Nigeria WT/TPR/S/247 
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I. ECONOMIC ENVIRONMENT 
(1) INTRODUCTION  
1. Nigeria has the largest population and the second biggest economy in Africa.  During the 
period under review, economic growth has been st rong and the share of agriculture and services in 
GDP has risen.  Nonetheless, the economy continues to depend on oil and gas as they contribute 17% 
to GDP, represent over 90% of Nigeria's exports, and account for more than 80% of government 
revenue.  Trade continues to play an important ro le, with total trade (imports and exports) accounting 
for over 53% of GDP.  Nigeria's trade regime has be come more liberal during the review period with 
the average applied MFN tariff falling from 28.6% in 2003 to 11.9% in 2009, due mainly to Nigeria 
aligning its tariff with that of the ECOWAS CET.   
2. On the other hand, more reform is essential.  For example, the customs legislation is out of 
date and does not provide for modern pro cessing and clearing methodology and techniques.1  Nigeria 
does not have specific laws on contingency measures or  competition policy.  It also continues to use 
restrictive trade measures to achieve objectives that could be better served with other policies, on the 
grounds that it does not have the capacity to develop or apply these other measures.  
3. Between 2005 and 2009, real GDP growth averag ed 6.4% annually and is estimated to have 
been 8.4% in 2010 (Table I.1).2  Growth has been driven by th e non-oil sector, mainly services such 
as wholesale and retail trade and communications (Table I.2).  As a result, real incomes have risen and poverty levels have declined.
3  However, during the 2005-10 period, growth in the oil and gas 
sector was subdued due to production shortfalls and, in some years, lower international prices.  
4. Under Vision 20:2020 Nigeria's official develo pment plan (see Chapters II and V), the 
government aims to make Nigeria one of the world's top 20 economies by 2020.  Currently, it ranks 41
st according to the World Bank.  To achieve this development goal, a growth  rate of over 14% per 
annum would be required.  However,  it would be difficult to sustain the current growth rate of over 
8%, and would require further diversification of the economy away from oil, a significant increase in 
private-sector investment (both domestic and fo reign), and far-reaching legal, structural, and 
institutional reforms focused on improving the busin ess and regulatory environment.  These would 
include, inter alia,  putting an appropriate regulatory fra mework in place for utilities as well as 
removing infrastructure bottlenecks, most notably provis ion of electricity, road transport, and the high 
cost of financing, all of which raise the cost of trade and doing business. 
                                                      
1 New customs legislation has been drafted but is awaiting parliamentary and presidential approval 
before it can be enacted (Chapter (III)(1)). 
2 IMF (2011). 
3 IMF (2008). WT/TPR/S/247 Trade Policy Review 
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Table I.1 
Selected macroeconom ic indicators, 2003-09 
 2003 2004 2005 2006 2007 2008 2009a 
National accounts % change unless otherwise indicated 
Real GDP at factor cost (naira billion, 1990 prices)  477.5 527.6 561.9 595.8 634.3 672.2 719.0 
Real GDP at factor cost, annual percentage change 10.2 10.5 6.5 6.0 6.4 6.0 7.0 
Current GDP, market price (naira billion) 8,742.6 11,673.6 14,735.3 18,709.8 20,874.2 25,424.9 .. 
Current GDP, market price (US$ billion)b 67.7 87.8 112.2 145.4 165.9 214.5 165.4 
GDP per capita, current market price (US$) 503.9 638.7 796.8 1,008.0 1,123.2 1,418.4 .. 
Prices and interest rates        
Inflation (CPI annual average, %age change)b .. 10.0 11.6 8.2 5.4 11.6 12.5 
Discount rate (end of period) 15.0 15.0 13.0 10.0 9.5 9.8 6.0 
Savings rate .. .. .. .. .. .. .. 
Commercial bank 3-month fixed rate 14.2 13.7 10.5 9.7 10.3 12.0 13.3 
Commercial bank lending rate 20.7 19.2 18.0 16.9 16.9 15.5 18.4 
Money credit (end period)        
Broad money (M2)c .. 14 16 39.9 28.3 23.1 .. 
Exchange rate        
N/US$ (annual average) 129.2  132.9  131.3  128.7  125.8  118.5  148.9  
 % of GDP 
Overall fiscal balance        
Total revenue and grants .. 35.4 38.1 34.1 28.4 32.8 19.9 
  Oil and gas revenue .. 28.7 32.3 29.1 21.9 26.6 13.0 
  Non-oil revenued .. 6.6 5.9 5.0 -29.1 -28.4 -27.3 
    Tax revenue .. 0.0 0.0 0.0 0.0 .. .. 
  Grants .. 0.0 0.0 0.0 0.0 .. .. 
Expenditure and net lending .. 27.2 28.7 26.4 28.7 28.2 30.4 
 Total federal governmen t and extra-budgetary 
expenditure .. 14.2 15.1 13.0 14.5 .. .. 
