WT/TPR/S/147 Trade Policy Review 
Page 26 
 
 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Nigeria has bound a total of 19.2% of its tariff lines.  Since its previous Review in 1998, its 
average applied MFN tariff has increased from about 24% to about 29% (2003), with applied MFN 
tariff rates on agricultural and non-agricultural prod ucts averaging 50% and 25%, respectively.  In 
general, tariff rates are widely dispersed, ranging from a minimum of 2.5% to a maximum of 150%;  a 
total of 19 bands are applied.  The overall tariff st ructure reveals mixed escalation, due to the high 
tariffs on agricultural goods.  However, a number  of industries are protected through positive 
escalation.  Several industries also benefit from tariff exemptions and concessions on imports of 
inputs and raw materials.  Within the context of its subregional integration efforts, Nigeria has 
expressed its commitment to align its tariff struct ure on the ECOWAS CET; when implemented, this 
could bring significant liberalization and simp lification to Nigeria's tariff regime.   
2. Ongoing reforms are reported to be improving the efficiency of customs administration, and 
addressing burdensome customs procedures and corrup tion.  The Government intends to replace the 
current preshipment inspection scheme with a d estination scheme, and move from the Brussels 
definition of value, to a system based on the WTO Agreement.  A value-added tax of 5% applies to 
both domestically produced and imported goods, and excise duties, ranging from 20% to 40%, are applied on certain imports.  Additional layers  of duty are payable for purposes such as port 
development and import supervision.  Together with the increase in the overall tariff protection levels, 
the number of goods on the import prohibition list  has increased sharply during the period under 
review.  Nigeria has not imposed any trade defence measures;  however, the authorities have indicated 
the need to protect local industries from dumping and unfair competition, within the WTO framework.  
3. Incentives in place to encourage exports include  financial assistance schemes, duty drawbacks 
and exemptions, and export processing zones;  thes e incentives could help reduce the level of anti-
export bias faced by Nigerian exporters.  The expor t of certain goods is prohibited on food security 
and local transformation grounds;  and export taxes ar e applied to a number of commodities.  Most of 
Nigeria's standards and technical regulations are ba sed on international norms.  Since Nigeria's last 
TPR, its standards regulating bodies have stepped up efforts to curb the introduction of substandard 
products on the domestic market.  Nigeria is neither  a member nor an observer of the Government 
Procurement Agreement.  All bidders for public wo rks must be incorporated in Nigeria with a 
Nigerian Partner holding some 60% equity.  The re gime is being reformed to reduce corruption and 
improve the management of public expenditure. 
4. A privatization programme was launched in 1999  to divest the State's interest in some 
100 public enterprises.  Delays have occurred, though there has been some deregulation and 
liberalization in some service subsectors.  Nigeria does not have legislation on competition policy;  a 
bill is being drafted.  The intellectual property re gime has remained unchange d since 1998.  However, 
bills to bring Nigerian legislation into conformity  with the TRIPS Agreement are under consideration.  
The enforcement of the legislation is reported to be weak. Nigeria WT/TPR/S/147 
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(2) MEASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures and valuation  
5. The importation of goods to Nigeria is govern ed by the Customs and Excise Management 
Act; Customs and Excise Notices; and guidelines set out by the Federal Ministry of Finance.1  Under 
these provisions, importers do not need to be register ed, since registration with the Corporate Affairs 
Commission under the Companies and Allied Decree of 1990 is sufficient to import all but a few 
regulated goods.2  Goods importers must complete an  import declaration form:  Form M.3  O t h e r  
required documents include:  an attested invoice;  bill of entry (single goods declaration form), copy 
of the bill of lading/airway bill;  a packing list;  certificate of insurance;  a bank receipt for import 
duties;  a clean report of inspection (CRI) issued  by the preshipment inspection agent; and, if 
applicable, other documents, such as health certificates, required for the clearance of imports subject to specific standards and technical regulations for health, safety, and sanitary or phytosanitary 
purposes (section (4)(ii)).  Temporary imports and imports of samples and advertising materials are also subject to specific documentary requirements , as are goods for transhipment or in transit.   
6. Six copies of Form M must be completed
4;  three copies are sent to the preshipment 
inspection (PSI) agents, and one each to the importe r's bank, the Nigerian Customs Service (NCS), 
and the National Maritime Authority (NMA).  Th e designated banks genera lly approve Form M on 
the basis of the attested invoice, and mark whether foreign exchange is required or whether the import 
would be funded externally.  Banks can issue lette rs of credit upon authorization by the Central Bank 
of Nigeria (CBN).  Documentation requirements for the purchase of foreign exchange are considered 
burdensome.5  Furthermore, imports of certain products, such as water, beer, tobacco substitutes, and 
lighters are not eligible for foreign exchange  from the Interbank Foreign Exchange Market. 
7. The PSI agent's liaison office issues a clean re port of inspection (CRI) to the importer after 
inspection by the PSI body in the supplier country .  The importer submits the Form M processed by 
the bank, the CRI, and other rele vant documentation to NCS for processing.  Since 1999, NCS has 
been using UNCTAD's Automated System for Customs Data (ASYCUDA, version 2.7);  there are 
plans to upgrade the system in or der to speed up customs clearance.6  
8. In 1999, the Nigerian Government replaced th e PSI scheme with a destination inspection 
scheme.  However, due to poorly trained sta ff and inadequate resources, the programme was 
withdrawn and PSI reinstated.  Currently, all imports , with the exception of personal effects and those 
qualifying for diplomatic privileges, are subject to  PSI. The Government intends to re-introduce the 
destination inspection scheme, and a cabinet-level implementation committee has been set up to help 
work out, inter alia , the relevant technology and risk management issues.   
9. Nigeria uses the Brussels definition of value for cu stoms valuation.  It plans to change to a 
system based on the transaction value soon;  to th is end, the National Assembly adopted legislation 
for the implementation of the WTO Customs Valuati on Agreement in June 2003.  It has benefited 
                                                      
1 Customs information is available at:  http://w ww.nigeriacustoms.org/me nu.htm [15 July 2004]. 
2 Under Nigeria's food and drug safety regulations, no processed food, drugs, drug products, cosmetics 
or packaged water can be manufactured, imported, exported, advertised, sold or distributed in Nigeria, unless it 
has been registered with NAFDAC (section (4)(ii)(b)). 
3 Form A is used for imports of services.   
4 Form M is obtainable from all offices of the pres hipment inspection agents, Nigerian embassies, local 
banks, branches of Nigerian banks overs eas and their local correspondents.   
5 IMF (2004a).   
6 Information available at:  http://www.thisday online.com/archive/2003/01/20030121news25.html. WT/TPR/S/147 Trade Policy Review 
Page 28 
 
 
from WTO technical assistance programmes in this respect.7  The customs regulations do not contain 
provisions concerning appeal of customs decisions.  
10. The Government has stepped up efforts to br ing efficiency to the customs administration.8 
Reforms to customs services are one of the core components of the Government's current reform 
programme (Chapter I(2)).  The objective of the programme is to modernize and speed up customs 
clearance;  simplify and rationalize tariffs, duties,  and waivers;  improve revenue collection by 
customs;  and strengthen and professionalize customs service.9  The measures taken (or planned) 
include:  a downward shift in port taxes and levies, and elimination of some redundant port security agencies;  the establishment of a unit to fight corruption in the provision of customs services
10;  and 
administrative changes to the management and operati on of NCS.  It is reported that the efforts to 
modernize and professionalize the Nigerian Customs Service and the Nigerian Port Authority have 
helped to reduce port congestion and clearance rates, particularly at  Lagos' Apapa port, which handles 
over 40% of Nigeria's trade.11 
(ii) Rules of origin 
11. Nigeria's non-preferential rules of origin are contained in the  Customs Duties Act.  Goods are 
considered originating in a country if they are who lly produced in that country or if the value-added 
during production or a component incorporated in the goods is at least 75% of the production costs.   
12. Nigeria also applies ECOWAS rules of origin, under which a finished product has 
Community origin, if at least 60% of the raw ma terials used in its manufacture come from ECOWAS 
members, or if the value-added is at least 35% of the ex-works cost price, excluding taxes. 
(iii) Customs tariffs  
13. Nigeria uses the HS 1996 at the eight-digit level.  Its 2003 applied MFN tariff had 5,146 lines;  
all duties are  ad valorem .  Nigeria bound some 19.2% of its total tariff lines at the HS eight-digit level 
(Schedule XLII).  All agricultural lines are bound in contrast with only 7% of non-agricultural lines 
(WTO definitions).  Final bound ta riffs range from 40% on aluminium alloys and machinery, to 150% 
on vegetable products, fats and oils, and prepared fo ods.  The average bound tariff rate is 118.4%, and 
the coefficient of variation is 0.40. 
                                                      
7 Nigeria is among the developing country Members that have reserved the right to invoke paragraph 4 
of Annex III of the WTO Agreement on Customs Valuation (WTO document G/VAL/2/Rev.18, 
16 February 2004). 
8 Customs administration faces significant challe nges including long clearance procedures (the 
authorities report a 48-hour average clearance rate), poor  security practices, and corruption.  Customs issues 
have also been complicated by frequent ad hoc changes to the tariff and import prohibition regime (USTR, 2003). 
9 In the port of Lagos and at all border posts, forwarding costs could vary by up to 100% for the same 
product depending on the relationship between the operator and the customs officials.  Due to high customs 
tariffs, under-invoicing is rampant, and porous border controls contribute to the thriving informal trade with 
neighbouring countries.  Informal exports to West  African countries from Nigeria are estimated at 
US$1.5 billion to US$1.9 billion.  Furthermore, some of  Nigeria's neighbours operate as "entrepot States" for 
products that are subject to import bans (section (2)(vii)) or highly taxed in Nigeria.  For example, over 75% of 
goods landing at Cotonou harbour are heading for Nigeria (OECD, 2001, and WTO,2004). 
10 Customs clearance is estimated to account for about  30% of losses due to corruption in the Nigerian 
economy.  "EFCC Sets up Unit to Assist Customs", This Day , 16 November 2004.  Available at:  
http://www.thisdayonline.com/archive/2004/04/19/20040419news12.html. 
11 USCS (2004). Nigeria WT/TPR/S/147 
 Page 29 
 
