By Adedapo Adesanya
Nigeria’s import levels increased by 80.7 per cent in six years, rising from $31 billion in 2017 to $56 billion in 2023, according to the latest World Trade Organization (WTO) Trade Policy Review.
This rise, according to the report, was primarily fueled by refined petroleum, which made up 38.3 per cent of the total imports.
The WTO noted that the Nigerian government’s trade and economic policies lacked consistency in the past, affecting the achievement of ambitious government goals.
The report added that 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 per cent of goods exports, while gas made up 10.5 per cent. Exports have risen by nearly 50 per cent over the last six years, reaching $65 billion.
“Exports of goods continue to be dominated by crude oil (80.6 per cent) as well as gas (10.5 per cent).
“Between 2017 and 2023, they increased by nearly 50 per cent to $65 billion. Services exports, about 6 per cent of all exports, are dominated by transport and travel (58.2 per cent), as well as increasingly financial services (22.9 per cent, 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 $31 billion to $56 billion, with refined petroleum accounting for the largest share (38.3 per cent).
“Services imports, which accounted for more than 20 per cent of total imports, are also dominated by transport and travel services (63.7 per cent of services imports), followed by other business services (20.1 per cent, predominantly traded digitally),” the report said.
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.
The WTO said that despite these efforts, some restrictive policies seem to counter the goal of economic diversification.
“For example, the share of intermediate goods in non-oil imports fell from 44 per cent to 32 per cent 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 per cent to 32 per cent 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 per cent 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 accounted for about 15 per cent of government expenditure in 2022.
The Nigerian government also decided to end the 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 per cent.
“At below 9 per cent, 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.”