    Recurrent expenditure .. 11.9 12.8 10.0 10.8 .. .. 
    Federal government capital expenditure .. 2.2 2.3 3.0 3.7 .. .. 
  State and local governments .. 13.0 13.3 12.3 12.0 .. .. 
  Other expenditure .. 0.0 0.3 1.1 1.3 .. .. 
Overall balance (cash basis) .. 8.1 9.4 7.7 -0.4 4.6 -10.4 
Excess crude account/Sovereign Wealth Fund (US$ billion)d               n.a. n.a. n.a. n.a. 14.2 19.7 7.1 
Saving and investment         
Gross domestic savings 15.6 14.3 19.3 18.0 29.9 14.8 27.0 
External sector        
Current account balance  8.1 17.6 33.2 23.3 18.6 14.7 13.8 
Net merchandise trade  13.9 22.4 26.0 24.0 22.8 21.8 18.3 
   Merchandise exports 35.3 39.4 49.2 39.1 39.8 39.0 35.9 
   Merchandise imports -21.4 - 17.0 -23.2 -15.1 -17.1 -17.2 -17.6 
Services balance -3.3 -3.0 -4.3 -6.5 -7.9 -10.0 -9.3 
Capital and financial account -6.9 -5.7 -23.5 -18.9 -4.6 -3.1 10.3 
  Direct investment 3.0 2.1 4.4 3.3 3.4 2.4 3.4 
Overall balance -1.9 9.6 10.0 9.6 5.5 0.8 -7.7 
Terms of trade .. 20.5 38 9 0.3 17 -22.7 
Gross official reserves (US$ million) 7,467.8 16,955.0 28,279.1 42,298.0 51,333.2 53,000.4 42,382.5 
  in months of imports 6.2 5.8 8.3 11.7 12.1         13.8 11.0 
External debte,f (US$ billion) 32,916.8 35,944.7  20,476.2  3,545.0 3,654.0  3,720.0 3,947.3 
  in % of GDP 48.7 40.9 18.2 2.4 2.2 1.7 2.4 
.. Not available. 
n.a. Not applicable. 
a Estimates. 
b Projections. 
c Change in % of broad money at the beginning of period. 
d If the costs of the bank recapitalization we re incorporated in the budge t, they would raise the NOPD by some 0.9% of non-oil 
 GDP in 2011, with the relative impact diminishing over time. 
e Nominal public-sector short- and long-term debt, end of period. 
f In 2005 (2006) reflecting also a US$7.1 billion (US$7.2 billion) write-off of Paris Club debt, and in 2006, reflecting the di scount 
(US$2.7 billion) on the US$7.0 billion buy -back of remaining Paris Club debt. 
Source:  IMF, Country Reports, Nos. 08/325 and 09/262. Nigeria WT/TPR/S/247 
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Table I.2 
Basic economic and social indicators, 2003-09 
  2003 2004 2005 2006 2007 2008 2009 
GDP by economic activity at constant 1990 prices                                (Naira billion)  
Agriculture 203.4 216.2 231.5 248.6 266.5 283.2 299.8 
  Crops 181.2 192.5 206.2 221.6 237.7 252.5 267.2 
  Livestock 12.9 13.7 14.6 15.7 16.7 17.9 19.0 
  Forestry 2.7 2.8 3.0 3.2 3.4 3.6 3.8 
  Fishing 6.6 7.2 7.6 8.1 8.7 9.2 9.8 
Industry 174.2 183.0 187.8 185.9 184.8 181.8 187.0 
  Mining and quarrying 132.5 137.1 137.9 131.9 126.2 118.7 119.5 
    Crude petroleum and natural gas  131.3 135.7 136.3 130.2 124.3 116.6 117.1 
  Manufacturing 17.4 19.4 21.3 23.3 25.5 27.8 30.0 
  Electricity, gas and water s upply 16.2 18.9 20.1 21.1 22.2 23.0 23.7 
  Construction 8.2 7.6 8.5 9.7 10.9 12.3 13.8 
Services 99.9 128.4 142.6 161.3 183.0 207.2 232.1 
  Wholesale and retail trade 49.8 68.1 77.3 89.1 102.6 117.0 130.4 
  Hotels and restaurants 0.8 2.0 2.2 2.4 2.7 3.1 3.5 
  Transport, storage, communication 13.7 20.7 23.5 27.3 32.1 38.3 46.3 
  Real estate and business serv ices 7.0 7.7 8.5 9.5 10.6 11.8 13.0 
  Public administration 3.6 3.9 4.1 4.3 4.5 4.7 4.9 
  Finance and insurance 21.0 21.5 22.1 23.2 24.4 25.6 26.6 
  Other services 4.0 4.5 4.9 5.5 6.0 6.7 7.4 
Share of main sectors in GDP at factor cost    (%)    
Agriculture 42.6 41.0 41.2 41.7 42.0 42.1 41.7 
  Crops 38.0 36.5 36.7 37.2 37.5 37.6 37.2 
  Livestock 2.7 2.6 2.6 2.6 2.6 2.7 2.6 
  Forestry 0.6 0.5 0.5 0.5 0.5 0.5 0.5 
