 33.7 percent in 2008, December 15, 2008. boosted by high oil prices. However, a fall in oil prices, International Monetary Fund (IMF). 2009. International coupled with changes in production due to instability Financial Statistics. IMF. August 2009 . exports to drop significantly in 2009. This Nduwugwe, J. 2008 ―Nigeria: FG Reduces Tariffs, Bans deterioration in the performance of goods exports Importation of Used Cars, Textiles.‖ 26 September. already began in the fourth quarter of 2008 when goods exports fell by 22 percent in nominal U.S. dollar Nigeria Customs Service. 2009. CET Tariff. terms compared to the same period in the previous . year. Goods exports in the first half of 2009 were less Third World Network Africa. 2009. ―Why the than half their value in the same period in 2008, Government Should Rethink the Ghana-EU Interim dropping by 51.5 percent on a year-on-year basis. Economic Partnership Agreement.‖ Third World Nigeria Trade Brief World Trade Indicators 2009/10 Network Africa. April 27, 2009. . World Trade Organization (WTO). 2008. Trade Policy Review—Nigeria. April 13, 2005. WTO, Geneva.