 
14. The average applied MFN tariff rate was 28.6% in 2003, up from 24.4% in 1998, reflecting 
an increase in overall protection (Table III.1).  Ta riffs range from 2.5% to 150%, with 19 different 
bands.  The degree of tariff dispersion is moderate as indicated by a coefficient of variation of 0.78.  
Since 2002, there have been no duty-free items as a mi nimum tariff rate of 2.5%  has been applied.  
The modal rate is 15%, which applies to some 25% of total tariff lines.  Some 9% of the lines have 
rates higher than 50% (Chart III.1). 
Table III.1 
Structure of the MFN tariffs, 1997/98-03 
(Per cent) 
  1997/98 1999/00 2001 2002 2003 U.R.a 
1. Bound tariff lines (% of all tariff lines) 19.2 19.2 19.2 19.2 19.2 19.2 
2. Duty-free tariff lines (% of all tariff lines) 0.2 0.2 0.2 0.0 0.0 0.0 
3. Non- ad valorem  tariffs (% of all tariff lines) 0.0 0.0 0.0 0.0 0.0 0.0 
4. Tariff quotas (% of all tariff lines) 0.0 0.0 0.0 0.0 0.0 0.0 
5. Non- ad valorem  tariffs with no AVEs (% of all tariff lines) 0.0 0.0 0.0 0.0 0.0 0.0 
6. Simple average tariff rate 24.4 26.0 26.0 29.0 28.6 118.4 
 Agricultural products (WTO definition)b 32.8 32.1 32.1 50.4 50.2 150.0 
 Non-agricultural products (WTO definition)c 23.1 25.1 25.1 25.8 25.3 49.2 
 Agriculture, hunting, forestry and fishing (ISIC, Div. 1) 26.7 26.3 26.7 41.5 41.4 150.0 
 Mining and quarrying (ISIC, Div. 2) 18.3 18.4 18.4 18.4 17.9 n.a. 
 Manufacturing (ISIC, Div. 3) 24.4 26.1 26.2 28.5 28.0 109.1 
7. Domestic tariff "spikes" (% of all tariff lines)d 0.5 0.5 0.5 5.2 5.0 0.0 
8. International tariff "spikes" (% of all tariff lines)e 51.6 57.9 57.9 57.4 56.5 100.0 
9. Overall standard deviation of a pplied rates 18.0 14.6 14.5 22.0 22.3 47.4 
10. "Nuisance" applied rates (% of all tariff lines)f 0.0 0.0 0.0 0.0 0.0 0.0 
n.a. Not applicable. 
a Based on the total number of bound tariff lines. 
b WTO Agreement on Agriculture. 
c Exclude petroleum. d Domestic tariff spikes are defined as those exceeding three times the overall simple average applied rate (indicator 7). 
e International tariff peaks are defined as those exceeding 15%. 
f Nuisance rates are those greater than zero, but less than or equal to 2%. 
Source: WTO Secretariat calculations, based on data provided by the Nigerian authorities. 
15. The sectoral distribution of tariffs shows wide differences, with significantly higher levels of 
protection for agricultural products (Table III.1 and III.2).  In 2003, the average MFN rate on 
agricultural products (WTO definition) was 50.2%, co mpared to 32.8% in 1998;  the sharp rise in 
tariffs mainly occurred in 2002, with the impositi on of high tariff on several agricultural products.12  
MFN tariffs on agricultural products range from 5% to 150%.  The lowest average agricultural rates 
are on cut flowers and plants (20.3%);  oilseeds, fats  and oils and their products  (34.1%);  and animals 
and products thereof (34.5%).  The highest rates are on fruit and vegetables (98.2%);  tobacco (89.4%, 
with the rate of 150% on cigars and other manufact ured tobacco products);  and beverage and spirits 
(75.3%, with the rate of 150% on water).  In  2003, non-agricultural products (WTO definition) 
attracted an average applied MFN rate of 25.3% , up from 23.1% in 1998.  Average applied MFN 
duties by product group range from 2.5% to 100%.  The lowest average ra tes were on petroleum 
(11.3%), non-electric products (13.9%), and chem icals and photographic imports (17.6%), and the 
highest were on textile and clothing (42.7%), fo llowed mineral products, pr ecious stones and metals, 
fish and fishery products, and leather, rubber, foot wear and travel goods, with rates of 28% to 30%.  
                                                      
12 For instance, tariff amendments introduced in 2002 led to tariff rates of 100% on several products of 
HS chapters 1 to 24 (mainly agricultural products), whereas tariff rates on several chemical products (HS 
chapters 25-40) and mach inery and electrical equipment (HS ch apters 84-85) were reduced to 5%. WT/TPR/S/147 Trade Policy Review 
Page 30 
 
 
In general, there remains wide dispersion of tariffs  within each product group: some chemicals attract 
tariffs of 2.5%, whilst others attract rates of 100% , though the average for the product group is 17.6%.  
19.2
19.1
33.3
15.532.2
31.8
54.6
31.417.9
18.5
2.8
14.810.6
10.9
2.8
8.610..5
11.3
1.49.1
8.0
6.5
28.3
02004006008001,0001,2001,4001,6001,800
All products
Manufacturing
Mining
Agriculture
0- 10% 10- 20% 20- 30% 30- 40% 40- 50% >50%Chart III.1
MFN tariff distribution by sectora, 2003
Number of lines
a
Source:Labels are share of the total number of tariff lines, b y sector. The fi gures ma y not sum to 100% as no dut y rates were 
provided for 22 tariff lines.
WTO Secretariat calculations, based on data provided by the Nigerian authorities. 
Table III.2 
Summary analysis of the MFN tariff, 2003  
Applied 2003 rates 
Analysis No. 
of linesa No. of lines 
used Simple avg. 
tariff (%) Tariff range 
(%) Std-dev 
(%) CV Imports 2000
(US$ million)
Totalb 5,146 5,124 28.6 2.5-150 22.3 0.78 5,804.5 
By WTO definition        
Agriculture 677 677 50.2 5-150 37.5 0.75 954.4 
Live animals and products thereof 81 81 34.5 5-100 26.4 0.76 1.5 
Dairy products 20 20 48.1 5-100 44.0 0.91 136.3 
Coffee and  tea, cocoa, sugar, etc. 128 128 44.5 5-100 27.2 0.61 318.2 
Cut flowers and plants 34 34 20.3 5-65 16.8 0.83 6.3 
Fruit and vegetables 150 150 98.2 45-100 9.9 0.10 3.5 
Grains 16 16 49.4 5-100 41.3 0.84 379.4 
Oil seeds, fats, oils and their products 71 71 34.1 10-100 23.7 0.69 30.4 
Beverages and spirits 31 31 75.3 5-150 29.8 0.40 20.1 
Tobacco 9 9 89.4 15-150 62.7 0.70 23.7 
Other agricultural products 137 137 20.4 5-100 17.8 0.87 35.0 
Non-agriculture (excl. petroleum) 4,467 4,445 25.3 2.5-100 16.7 0.66 4,782.6 
Fish and fishery products 108 108 28.4 5-100 25.0 0.88 257.7 
Mineral products, precious stones and 
precious metals 340 340 29.8 2.5-100 18.8 0.63 495.2 
Table III.2 (cont'd)Nigeria WT/TPR/S/147 
 Page 31 
 
 
Applied 2003 rates 
Analysis No. 
of linesa No. of lines 
used Simple avg. 
tariff (%) Tariff range 
(%) Std-dev 
(%) CV Imports 2000
(US$ million)
Metals 591 589 22.4 5-65 12.1 0.54 552.7 
Chemicals and photographic supplie s 844 842 17.7 2.5-100 14.9 0.84 969.5 
Leather, rubber, footwear and travel 
goods 146 146 28.9 5-50 8.9 0.31 62.3 
Wood, pulp, paper and furniture 249 248 27.0 2.5-100 20.3 0.75 298.0 
Textiles and clothing 832 824 42.7 5-65 11. 3 0.26 73.4 
Transport equipment 137 135 19.1 10-55 12.3 0.64 724.7 
Non-electric machinery 526 521 13.9 2.5-45 7.4 0.53 710.4 
Electric machinery 258 258 20.0 2.5-45 8.4 0.42 511.1 
Non agricultural articles n.e.s. 436 434 23.0 5-100 14.7 0.64 127.6 
By ISIC sectorc        
Agriculture, hunting, forestry and 
fishing 290 290 41.4 5-100 36.2 0.88 296.4 
Mining and quarrying 108 108 17.9 5-100 15.4 0.86 30.5 
Manufacturing 4,747 4,725 28.0 2.5-150 21.0 0.75 5,477.6 
By stage of processing        
Raw materials 633 633 32.2 5-100 31.2 0.97 741.5 
Semi-processed products 1,679 1,676 24.5 2.5-100 16.5 0.67 1,930.3 
Fully-processed products 2,834 2,815 30.2 2.5-150 22.6 0.75 3,132.7 
a Total number of lines is listed. Tariff rates are based on a lower frequency (number of lines ) since no rates were provided f or 
22 tariff lines. 
b Two tariff lines are excluded from WTO non-agricu lture definition (essentially petroleum products).  
c International Standard Industrial Classification (Rev.2).   Electricity, gas and water are excluded (1 tariff line). 
Note: CV = coefficient of variation. 
Source : WTO Secretariat estimates, based on data provided by the Nigerian authoriti es. Imports 2000 from UNSD, 
Comtrade database. 
16. Due to the relatively high protection for ag ricultural products, the overall tariff structure 
displays mixed escalation, negative from the fi rst to the second stages of processing, and positive 
from the second to the third stages (Chart III.2).  However, in food processing and beverages, textiles 
and apparel, wood products, pa per and printing, and basic metal products, there is pronounced 
positive escalation from stage one to three of processi ng;  this implies high effective protection to 
these industries, thereby increasing the profitability of production in these sectors and influencing the pattern of resource allocation in their favour.  Fu rther disaggregation shows negative tariff escalation 
in petroleum refineries and mixed in industries us ing essential natural resources available in Nigeria 
to manufacture miscellaneous petroleum and coal  products, rubber products, and some non-metallic 
mineral products.  Without support measures, such as those in place in the petroleum industry and 
other incentive schemes (sections (iii);  (3)(iv);  and (4)(i)), such a tariff structure does not favour 
efficient resource allocation, nor processing of local  products (including agricultural products and 
natural resources) for export. 
17. Within the context of accelerated integrati on amongst ECOWAS member states, Nigeria is 
committed to adjusting its tariffs to the ECOWAS  common external tariff, ranging from zero to 20% 
with a four band tariff structure, by 2007 (Chapter II(5)(ii)).
13  In general, Nigeria has lagged behind 
in trade reforms and hence has higher average and dispersed tariffs.  Alignment with the ECOWAS 
CET should bring about significant liberalization and ra tionalization of Nigeria's current tariff regime 
and help simplify customs administration.14  However, given Nigeria's current level of protection, 
                                                      