  Fishing 1.4 1.4 1.4 1.4 1.4 1.4 1.4 
Industry 36.5 34.7 33.4 31.2 29.1 27.1 26.0 
  Mining and quarrying 27.7 26.0 24.5 22.1 19.9 17.7 16.6 
  Manufacturing 3.6 3.7 3.8 3.9 4.0 4.1 4.2 
  Electricity, gas and water s upply 3.4 3.6 3.6 3.5 3.5 3.4 3.3 
  Construction 1.7 1.4 1.5 1.6 1.7 1.8 1.9 
Services 20.9 24.3 25.4 27.1 28.9 30.8 32.3 
  Wholesale and retail trade 10.4 12.9 13.8 14.9 16.2 17.4 18.1 
  Hotels and restaurants 0.2 0.4 0.4 0.4 0.4 0.5 0.5 
  Transport, storage, communication 2.9 3.9 4.2 4.6 5.1 5.7 6.4 
  Real estate and business serv ices 1.5 1.5 1.5 1.6 1.7 1.8 1.8 
  Public administration 0.7 0.7 0.7 0.7 0.7 0.7 0.7 
  Finance and insurance 4.4 4.1 3.9 3.9 3.8 3.8 3.7 
  Other services 0.8 0.8 0.9 0.9 1.0 1.0 1.0 
Memorandum items:    %    
Life expectancy at birth (years) 47 47 47 47 48 48 49 
Infant (-5) mortality rate per '000 live births .. .. 97 94 91 89 86 
.. Not available. 
Source:  World Bank, World Development Indicators .  Viewed at: http://datab ank.worldbank.org/ddp/home.do? 
Step=3&id=4; Federal Republic of Nigeria (2009), National Bureau of Statistics, Annual Abstract of Statistics ;  
Federal Republic of Nigeria, Nati onal Bureau of Statistics (2010), Gross Domestic Product for Nigeria, Revised 
2009 and estimates for Q1-Q2, 2010 . WT/TPR/S/247 Trade Policy Review 
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(2) MACROECONOMIC DEVELOPMENTS  
5. Total government revenue continues to be highl y dependent on the oil and gas sector and, 
therefore, fluctuates with global oil prices.  Total revenue as a percentage of GDP declined from over 
38% in 2005 to less than 20% in 200 9.  The decline was due to a fall in international oil prices.  In 
contrast, total expenditure as a percentage of GDP remained steady over the period, rising slightly 
from 30% in 2005 to 30.4% in 2009.  Consequently, a fiscal surplu s of 8.4% of GDP in 2005 turned 
into a deficit of 10.4% of GDP in 2009.   
6. In the past, Nigeria followed a pro-cyclical fiscal  pattern with high oil prices leading to high 
public spending and high growth followed by cut-backs and recession when oil prices fell.  The 
authorities recognized the destabilizing impact of a pr o-cyclical fiscal policy and, in order to manage 
revenue volatility and improve the implementation of fiscal policy, implemented the "oil revenue 
fiscal rule" in 2004.  The "oil revenue fiscal rule" is  an informal political agreement between different 
layers of government for the allocation of benchmar k oil revenues.  Oil revenues are calculated based 
on a benchmark oil price and projected production le vels.  Any revenue in excess of the benchmark 
level is supposed to be transferred into the "excess crude account" (ECA).  In 2007, a Fiscal 
Responsibility Act was enacted to, inter alia,  give a legislative basis to the informal oil-revenue-based 
fiscal rule.4   
7. Initially, the oil revenue fiscal ru le was effective, with the pro- cyclicality of public spending 
declining substantially during 2005-08 as surplus oil revenues were sterilized in the ECA.  However, 
the lack of a legal basis to enforce the rule le d to ad hoc disbursements from the account.  "Thus, 
despite world oil prices and domestic oil production well in excess of the budget benchmarks in 2010, 
the government spent all current oil revenues a nd drew on savings in the ECA at a time when 
stabilization called for a rebuilding of ECA balances."5  The balance in the ECA peaked at 
US$20 billion in 2008, then declined to  US$3.4 billion in 2010 (Chart I.1). 