13 The transition period is from June 2005 to December 2007. 
14 The Nigerian authorities estimate that the unweighted tariff will fall to 18%, from the current 29%, 
upon alignment on the ECOWAS CET.   WT/TPR/S/147 Trade Policy Review 
Page 32 
 
 
transition to the ECOWAS CET could entail certain s hort- to medium-term adjustment costs;  there 
have already been protests from certain quarters of industry.15 
0.010.020.030.040.050.060.070.0Chart III.2
Tariff escalation by ISIC 2-digit industry, 2003
Per cent
Sourc e: WTO Secretariat estimates, based on data provided by the Nigerian authorities.
All product s
Food, beverages
Textiles,
apparel
Wood products
Paper, printing
Chemicals ,
plastics
Non-metalli c
minera l
products
Basic meta l
products
Fabricated meta l
products
Other manufac -
turingNOT APPLICABLEAgricuture
MiningRaw materials Semi-processed Fully processed
 
(iv) Duty exemptions and concessions 
18. The general import guidelines provide for exem ptions from import duties on a number of 
goods, including:  aircraft, their parts and ancilla ry equipment;  life saving appliances;  all goods 
imported for the official and personal use of a Consul ar Officer, where the Government of the country 
represented grants similar privileges;  furniture and personal effect of diplom ats;  goods obtained free 
as technical assistance materials from donor internati onal organizations or c ountries;  personal and 
household effects in passengers' baggage;  and military hardware and uniforms. 
19. Various tariff concessions are also in place to  attract investment.  Duty concessions are 
granted on certain raw materials used by manufacturers in the communications, telecommunications, 
glass, baby napkins, motor cycle and bicycle indust ries, by virtue of their status as "Bonafide" 
manufacturers.  Various special duty concessions ha ve also been granted to the British American 
Tobacco Company to enable it set up a tobacco plan t in Nigeria.  Tariff concessions also apply on 
fertilizers, in support of the agricultural sector.  Tax concessions are provided to exporters under the 
Export Expansion Grant scheme (section (3)(iv)).  In certain cases (e.g.  on wire of iron non-alloy 
steel), duty concessions depend on the port of importation. These widespread exemptions and 
concessions further complicate customs clearance. 
                                                      
15 In a letter to the President and the National A ssembly, the National Union of Textile and Garment 
and Tailoring Workers of Nigeria indicated that the greatest threat to the textile sector is the harmonization of 
Nigeria's tariffs with the ECOWAS CET.  Informatio n available at:  http://allafrica.com/stories/printable/ 
200501190604.html [19 January 2005]. Nigeria WT/TPR/S/147 
 Page 33 
 
 
20. Even though the simple averag e tariff was 28.6% in 2003, customs and excise duty as a share 
of total imports was 15%, thus reflecting relatively low duty collection.  The low collection ratio may 
be partly due to the widespread exemptions a nd concessions, as well as preferential rates offered to 
ECOWAS member states;  corruption at customs borde rs is also likely to play a significant role.   
(v) Preferential tariffs 
21. As a member of ECOWAS, Nigeria provides tariff preferences to the other ECOWAS 
member states (Chapter II(5)(ii)).  Furthermore, Nige ria grants tariff preferences to all Global System 
of Trade Preferences participants.  Tariff reductions  of up to 80% of the MFN rate are applied on ten 
HS-four digit groups including medicaments, cars and trucks.16 
(vi) Other duties and taxes 
22. Nigeria bound other duties and charges on all im ports at 80%.  Additional duties applying 
only to imports include:  a port development levy of 7% of the duties payable;  an ECOWAS community levy of 0.5%
17; a Comprehensive Import Supervision Scheme charge of 1% on the f.o.b 
value of imports, a national automotive council levy of  2% on vehicles and parts;  and a levy of 10% 
on the importation of both sugar and rice.18  
23. Under the Value-Added Tax (VAT) Decree No . 102 of 1993, VAT is payable at 5% on 
domestically produced and imported goods and servi ces, with the exception of goods and services on 
an exclusion list (Table III.3). VAT is calculated on the duty-inclusive c.i.f. value of imports.  VAT 
applies to the sales price of locally produced goo ds and services.  Exports are zero-rated.  VAT 
proceeds are distributed to the federal, state a nd local governments in shares of 35%, 40% and 25% 
respectively.  In 2003, VAT contributed to some 6% of total public revenue, i.e.  1.7% of GDP.   
Table III.3 
Goods and services exempt from VAT, 2004 
Goods 
Medical and pharmaceutical products 
Basic food items such as peas, beans, yam, cassava, maize, rice, wheat, milk, and fish 
Infant food items 
Books, newspapers, and magazines  
Educational materials (laboratory equipment) 
Baby products such as carriages, clothes, and napkins, as well as sanitary towels 
Commercial vehicles and spare parts, tract ors, public transport passenger vehicles, moto rcycles, tanks and other armoured fight ing 
vehicles, and bicycles 
Agricultural equipment such as for soil prep aration or cultivation, harves ting or threshing, milking and dairy machinery, and p oultry 
keeping machinery 
Veterinary medicine equipment 
Fertilizers and farm tr ansportation equipment 
Services 
Medical and health services 
Services by community banks, people's banks, and mortgage ins titutions (interest earnings on loans by commercial banks and 
premiums paid to insurance companies are not taxable) 
Performances conducted by educationa l institutions as part of learning 
Social services such as orphana ges, charities, and fire fighting 
Table III.3 (cont'd) 
                                                      
16 WTO (1998). 
17 This tax is intended to compensate for the major tariff reduction involved in the CET and is 
applicable to industrial and agri-industrial products in specific activities.   
18 IMF (2004a).   WT/TPR/S/147 Trade Policy Review 
Page 34 
 
 
Pure postal services 
Religious services 
Non-commercial cultural services 
Overseas air transportation 
Public telephone and telegram  services (excluding business or commercial services) 
Other goods and services 
Salt 
Water 
Salary or wages from employment 
Director's emoluments 
Hobby activities 
Private transactions such as sale of domestic or household articles, vehicles, personal eff ects, and residential house rent 
Source : Information provided by the Nigerian authorities. 
24. Excise duties, which had been abolished at the time of the last TPR of Nigeria, were re-
introduced in 1999 on, inter alia , spirits, cigarettes, alcoholic beverages, and cosmetics, at rates 
ranging from 20% to 40% (Table III.4).  Excise duti es apply to the duty-inclusive price of imports, 
and to the sales price of locally produced goods.  
Table III.4 
Excise duties, 2004 
HS code Product descriptions Duty 
2208.2200 – 2208.9000 Spirits, liquors and other spirituous beverages 40% 
2402.1000 – 2402.9000 Cigarettes, ciga rs, cheroots and cigarillos 20% 
2403.100 – 2403.9000 Others manufactured tobacco  or manufactured tobacco substitutes 20% 
2203.0000 – 2206.000 Stout, beer, wines, ve rmouth and fermente d beverages 40% 
3304.1000 – 3304.3000 Bleaching creams only 40% 
Source: Nigerian Customs Service onlin e information.  Available at :  www.nigeriancustoms.org. 
(vii) Import prohibitions, quantitative restrictions, and licensing 
25. Under Nigeria's customs legislation, import pr ohibitions can be applied to protect domestic 
industries;  to reduce balance-of-payments deficits;  as anti-dumping measures;  and for moral, safety, 
and other purposes.  The Government modifies th e import prohibition list, adding or subtracting 
items, through notices and decrees.   
26. At the time of the last TPR of Nigeria in 199 8, products under 23 HS four-digit codes were 
subject to import prohibitions.  In line with the Government's plan to phase out the import bans, a 
number of these prohibitions were replaced with high tariffs between 1999 a nd 2001.  However, there 
was a sharp reversal in 2002.  As at November  2004, agricultural and non-agricultural goods under 
some 218 HS four-digit codes were subject to import prohibition, mainly for the purpose of protecting 
domestic industries (Table III.5).  These increased import prohibitions further distort resource 
allocation in favour of uncompetitiv e domestic industries to the detriment of the exportable sector;  
raise prices paid by consumers, thereby undermining the Government's efforts to reduce poverty;  and 
provide further incentives for smuggling, w ith concomitant losses in customs revenue.19  As part of 
the schedule to align Nigeria's trade regime with  that of ECOWAS, goods currently on the import 
prohibition list (for trade protection purposes) are sche duled to be  phased into the new tariff regime, 
starting in January 2007.  
                                                      
19 The effectiveness of the import ban regime in restricting trade in certain products remains 
questionable as some products on the banned list are illegally imported into Nigeria.  Nigeria WT/TPR/S/147 
 Page 35 
 
 
Table III.5 
Import prohibitions, November 2004 
Product HS code 
September 2003  
Wheat flour 1001.0000 
Sorghum 1007.0000 
Mosquito repellent coils 3808.1000 
Rethreaded/used tyres 4012.1000-4012.9000 
Motor vehicles above eight years old, ex cluding tractors, trucks, trailers/trailer 
heads, and busesa 8701-8705 
Gaming machines 9504.1000-9504.3000 
Cement in bags 2523.2910 
Vegetable oil in bulk 1507.1100-1516.2000 
Used refrigerators 8418.2100 
Used air-conditioners 8415.1000 
Used compressors 8414.8000 and 8415.3000 
Printed fabricsb Chapters 52-55 
Frozen poultry and poultry products 0207.0000-0207.3600 
Cassava and cassava productsc 0714.1000, 1106.2000, 1108.1400 and 1903.000 
Toothpicks  
Bottled water (sparking and no n-sparking) 2201. 0000-2202.0000 
Biscuits 1905.3000 
Noodles (including sp aghetti) 1902.1 100-1902.4000 
Fruit juice in retail packsd 2009.1100-2009.9000 
Barite, bentonite, and attapulg ite 2508.1000.11 and 2508.1000.19 
Sugar confectioneries (sweet s and chocolate) 1704.1000-1704.9000 and 1806.1000-1806.9000 
Exercise books 4820.2000 
Envelopes 4817.1000 
Beer (bottled and canned) 2203 
Toilet rolls 4803 
January 2004 additions  
Textiles, excluding the following Chapters 50-63 
 Nylon tyre cord 5902.1000-5902.9000 
 Multifilament nylon chafer fabric and tr acing cloth 5111.2000, 51 12.2000 and 5901.9000 
 Mattress tickings 5903.1000-5903.9000 
 Narrow fabrics 5806.1000-5806.4000 
 Trimmings and linings 5909.000, 6117.9000, 5808.9000, 6003.000, 
6307.9000 
 Made-up fishing nets 5608.1100 
 Mosquito netting materials 5608.1900 and 5609.9000 
 Gloves for industrial use 6116.1000-6116.9900 
 Canvas fabrics for manufacture of fan belts 5907.000-5908.0000 
 Moulding cups 6212.9000 
 Elastic bands 5604.9000 
 Motifs 5810.1000-5810.9000 
 Textile fabrics and articles fo r technical use 5911.1000-5911.9000 
 Transmission or conveyor belts or belting of textile materials 5910.9000 
 Polypropylene primary backing material 5512.1100-5512.9900 
 Fibre rope 5607.1000-5607.9000 
 Mutilated rags 6310.1100 
 Sacks and bags 6305.1000-6305.2000 
Men's footwear and bags of leather and plastic  3926.2000, 6401.1000-6405.9000, 4202.1100-
4202.9900 
Soaps and detergents 3401.1100-3402.9000 
Furniture 9401.1000-9401.9000 and 9403.1000-9406.0000 
Assembled bicycles (excluding CKD) 8712.0000 
Table III.5 (cont'd) WT/TPR/S/147 Trade Policy Review 
Page 36 
 
 
Product HS code 
Flowers (plastic and fresh) 0603.1000-0603.9000 and 6702.1000-6702.9000 
Fresh fruit 0801.1100-0814.0000 
Cutlasses, axes, pickaxes, spades, and shovels 8201.1000-8201.9000 
Wheelbarrows 8716.8000 
Pork and pork products, beef and beef products, mutton, lamb, and goat meat 0210.1900, 1602.4900, 0202.2000, 1602.5000, 
0204.4200, 0204.4300, 1602.9000, 0204.1000, 
0204.2200, 0304.3000, 0204.4200, 0204.4300, 
0210.7900, 0204.5000, 0208.9000, 0210.9900, and 
1602.9000 
Toothpaste 3306.1000 
Pencils 9609.1000-9609.9000 
Ballpoint pens 9608.1000 
Plastic plates, knives, spoons, forks, c ups, buckets, bowls, bi ns, containers, and 
hangers 3924.9000 
Corrugated boards and cartons 4808.1000 and 4819.1000-4819.6000 
Live or dead birds 0106.3100-0106.9000, 0208.9000, and 0210.9900 
a The importation of any vehicle th rough land borders is prohibited. 
b All other textiles must be imported through  Apapa and Tin Can Island ports in 20ft containers in the following range:  (i) ot her 
 textiles (non-printed) 110,000-140,000 metres;  ( ii) brocade/damask 120,000- 130,000 metres;  (iii) and, lace/embroidery 
 70,000-80,000 meters.  A minimum import pr ice of US$0.40/metre shall apply to all textiles under HS Chapters 50-63.  The 
 importation of all textiles thr ough land borders is prohibited. 
c The importation of all cassava  and cassava products through land borders is prohibited. 
d Fruit juice may be imported in concentrates or drums only. 
e Drugs and pharmaceutical raw materials may only be imported through Calabar and Apapa ports, and Lagos and Kano airports. 
Source: Nigeria Customs Service online inform ation.  Available at:  http://www.ni geriacustoms.org [11 October 2004]. 
27. In addition to import bans to protect local  industries, imports on the Absolute Import 
Prohibition list are banned on, inter alia , security, health, morality grounds.  These goods include:  
weapons, certain spirits, obscene articles, textile materials containing hazardous chemicals, and 
second-hand clothing.  Furthermore, the importation of vehicles, cement, drugs and pharmaceutical 
raw materials, and all containerized goods, through Nigeria's land borders, is prohibited.  Textile 
materials and cement may only be imported in bulk.20 
28. Nigeria notified the WTO that its general import licensing system was abolished in 1986.  
However, specific licensing requirements remain in place for a number of restricted products, 
including petroleum products, and ge nerators.  Applications to import prohibited goods or restricted 
products subject to import licences or permits must be  made three months in advance of importation.  
The quantity allocated to each importer, or to be imported from each country, is stated in individual 
licences and permits, but not published.  The quantit y is determined on the merit of each application.21 
(viii) Contingency trade remedies 
(a) Anti-dumping and countervailing measures 
29. The Customs Duties (Dumped and Subsidies Goods) Act 1958 provides for the imposition of 
a special duty on any goods deemed to be dumped by companies or subsidized by any Government or 
authority outside Nigeria.  Under the Act, goods are regarded as having been dumped if the export 
price is lower than the "fair market price".  The provisions of this Act may be invoked if there is a threat of material injury to potential or establishe d industries in Nigeria, and if the imposition of a 
special duty does not conflict with Nigeria's intern ational agreements.  Nigeria has not submitted any 
                                                     
 
20 Cement imports must not be less than 10,000 tonnes;  and textile products must be imported in 
20 foot containers and must not be less than 130,000 metres.   
21 WTO (1998). Nigeria WT/TPR/S/147 
 Page 37 
 
 
notifications on anti-dumping or countervailing dutie s since 1998.  Reference was made, however, in 
the 2004 Budget Statement, to the need to protect local industries from dumping and unfair competition within the framework of remedies provided for by the WTO and regional trade agreements. A bill on anti-dumping and countervailin g measures is currently under preparation. 
(b) Safeguards actions 
30. At the time of its last TPR, Nigeria was repor ted to have been in the process of enacting 
legislation on safeguard measures.  However, ther e are no formal domestic legislative procedures for 
safeguard actions as provided for by the WTO Agr eement on Safeguards.  In January 2002, Nigeria 
notified the WTO Committee on Safeguards that import prohibitions on wheat flour, sorghum, millet, 
and kaolin were in place for safeguard reasons.
22   
(ix) Balance-of-payment measures 
31. In accordance with Paragraph 9 of the Unde rstanding on Balance-of-Payments Provisions of 
GATT 1994, and pursuant to the consultations be tween Nigeria and the Committee on Balance-of-
Payments Restrictions, Nigeria su bmitted to the General Council a schedule for the elimination of 
restrictive trade measures maintained for BOP reasons.23  In accordance with this schedule, it notified 
the Committee of the removal of items from its import prohibition list for both 1998 and 1999;  
currently, barites and bentonites remain to be removed from the list.24  
(x) Countertrade arrangements and buy-back schemes 
32. The Government considers countertrade arrange ments and buy-back schemes as strategies for 
conserving foreign exchange earnings.  Therefore, it encourages companies and individuals to 
undertake industrial projects by sourcing mach inery and equipment from overseas suppliers, through 
such arrangements, on a medium and long-term basi s.  However, countertrade arrangements and buy-
back schemes are not permitted for the importation of consumer goods.   
(xi) Government procurement 
33. In 2003, total federal government expenditure amounted to some N 1,179 billion (about 15.6% 
of GDP), of which some N 519 billion were spent on non-debt recurrent items and some N 225 billion 
on capital items.25 The improvement in the use of public funds , at the Federal, State and local levels, 
remains a priority of the Government.  Nigeria is  neither a member of nor an observer to the WTO 
plurilateral Agreement on G overnment Procurement. 
34. Under its current public procurement regime, the Government uses open tendering, selective 
tendering, and negotiated tendering to purchase goods and services.  In  open tendering, the tender is 
advertised in domestic and/or inte rnational daily newspapers indicati ng in brief the scope of work, and 
dates of collection and return of tenders.  Under the selective tendering procedure, firms are required 
to register or pre-qualify with the tendering minist ry or agency to be eligible to bid.  Once pre-
qualified for a project, a firm is usually considered qualified for all future projects of the same general 
type.  Invitations to bid for a specific project are sent to pre-qualified firms, which constitute a "long 
list", from which a short list of less than eight firm s are selected and receive the tender documents.  
                                                      
22 WTO document G/SG/N/2/NGA/Suppl.1, 21 January 2002. 
23 WTO document, WT/BOP/N/45, 11 March 1999. 
24 HS 2508.1000.11 and HS 2508.1000.19. 
25 Ministerial briefing on the 2004 Budget.  Available at: http://www.fmf.gov.ng/budget.htm 
[14 July 2004]. WT/TPR/S/147 Trade Policy Review 
Page 38 
 
 
Selective tendering is the dominant form of public pr ocurement.  The most restrictive procedure, the 
negotiated procedure, is used where a ministry or government agency is constrained to invite only one 
or two tenders (known to the tendering body) for reason of urgency, rare expertise or national 
security.  Under negotiated contracts, the tendering body explains its procurement requirements, and 
the conditions and final cost are negotiated.26 
35. Only construction firms incorporated in Nigeria,  with at least 60% of their equity held by 
Nigerians, can bid on public work contracts.  The Nigerian Indigenization Decree exempts foreign 
firms bidding on their first contract from having to establish a company in Nigeria;  however, in practice, this has proven difficult.  Preferential marg ins are not given to domestic suppliers over their 
foreign counterparts, but federal ministries and pa rastatals are encouraged to buy locally produced 
goods, where available at the right quality and quantity, rather than importable substitutes.
27  F o r  
"small amounts" of government procurement, a market survey may be conducted to obtain the 
cheapest and best quality item in the local market, if available;  otherwise, the goods or services are procured abroad through designated ag ents responsible for foreign supplies.
28 
36. The Government has identified public procurem ent as one of the main avenues of corruption 
in Nigeria;  and this affects the efficiency of the management of Nigeria's public expenditure.  To this 
end, the Government commissioned the World Bank to undertake a study on public procurement related activities.  Among the main weaknesses identif ied were:  the lack of a modern law on public 
procurement and of a permanent oversight body to provide guidance and monitor purchasing entities;  
weaknesses in the implementation of the existing legi slation, including gaps and deficiencies, which 
created opportunities for bribery and corruption
29;  the private sector's perception of tender boards as 
sources of delay and non-transparency, as well as their limited mandates, as de facto power to decide on contracts is with Permanent Secretaries and the Ministers;  and the carrying out of procurement activities by staff who substantially lacked the relevant training.   
37. In response, the Government has taken st eps to reduce corruption and improve the 
management of public expenditure.  A circular on New Policy Guidelines for Procurement and Award 
of Contracts in Ministries/Parastatal s was issued in 2000.  Under the guidelines all contracts valued at 
or above one million naira but less than N
50 million must be approved by Permanent Secretaries, and 
contracts valued above N 50 million be approved by the Federa l Executive Council;  contract splitting 
is strictly prohibited;  open tendering procedures must be used;  tenders must be opened in public, 
with or without press coverage;  bid criteria must be  clearly defined;  bids must be evaluated by a 
committee of professionals;  tenders and the awar d of major contracts must be published and 
advertized in two national dailies;  an d final payments of contracts over N 5 million be co-signed by 
the Auditor-General or his representative.  
38. The circular also established a Steering Committee on the implementation of procurement 
reforms to prepare the ground for the establishmen t of a public procurement commission.  The 
steering committee has produced a Draft Public Sect or Procurement Manual.  The procedures outlined 
are consistent with the guidelines in the circular ;  however, the manual introduces new procurement 
procedures based on the model on procurement of goods, works, services and construction set by the 
United Nations Commission on International Trade Law (UNCITRAL).  It also provides guidance 
and uniformity in procurement procedures for all g overnment procurement agencies.  Furthermore, 
                                                      
26 WTO (1998).   
27 Uniforms of public officers must be sourced locally.   
28 Ekpenkhio (2003). 
29 For instance, due to inflation and lack of regular adjustment of the approval thresholds of the tender 
boards, their authorizations were constantly being er oded, resulting in abuses, prominently the splitting of 
contracts.  There was proliferation of tender boards.   Nigeria WT/TPR/S/147 
 Page 39 
 
 
the Steering Committee has produced a draft bill for the legal framework on procurement and for the 
establishment of the public procurement commission.  The legal framework proposed under the bill is 
based on the UNCITRAL model and is aimed at  harmonizing existing government procurement 
practices and policies in Nigeria.  The public procurement commission is envisaged to, inter alia , act 
as an oversight body independent of  the tender boards;  ensure the efficiency and effectiveness of 
procurement functions across the public sector;  act as an instrument of administrative review;  serve 
as a regulator;  provide coordination services;  and monitor the procurement environment.30  
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Registration and documentation 
39. Exporters are required to be registered with  the Nigerian Export Promotion Council (NEPC). 
They must submit a completed application form along with copies of a certificate of incorporation, tax 
clearance certificate, Form C.O.7 (which shows the particulars of directors of the company), and the 
memorandum and articles of association.31  Registration is said to take place within two weeks of 
submission of all the required documents.  Exporters  must renew their registration every two years, 
submitting a current company tax clearance certificate, evidence of export perform ance within the last 
two years, and a certified copy of Form C.0.7.   
40. All exporters must complete and register an export proceeds (NXP) form with an authorized 
dealer (commercial or merchant bank) of their choice.32  The processing bank retains one copy, 
another copy is sent to the Central Bank of Nigeri a (CBN), and the few remaining copies are sent to 
the NCS for inspection purposes.  Other export documents include a proforma invoice;  a sales 
contract, if applicable;  NEPC registration certificat e;  relevant sanitary and phytosanitary certificates, 
shipping documents and other completed forms as re quired by the importing country.  After shipment 
of the goods, NCS dispatches endorsed copies to CBN , NEPC, and the exporter.  All export proceeds 
must be repatriated into the exporter's domicilia ry account, maintained with the processing bank, 
within 90 days of shipment.  A currency retention scheme allows exporters to retain 100% of their 
foreign exchange earnings in their domiciliary accounts. 
(ii) Export taxes, charges and levies 
41. The export amendment decree of 1992 prescrib es that all raw material or unprocessed 
commodities, whether mineral or agricultural, may be  subject to the payment of an export levy as may 
be prescribed, from time to time, by order of the N EPC.  In this respect, an administrative levy of 
US$5 per tonne is applied to exports of cocoa, and of US$3 per tonne to  exports of other raw 
materials.   
(iii) Export prohibitions and controls  
42. Under Nigeria's Export Prohibition Act certain exports are prohibited for purposes of 
domestic food security, value-added considerations, and preservation of  cultural heritage.  Currently, 
the ban covers raw hides and skins, timber (rough or sawn), scrap metals, unprocessed rubber latex 
and rubber lumps, rice, yams, maize, beans, and artefacts and antiquities. Nigeria's food safety 
                                                      
30 Ekpenkhio (2003).   
31 For co-operative societies, evidence of registration is  required in place of certificate of incorporation.   
32 The objectives of the NXP form ar e that goods to be ex ported meet with the buyer's expectation;   
and that proceeds due to the exporter are repatriated within 90 days of sh ipment of goods and credited to the 
exporters' domiciliary account maintain ed with an aut horized dealer. WT/TPR/S/147 Trade Policy Review 
Page 40 
 
 
regulations require export licences for unprocessed food products33; in certain cases, the Minister for 
Agriculture is empowered to prescribe grades a nd standards of quality for these products.   
(iv) Export incentives  
43. The various incentive schemes ava ilable to exporters may some what reduce the anti-export 
bias resulting from the protection of domestic market s by high tariffs and import prohibitions.  They 
reflect the authorities' awareness of the inconsiste ncy in the objective of promoting processed exports 
based on highly protected local raw materials (tarif f displays negative escalation from the first to the 
second stage of processing in several industries).  Nonetheless, their impact on non-traditional exports could be limited by their accessibility to exporters.  Furthermore, even if the anti-export bias is 
eliminated through these schemes, the supply r esponse of non-oil exports could be severely 
constrained by domestic factors, such as infrastru ctural deficiencies, weak financial and labour 
markets, weak export-related institu tions, and macroeconomic instability.
34  In the long run, budgetary 
constraints may also play their part. 
(a) Export subsidies and finance 
44. The Export Expansion Grant Fund scheme (EEGF)  provides cash inducement to exporters 
who have exported a minimum of N 500,000 of processed products.  The objective of the scheme is to 
stimulate exporters to expand the volume of exports , and diversify their export product and market 
coverage.  Exporters of processed products are en titled to a 4% grant on their total annual export 
turnover, subject to receipt of confirmation of repatriation of export proceeds from the CBN and 
presentation of a performance bond from any of the recognized financial institutions. The EEGF is 
reported to have suffered from over-invoicing of exports, false documenta tion, and inadequate 
categorization; it has been reviewed with the aim of  making it more effective.  The Export Adjustment 
Fund Scheme (EAFS) is meant to serve as a supplem entary export subsidy to compensate exporters 
for the high cost of local production, arising mainly from infrastructural deficiencies and other factors beyond the control of exporters.  A Pioneer Stat us Scheme provides for tax holidays on corporate 
income to manufacturing companies exporting at least 50% of their turnover. 
45. The main support to exporters through banks is  the Re-discounting and Re-financing Facility 
(RRF) scheme.  It is designed to assist banks provide  pre- and post-shipment finance in local currency 
for non-oil exports.  The facility gives exporters ac cess to the expanded export portfolio of banks at 
preferential rates.  Under the re-financing scheme,  a bank is provided longer-term credit (of up to a 
year), whereas the re-discounting scheme provides short-term preshipment credit for a maximum of 
60 days.  The scheme is implemented by the CBN and the Nigerian Export and Import (NEXIM) 
Bank.  The Industrial Export Stimulation Facilit y (IESF) provides manufacturers of export products 
with foreign exchange for the importation of capita l equipment, and packaging and raw materials for 
the production of finished or semi-finished export products;  this facility is also administered by 
NEXIM.  The Tax Relief on Interest Income Scheme provides for tax exemption on interest accruing 
to banks from loans for export activities.   
                                                     
 
33 Export of Nigerian Produce Act, Cap 119, Export produce (Federal Powers) Act 120, 
5 October 1961.  
34 A recent survey on firms in Nigeria showed that, while some 48% of firms recognized import tariffs 
and charges to be barriers to export expansion, a greater  percentage of firms (60-70% ) recognized port charges 
and delays, access to credit, taxes on capital, supply of skilled labour and taxes on labour as important barriers 
to trade (World Bank, 2004). Nigeria WT/TPR/S/147 
 Page 41 
 
 
(b) Duty drawback, and manufacture-in-bond schemes 
46. A drawback scheme allows for duties (including other levies) charged on raw materials used 
in the manufacture of products to be refunded upon the export of the final products.  The purpose of this scheme is to encourage manufacturing for exports.   The scheme is to provide automatic refunds of 
up to 60% upon initial screening by the Duty Drawb ack Committee;  the balance of the funds is 
granted upon final processing of the application.  To be eligible, applicants must be companies 
incorporated in Nigeria.  Problems related to re funds prompted a new payment system, the Negotiable 
Duty Credit Certificate (NDCC).  
47. Under the manufacture-in-bond scheme, raw ma terials may be imported duty-free for the 
production of export goods, on the basis of a bond issu ed by a recognized financial institution.  The 
bond is discharged upon production of proof of export  and repatriation of foreign exchange.  The 
scheme faces:  difficulties in the recovery of impor t duty in case of default; poor accounting of input-
output coefficients; lack of funds for the superv ision of the scheme; and implementation weaknesses. 
The scheme is under review.  
(c) Export promotion and assistance 
48. The Export Development Fund (EDF) was set up by  the Government to help finance certain 
activities of private exporting companies.  These includ e:  participation in training courses, symposia, 
seminars, and workshops;  advertis ing and publicity campaigns in foreign markets;  product design 
and consultancy;  participation in trade missi ons, buyer-oriented activities, overseas trade fairs, 
exhibitions, and sales promotion;  collection of trade information;  organization of export groups;  and 
studies in respect of setting up export-oriented indus tries.  The maximum grant per company for each 
activity is 50% of the total direct costs approved, up to a maximum of N
200,000. 
49. There are plans to encourage the establishment of export production villages (EPVs) at the 
grass root level.  EPVs would seek to encourage specialization in the production of agricultural 
commodities;  provide employment opportunities, thereby helping in the fight against poverty;  and coordinate efforts towards production of export goods in commercial quantities.  Two EPVs have 
been launched, to date, for horticulture and Arabica coffee. 
(v) Export processing zones (EPZs)  
50. The law enabling EPZs was enacted in 1992 and su pports the establishment of industries and 
businesses within demarcated zones,  principally for export purposes.
35  EPZs are also being used to 
address the infrastructural and regulatory deficiencies inhibiting export-oriented companies in 
Nigeria.  The Nigerian Export Processing Zone Authority (NEPZA) has responsibility for overseeing 
the development and management of EPZs.  Existin g EPZs are located in Calabar, Onne, Kano, and 
Lekki, but only the first two are operational.  EPZs have also been initiated by some state 
governments.36  The Calabar EPZ focuses mainly on non-oil exports, whereas the Onne EPZ is 
dedicated to oil and gas.  Incentiv es provided to firms located in EPZs include:  one-stop approval by 
the EPZ administration;  exemption from federal, state,  and local taxes, as well as from custom duties;  
repatriation of capital and profits, without any re quirement to open a domiciliary account;  rent-free 
land during construction of factory space;  availa bility of services such as warehousing, built-up 
factories, transportation, sanitation, catering etc;  unrestricted remittance of investors' profits;  100% 
foreign ownership of enterprises;  and sale of up to 25% of production permitted in the domestic 
                                                      
35 An Oil and Gas Export Free Zone was established under the Oil and Gas Export Free Zone Act No. 8 
of 1996. 
36 These include Maigatari in Jigawa State and Ulokola in Ondo State. WT/TPR/S/147 Trade Policy Review 
Page 42 
 
 
market. Goods sold in the domestic economy are subj ect to all applicable import duties, levies, and 
taxes. Unionization and strike actions are not permitted within the EPZs. 
51. In March 2004, 22 firms were recorded to be ph ysically operating in the Calabar EPZ, out of 
a total of 100 companies licensed to operate there;  it has attracted US$282 million in investment and 
generated some 2,000 jobs.  In  2003, exports from Calabar EPZ amounted to US$50 million, and 
N286 million of revenue was collected by the Federa l Government on goods produced in the EPZ and 
sold in the domestic economy.  The occupancy rate of the Calabar zone is currently 34%;  there are 
plans to expand it.  The Onne EPZ has attracted so me 100 companies and is employing about 7,000 
workers;  in 2002, it generated N 15 billion in government revenue fro m sales to the domestic market.   
52. Export Processing Factory (free point) status has been granted to 26 companies37, enabling 
them to benefit from the incentives provided to firms located in an EPZ;  and border free-zones, which also benefit from the incentives available in the EPZs, have been established in order to 
mainstream the vast informal trade taking place through the different border areas.   
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  
(i) Incentives 
53. Fiscal incentives offered under Nigeria's investment regime including tax holidays, tax 
concessions, and accelerated capital depreciation (Table  II.2). One of the oldest incentives, pioneer 
status, encourages the establishment of industries c onsidered beneficial to the country. A company 
granted pioneer status is entitled to a corporate inco me tax holiday of five years;  this period is 
extended to seven years for a company located in an economically disadvantaged area. In addition a 
pioneer industry sited in an economically disad vantaged area enjoys a 5% additional capital 
depreciation allowance.  There are also sector-spe cific fiscal incentive both for the agriculture and 
industrial sectors, through access to credit via speci alized financial institutions or credit schemes 
(Chapter IV(2)(ii)) and IV(4)).  
(ii) Standards and other technical requirements 
54. Several standards and technical regulations have been establishe d in Nigeria for the protection 
of human, animal, and plant health, and the protection of the environment.  In the development of 
these standards, Nigeria has taken into account bot h international norms and domestic concerns.  
(a) Standards, testing, and certification 
55. Nigeria is a member of the International Standardization Organization for (ISO).  The 
Standards Organization of Nigeria (SON) is the sole  statutory body responsible for standardizing and 
regulating the quality of all products in Nigeria.  It  investigates the quality of facilities, materials, and 
products in Nigeria, and establishes a quality assuran ce system, including certification of factories, 
products, and laboratories;  compiles an inventory of products requiring standards;  registers and 
regulates standard marks and specifications;  and advises state and federal government departments on 
specific problems relating to standards.38  SON is governed by the Nigerian Standards Council, which, 
through the Minister of Industries, issues official  standards covering manufac tured goods.  Standards 
for medicines, cosmetics, medical devices, and ch emicals are set in conjunction with the National 
Agency for Food and Drug Administration and Control (NAFDAC)39, which is responsible for the 
                                                      
37 As at December 2004.  
38 Office of Public Communication (2003c). 
39 Office of Public Communication (2003a). Nigeria WT/TPR/S/147 
 Page 43 
 
 
control and regulation of these products.  All standa rds and technical regulations are mandatory.  In 
the absence of established Nigerian standards, intern ational standards set by ISO and the International 
Electrotechnical Commission (IEC) are adopted.  SON is the enquiry point for TBT issues, whilst the Federal Ministry of Commerce is responsible for notifications to the WTO. 
56. SON has established a wide range of standard s covering products in the chemical, civil 
engineering, electrical engineering, mechanical engineering, processed food, medical, and textile 
industries.  According to the authorities, the standards adopted have been based on the ISO 9000 
series of standards (9001, 9002, 9003) for quality management,
40 and ISO 14000 standards for 
environmental management systems.  In total, SON's library of standa rds consists of over 500 
Nigerian Industrial Standards and over 30,000 foreign and internationa l standards.  Products must be 
assessed by SON before receiving ISO certification.  The Nigerian Industrial Standards certification (NIS) mark is awarded to manufacturers as a sy mbol of good performance, and can be displayed on 
the specific product for the year it was won;  imported products cannot carry this logo.  SON is also actively involved in inspection of imports fo r quality assessment at Nigeria's ports and borders
41;  
according to the authorities, this has become increasingly important, as the opening of the Nigerian 
economy has, inter alia , led to an influx of sub-standard products.42  The port/border inspection 
scheme involves the inspection, examination, sampli ng and the laboratory analysis of imported goods.  
SON has announced guidelines for product quality in spection and provisional release of imports 
within 48 hours43;  however, provisionally released goods may not be disposed of or sold until the 
outcome of the laboratory tests and SON's release letter have been issued.  
57. SON is progressing in its enforcement activities through the strict application of its regulatory 
powers in investigating, seizing, and destroying  sub-standard domestically produced and imported 
goods.  In recent years, several arrests have b een made, and sub-standa rd products have been 
destroyed.  SON also reports an increase in the nu mber of companies seeking its assistance to set up 
quality control systems.  Nonetheless, Nigeria fa ces enforcement challenges related to increased 
smuggling of sub-standard products into the c ountry through porous borders;  evasion of SON 
inspection by importers/clearing agents;  and s hortage of manpower and operational vehicles and 
sophisticated laboratory testing equipment.  In a recent survey, some 55% of Nigerian firms 
considered that there is significant duplication of testing procedures in meeting both foreign and domestic requirements;  and 70% consider that meeting technical regulat ions is important for 
expanding export sales.
44 
(b) Sanitary and phytosanitary measures 
58. Nigeria is a member of the Codex Alimentarius Commission (CAC).45  Standards for 
processed food and pre-packaged water are set by both SON and the National Agency for Food and 
                                                      
40 SON adopted the ISO 9000 series of standards in 1994, after forty of its staff qualified as assessors.  
41 Importers are required to furnish SON with the name  of the product, country of origin, specification, 
date of manufacture, batch or lot number, applicable standard(s) under which they were produced, and where 
relevant, the shelf life and active ingredients of the product.  
42 Many sub-standard goods have been imported as imitations of originals, e.g. Dhilips pressing irons 
instead of Philips and SUNNY radios instead of SONY.  
43 The provisional release of imports applies to a ll products, except electric pressing irons, tungsten, 
electric filament bulbs and fluorescen t tubes, electric cables and wires, dr y cell batteries, dairy products and 
other products observed to be consistently sub-standard and specified by the Director General of SON.  
44 World Bank (2004). 
45 The National Codex Committee (NCC) is composed of members from government ministries, 
standards agencies, academia and research institutes, private sector and law en forcement agencies. NCC, inter 
alia,  advises the government on food standards and related issues, particularly in the context of its CAC works, 
and formulates national position papers on codex texts.  WT/TPR/S/147 Trade Policy Review 
Page 44 
 
 
Drug Administration and Control (NAFDAC)46, the latter is responsible for the control and regulation 
of these products. In the absence of established Ni gerian standards, international standards are 
adopted, such as those set by the Codex Alimentari us Commission.  NAFDAC is the enquiry point on 
SPS issues, whilst the Federal Ministry of Commerce is responsible for notifications to the WTO.  
59. Under NAFDAC's food and drug safety regulations47, no processed food, drugs, drug 
products, or packaged waters can be manufactured, im ported, exported, advertised, sold or distributed 
in Nigeria, unless they have been registered with NAFDAC.48  Registration involves the inspection of 
facilities prior to commencement of operations49;  assessment of food safety and quality50; laboratory 
analysis and radiation tests, where applicable; the co ntrol of advertisements to ensure that claims are 
not exaggerated; and confirmati on of compliance with labelling requirements. Export certificates from 
NAFDAC are also required for these products.  Export certificates are issued only if the manufacturer of the product maintains the standard requirement s of "good manufacturing practice" and the product 
passes the NAFDAC laboratory tests.
51  A certificate of manufacture and free sale is also required 
from the competent regulatory body in the exporting country, and authenticated by the Nigerian Embassy in the country of origin, before the impor tation of drugs, cosmetics, medical devices, and 
food products;  and certain samples must be sent to NAFDAC's laboratories for t esting, at least, three 
months before the product arrives in Nigeria.  However, in practice, NAFDAC recognizes testing and 
certification procedures of competent conformity assessment bodies in third countries. NAFDAC applies the CAC's food additive and contaminant re gulations, and pesticide residue and mycotoxin 
standards, in its assessment of food safety.  
60. Under the Agriculture (Control of importation) Ac t, the Minister of Agriculture is empowered 
to regulate the importation of plants, seeds, oil, artificial fertilizers, and other similar goods.  Fresh 
plants and plant products require certificates issu ed by the authorities of exporting countries, as well 
as phytosanitary certificates issued by Nigeria's National Plant Quarantine Service (NPQS). The 
NPQS Act No. 28 of 1959 is being reviewed and an amendment bill has been drafted to achieve 
industry and international best practices in phy tosanitary regulations, as well as discouraging 
contravention, through appropriate standards.  According to NAFDAC authorities, risk assessments 
for food safety follow the risk assess ment guidelines of the International Plant Protection Convention 
and the International Office of Epiz ootics and take into consideration the Codex texts on risk analysis.  
The Animal Disease Control Act seeks to prevent the introducti on and spread of diseases among 
animals in Nigeria:  the importation of animals, animal products, and birds requires a licence issued 
by the veterinary authorities.  Animal hatching eg gs or poultry must be examined, disinfected, or 
inoculated and quarantined . The importation of any animal product (e.g. semen or egg) is prohibited 
unless a permit has been granted. There is currently  a ban on the importation of all types of meat.  
61. Nigeria's agricultural exports have been rejected  in foreign markets due to failure to meet 
certain SPS requirements.  It is estimated th at, between July 2001 and May 2002, 80 export 
consignments were refused for reasons such as f ilth, misleading labelling, preparation and packaging 
under unsanitary conditions, presence of pests in cons ignments, and unsafe colourings and additives.  
However, the products concerned did not carry evidence of certification from the competent 
                                                     
 
46 Office of Public Communication (2003a). 
47 Decree No. 15 , 1993, as amended by Decree No. 20 of 1999.  
48 In theory, food products not registered with NAFDAC are not importable.  However, some products 
enter the country through neighbouring countries without going through the registration process.   
49 This takes into account Good Manufacturing Practices (GMPs). 
50 NAFDAC ensures that the Hazard and Critical C ontrol Point (HACCP) system is established. 
51 With regard to fish and fishery products, further examination is undertaken by the Federal 
Department of Fisheries, and the Federal Ministry of Agriculture and Natural Resources before the issuance of an export certificate.  Nigeria WT/TPR/S/147 
 Page 45 
 
 
authorities, and the regulatory authorities in Nigeri a are confident that products certified by them 
easily access world markets.  Nevertheless, problems are encountered when foreign countries' national 
standards are more stringent and burdensome than international standards, as the costs of meeting 
them are in general high, and prohibitive for Ni geria's small- and medium-size exporters of 
agricultural products.52 
(c) Marking, labelling, and packaging 
62. All products require a label indicating the na me of the product, its country of origin, 
specifications, date of manufacture, batch or lot nu mber, and the standard(s) to which it complies.  
The labelling must be in English, in addition to any other languages required, and metric units of 
measurement must be used.  Furthermore, pharmac eutical and chemical products must carry expiry 
dates and/or shelf life, and specify active ingred ients, where applicable, on their packaging.  
Information on performance life and rating may be re quired on electrical appliances, depending on the 
product.  Food products must comply with speci fic labelling requirements from NAFDAC, such as:  
production batch number;  net conten ts, including essential ingredients in metric weights for solids, 
semi-solids, and aerosols, and metric volume fo r liquids;  and food colourings and additives.53 
(iii) Intellectual property rights 
63. Nigeria is a signatory to the Universal Copyri ght Convention, the Berne Convention, the Paris 
Convention (Lisbon text), and the Rome Convention.  It is also a member of the World Intellectual 
Property Organization (WIPO).  Since the last TPR of Nigeria, legislation on intellectual property rights (IPRs) has remained unchanged.
54  The legislation covers pate nts and industrial designs, trade 
marks, and copyright.  It does not provide for the protection of geographical indications, lay-out 
designs of integrated circuits, undisclosed informa tion or plant varieties, or for specified border 
measures.  However, a number of bills are under prep aration to bring Nigeria's IPR legislation into 
conformity with the TRIPS Agreement.  
64. Under the current regime, the Ministry of Comme rce is responsible for the administration of 
industrial property system through the Trademarks , Patents and Designs Registry, while copyright 
matters are administered by the Nigeria Copyright Commission (NCC) of the Ministry of Culture. 
65. The Patent and Design Act (Cap. 344) provides for the protection of inventions that meet the 
requirements of novelty and result from activities capabl e of industrial application.  Patents cannot be 
obtained for inventions that would be contrary to public order or  morality.  Plants, animals, and 
essentially biological processes are excluded from patentab ility.  The current legislation is not explicit 
on the patentability of diagnostic, therapeutic, and su rgical methods.  Patent rights are excluded in a 
number of activities, including acts carried out pr ivately and on a non-commercial scale;  the use of 
the invention for scientific resear ch and teaching purposes;  and the preparation of medicines under 
individual prescription.  Patent protection is 20 y ears, subject to the payment of annual fees.   
66. Any inventor, whether Nigerian or foreign, ma y file a patent application, although foreign 
applicants must file through a resident agent.  If the required documents are co mplete and in order, the 
Registrar issues a patent and is responsible for its publication.55 The National Office for Technology 
Acquisition and Promotion (NOTAP) also registers foreign technology-transfer agreements having 
effect in Nigeria, if the purpose or intent is for the use of, inter alia , trade marks and patented 
inventions. NOTAP thus seeks to encourage the iden tification, selection, and adaptation of imported 
technologies in Nigeria. 
                                                      
52 Adeyemo and Bankole (2003).  
53 Dun and Bradstreet (2002).   
54 WTO (1998). 
55 WTO document IP/Q/NGA/1, IP IP/Q2/NGA/1 IP/Q3/NGA/1, IP/Q4/NGA/1, 8 June 2004.   WT/TPR/S/147 Trade Policy Review 
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67. Patent holders may, through the courts, preclude  the act of making, importing, selling or using 
the patented product, or stocking it for the purpose of  sale or use;  and with respect to patents on 
processes, the right holder can preclude other pe rsons from applying the process a product.  The 
patent holder may institute legal action or commen ce legal proceedings against an infringer.  The 
legislation allows for the granting of a compulsory lic ence to an interested person, four years after the 
filing of a patent application or three years after th e granting of a patent, if:  the patented invention, 
though being capable of being worked in Nigeria, ha s not been so worked;  the degree of working of 
the invention in Nigeria, does not reasonably meet the demand for the product;  the working of the patented invention in Nigeria is being hindered or prevented by the importation of the patented article 
or by the refusal of the patentee to grant licences on reasonable terms;  and if a patented invention in 
Nigeria cannot be worked without infringing the righ ts derived form a patent granted on an earlier 
application.  
68. Industrial designs, including textile designs, are also protected under the Patent and Design 
Act.  Registration of an industrial design confer s upon the right holder absolute rights to use the 
design exclusively, thereby precluding other persons  from:  reproducing the design in the manufacture 
of a product;  importing or selling or utilizing, for commercial purposes, a product reproducing the 
design;  and holding such a product for the pur pose of selling it or utilizing it for commercial 
purposes.  Registration of an industrial design is valid for five years, renewable for two further 
consecutive periods of five years.  Registration of  industrial designs is made at the Patents and 
Designs Registry in the Ministry of Commerce.  
69. The Trademarks Act, Cap. 436, regulates the re gistration of trade marks.  The law establishes 
the legal protection of marks that meet the requi rement of distinctiveness.  Applications for 
registration of trade marks are made to the Regist rar on a prescribed form.  Registration is valid for 
seven years and is renewable indefinitely subject to  the payment of a prescribed fee.  Collective marks 
and certification marks may be registered.  A regist ered trade mark is assignable and transferable in 
connection with the goodwill of a business, and may be  removed from the register for non-use over a 
five-year period.  Services are not protected under the current regime.  
70. The Copyright Act, Cap. 68, as amended, provides for the protection of literary, musical, and 
artistic works, cinematographic films, sound record ings, and broadcasts.  Computer programs and the 
compilation of data are defined and protected as literary works.  Under the Act, exclusive rights can be granted, inter alia , the production, reproduction, translation, and publication of a work;  
performance in public;  making of any cinematograph fi lm or record in respect of the work;  broadcast 
or communications of the work in public;  adaptation of the work;  and distribution to the public for commercial purposes.  The Act does not contain a pr ovision on "moral rights".  As a signatory to the 
Universal Copyright Convention, Nigeria provid es national treatment to holders from all other 
signatories  the Convention.  Copyright on literary, mu sical, and artistic works is for a lifetime of the 
author plus 70 years;  cinematographic works,  photographs, sound record ings, and broadcasts are 
protected for 50 years from the end of the year in which the work was first published, performed or 
made;  and performers are also provided with exclus ive control in relation to performances, for a term 
of 50 years from the end of the year in which the performance took place. 
71. In a bid to bring this legislation into confor mity with the TRIPS Agreement, various draft 
bills are under preparation.  These cover the estab lishment of the Intellectual Property Commission of 
Nigeria, to strengthen and streamline the administ ration of the intellectual property system;  trade 
marks, with provisions on geogr aphical indications, service marks,  and border measures for customs 
to seize counterfeit goods;  protection of plant varieties,  farmers' and breeders' rights;  patents, with a 
provision excluding diagnostic, therapeutic, and surgi cal methods from patentability;  layout designs 
of integrated circuits, with provisions on topographi es;  and the protection of undisclosed information. Nigeria WT/TPR/S/147 
 Page 47 
 
 
72. In accordance with Nigeria's legal system, IP R matters relating to evidence, injunctions, 
damages and other remedies, including provisional me asures, are dealt with under the general law of 
civil procedure.  Civil remedies and actions incl ude:  injunctions, damages, including recovery of 
profits;  destruction of infringing goods, material s and equipment for their production;  seizure and 
detention of counterfeit goods. The Merchandise Ma rks Act and the Copyright Act provide for 
criminal procedures in respect of infringement of  trade marks and copyright piracy;  a criminal 
infringement is punishable with a fine or imprison ment or both. Customs authorities have no statutory 
power to order any remedies.56 
73. Law enforcement, particularly for patents and trade marks, is reported to be weak, and the 
judicial process slow and subject to corruption.  Shortage of funds, computer facilities, and 
manpower, as well as inadequate  understanding and appreciation among regulatory officials, 
distributor networks, and consumers of the benefit of intellectual property rights, contribute to the 
weak IPR enforcement climate.  This is accentuat ed by the average consumer prices of legally 
produced or imported materials, particularly software , which are beyond the reach of most Nigerians.  
Companies rarely seek trade mark or patent protection because it is perceived as ineffective.  
However, in recent years, the Nigerian Police, work ing closely with the NCC, has occasionally raided 
enterprises allegedly producing a nd selling pirated software and vi deos.  A number of high profile 
actions have been taken against IPR infringers.  Ho wever, very few cases involving copyright, patent, 
or trade mark infringements have been prosecute d successfully and in most cases have been settled 
out of Court, if any final resolution occurs at all.57 
(iv) Public enterprises and privatization 
74. There are some 1,500 public enterprises (PEs) in Nigeria;  the Federal Government owns 
some 600, and state and local governments own the rest (these are relatively smaller).  PEs contributed to some 50% of GDP and 66% of overall  employment in 1997.  Many were established in 
the early 1970s, when there was a boom in oil revenu es and a belief that public companies were better 
than the private sector for accelerating national econom ic development.  However, in general, the 
performance of PEs has been poor.  It is estimated  that Nigeria has invested over US$100 billion in 
PEs with very low (0.5%) and in many cases negative returns.
58  They have been major contributors to 
fiscal deficits and non-performing debts59, thereby, contributing to macroeconomic instability.  
Furthermore, PEs are said to be characterized by corruption60, mismanagement, over dependence on 
treasury funding, poor service delivery61, and abuse of monopoly powers.62 
75. In response, and in line with the present em phasis on supporting the private sector as the 
engine of economic growth, privatization and comme rcialization of PEs have been core components 
of the Government's economic refo rm agenda since 1999 (Chapter I(2)).  An earlier privatization 
programme, which began in 199863, was not effective, and new legislation, the Privatization and 
                                                      
56 WTO document IP/N/6/NGA/1, 28 November 2001.   
57 USTR (2003); and USDA (2004). 
58 Allen (2001). 
59 It is estimated that over 55% of non-performing debts owned to the London and Paris Clubs are PEs 
debts. 
60 The Government has been fighting to curb corruption through the Economic and Financial Crimes 
Commission and the Independent Corrupt Practices and Related Practices Commission (Chapter I(3)(ii)). 
61 For example, the unreliable power supply from th e Nigerian Electric Power Authority (NEPA) is 
estimated to cost the Nigerian economy US$1 billion annually;  and the inadequate and inefficient fuel 
distribution costs US$440 million annually. 
62 Bureau of Public Enterprises presentation to JETRO delegation, May 2002, Abuja.  Available at:  
http://www.bpeng.org/CGI-BIN/publications /Presentations/JETRO%20Delegation%20-
16TH%20May%202002.ppt.   
63 WTO (1998). WT/TPR/S/147 Trade Policy Review 
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Commercialization Act, was adopted in 1999.  The law established the National Council on 
Privatization (NCP) to oversee the privatization pr ogramme and the Bureau of Public Enterprises 
(BPE) as the implementation agency and secretariat to the NCP.64  
76. In July 1999, the Federal Government adopted  a three-phase privatization programme for the 
1999-04 period to:  fully divest public shares in banks, cement companies, and oil marketing firms 
listed on the Nigerian Stock Exchange, during the firs t phase;  fully divest state ownership in hotels, 
vehicle assembly plants, and other industrial, agricultural and service enterprises operating in 
competitive markets, during the second phase;  and par tially divest shares in major public enterprises 
in potentially competitive subsector s, such as the telecommunications company (NITEL), the national 
power company (NEPA), and the oil refineries, du ring the third phase.  The current privatization 
programme envisages the full or partial divestment  of interest in nearly 100 public enterprises 
(Table A.III.1).   
77. The privatization programme is being im plemented through competitively selected 
investment advisors, under the supervision of BPE.  Two modes of divestiture have been adopted:  for 
very large PEs, a strategic investor is selected firs t, followed by the phased sale of shares to Nigerian 
investors on a broadly distributed basis across the country;  for other PEs, privatization is directly 
through offerings of the State's shares on the stock ma rket to Nigerian investors.  The privatization 
procedures allow for the sale of up to 51% of the sh are capital to strategic investors, and elimination 
of the long-term requirement of a residual share holding by the Federal Government.  A recent World 
Bank study recommends that, inter alia , bids should be opened publicly, in a publicized and broadcast 
forum, followed by expeditious approval by the NCP.65  
78. Thirteen transactions were concluded under th e first phase of the privatization programme, 
yielding revenue of about US$200 million, exceeding the US$150 million target.  As at 
February 2003, ten PEs had been sold unde r the second phase, remitting some US$260 million.66  The 
third phase is under way, with an emphasis on the d esign and pursuit of reforms in key subsectors, 
such as power, ports and railways, oil and gas, a nd telecommunications.  The reforms involve the 
development of sectoral policies;  structural diagno stic reviews;  the review and design of more 
market-conducive legal and regulatory frameworks;  and major pre-sale restructuring, including 
unbundling.   
79. Challenges under the current programme include:  unrealistic time-lines and revenue targets;  
foreign investor apathy, and capacity constraints in  the domestic market;  inability to effect a more 
pro-active approach to pre-sale marketing and prepar ation;  and insufficient "stakeholder buy-in and 
coalition building".  A new strategic plan h as been devised to ad dress all these issues67, but the extent 
to which privatization will contribute to Nigeria's development objectives depends on, inter alia , the 
market environment.  Various studies point to the importance of maintaining a competitive and good 
regulatory environment for the success of privatization. 
(v) Competition policy and price controls 
80. There is currently no legislation in Nigeria to  regulate competition or anti-trust issues.  A 
competition bill is under consideration by the National Assembly.  This legislation has become all the 
more important due to the recent privatization e fforts, and the anti-competitive practices by both 
public and private companies, including on barriers to entry, abuse of dominant position, and price- and market-sharing agreements.  These i ssues are addressed in the draft bill.   
                                                     
 
64 The NCP was inaugurated in July 1999, with the Vice-Preside nt as its Chair. 
65 World Bank (2002a). 
66 BPE (2003), February. 
67 BPE (2003), October.   Nigeria WT/TPR/S/147 
 Page 49 
 
 
81. Under the draft bill, a Federal Competition Comm ission is to be established.  Its functions 
will be to, inter alia :  initiate policy on competition;  prot ect consumers by nurturing a competitive 
environment;  monitor the abuse of market domina nce and mergers, takeovers, acquisitions, etc;  
advise government;  coordinate the activities of sector al regulators;  investigate violations;  and 
initiate the resolution of disputes or complaints by  issuing clear directives to violators and applying 
sanctions in the form of fines where necessary.   
82. The bill prohibits contracts or agreements deem ed to restrict trade or substantially lessen 
competition, such as through:  restricting output or pr oduction;  price fixing;  allocation of territory or 
division of market;  collusive tendering;  and the denial of access to a market or a factor of 
production.  The bill does not prohibit dominant po sition, but persons in a dominant position in a 
market are prohibited from abusing their positions.  An abuse, under the draft bill consists of:  
restricting the entry of any person into that market or any other market;  preventing or deterring any person from engaging in competitive conduct in that  market;  and eliminating any person from the 
market.  Other forms of prohibited abuse include arrangements to prevent or deter another person 
from selling a good at a price lower than that specifi ed by the supplier;  and withholding or preventing 
the supply of a good by the supplier.  Certain merg ers, takeovers, and acquis itions are also prohibited 
in the draft bill:  activities likely to result in a dom inant position or to strengthen an already existing 
dominant position are prohibited.   
83. The draft bill allows the President to declare prices of specific goods or services to be 
controlled, to remedy the effects of absence of or lim ited competition in a particular market or if it is 
considered necessary or desirable in the interests of users, consumers, or suppliers.  Authorizations for 
contracts, arrangements, and restrictive practices th at substantially lessen competition may be granted 
by the Commission if it is considered beneficial to  the public.  Similarly, mergers, takeovers, and 
acquisitions are to be allowed if the Commission cons iders that there is a justified factor of public 
benefit.   
84. Enforcement procedures envisaged under the bill include court orders for the divestiture of 
assets or shares of a company in certain cases and the institution of criminal proceedings.  The 
Commission may require persons to supply informa tion, documents or give evidence;  and may 
conduct searches.  Persons alleging that they have suffe red or are likely to suffer an injury, as a result 
of violation or likely violation of any provision of the bill are entitled to file a complaint initially with the Commission for an administrative hearing.  Howeve r, if the hearing officer considers that it is in 
the interest of justice, a complainant may be grante d leave to file an application promptly with the 
Court prior to the termination of the administrative hearing.  Review decisions by the court may confirm, modify, or reverse the Commission's determina tion or any part of it.  The court has the same 
power as the Commission in relation to these matters.  
(vi) Local-content requirements 
85. Pursuant to Article 5.1 of the WTO Agreement on Trade-Related Investment Measures, the 
Government of Nigeria has notified the Committee on TRIMs that Nigeria has no local-content laws 
or regulations.  However, under the Investment Act, certain incentives are subj ect to the use of local 
raw material.  For instance, a tax credit of 20% is gr anted for five years to industries that use a certain 
minimum level of local raw material.
68 
                                                      
68 The minimum levels of local raw materials are, by sector: agri-allied (70%), engineering (60%), 
chemicals (60%), and petrochemicals (70%).