8. Nigeria's trade and business environment is also affected by the exchange rate.  An 
overvalued exchange rate can erode the intern ational competitiveness of exports, while making 
imports more attractive and, thereby worsening the tr ade balance.  According to the IMF, the naira is 
overvalued by approximately 15%.6  Although the Central Bank of Nigeria's stated goal is price 
stability, it appears that in recent y ears the focus has been on exchange  rate stability.  The naira has 
depreciated from N 131.3/US$ in 2005 to N 154.8/US$ (officially N 151/US$) in March 2011.  To keep 
the exchange rate stable, the au thorities intervened in the market  and sold foreign exchange.  
Consequently, foreign exchange reserves declined  from US$53 billion in 2008 (13 months of import 
cover) to slightly over US$34 billion in 2010 (6.6 months of  import cover).  
9. On the other hand, during the period under re view, the authorities pursued an accommodative 
monetary policy and kept interest rates low so as to promote growth and investment in the economy.7  
The low interest rate environment led, inter alia, to rapid monetary expansion with private sector 
credit growth peaking at over 140% per year in ear ly 2008.  The expansiona ry nature of monetary 
policy exerted significant upward pressure on prices.  Inflation, as measured by the consumer price 
                                                      
4 "The Fiscal Responsibility Act prescribes procedures for formulating, executing and publishing the 
annual budget and medium-term expenditure framework, and sets out the role of the budget oil price.  It also 
contains a rule limiting the overall budget deficit to 3% of GDP, with only a very restrictive escape clause."  
IMF (2009). 
5 IMF (2011). 
6 IMF (2011). 
7 Real short-term interest rates have been highly negative, which has exerted pressure on prices and the 
exchange rate. Nigeria WT/TPR/S/247 
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index rose from a low of 5.4% in 2007 to nearly 14% in 2010.  However, the authorities are of the 
view that inflation is influenced mainly by stru ctural factors, such as limited supply response and 
uncompetitive market structures, and not by monetary policy. 
0510152025
‐20‐1001020304050
2004 2005 2006 2007 2008 2009Chart I.1 
Excess crude account and fiscal deficit, 2004-09
US$ billion
Source: IMF, various Country Reports (2008, 2009, and 2011).%o f  G D P
Revenue as % of GDP
Fiscal deficit as % of GDP
Excess crude account (right-hand scale)
 
10. It seems that price stability h as become more important for the authorities, who feel that 
lowering inflation is essential for sustainable growth in  the economy.  In this regard, the Central Bank 
of Nigeria tightened its monetary policy stance s lightly by increasing the policy interest rate by 
50 basis points to 6.5% as well as increasing the cash  reserve requirement and the liquidity ratio in 
January 2011. 
11. Consolidation in the banking sector, coupled with  rapid credit growth and weak supervision, 
were the underlying reasons for the banking crisis in Nigeria, which was exacerbated by the global 
economic crisis in late 2008.  The Nigerian res ponse to the crisis was three pronged.  To ensure 
smooth credit flows and liquidity in the system, interest rates, cash reserve requirements, and liquidity ratios were reduced; ceilings on de posit and lending rates were introduced; conditions of using the 
central bank’s discount window were eased; and regu lations governing loans for share purchases were 
relaxed.  With respect to the foreign exchange ma rket, the authorities kept the exchange rate stable 
within a band by imposing conditions on foreign ex change transactions.  On the fiscal front, the 
budgeted price of oil was reduced from US$62/barrel to  US$45/barrel.  The authorities' response to 
the financial crises did not include any measures to restrict trade. 
(3) S
TRUCTURAL POLICIES  
12. To sustain growth in the medium to long term , the economy needs to diversify.  This will 
require significant investment, which the authorities envision will come from the private sector.  
However, to ensure that growth is private-sector  led, far-reaching structural reforms are needed in 
many areas, including competition law, infrastruct ure, access to credit and, probably of most 
immediate concern, adequate regulations for utilities.   Furthermore, to build up investor confidence, 
legislation need to be in place to protect the rights of the investor, such as those pertaining to property WT/TPR/S/247 Trade Policy Review 
Page 6 
 
 
ownership;  to protect intellectual property rights;  and to protect investors if contracts are cancelled 
or rescinded.  The authorities are aware of these issues , and draft legislation that deals with many of 
the above has already been prepared.  In many areas,  draft bills were being considered by the National 
Assembly at the time of the previous Review of Ni geria in 2005, but in many areas these have yet to 
be enacted or implemented.  
13. According to the World Economic Forum repor t on global competitiveness, Nigeria ranked 
127 out of 139 countries, while the World Bank ranked Nigeria 137 out of 183 countries in terms of ease of doing business.
8  According to both reports, the main impediments to doing business and 
investment were poor infrastructure (inadequate electricity supply9, and poor transport networks and 
facilities), access to finance and corruption.  The authorities are cognizant of these problems and state 
that they have been taking steps to address some of  the issues.  They also noted that in some areas, 
such as telecommunications, rapid progress has been ma de over the past few years and in others, such 
as electricity, the necessary legal, regulatory, and institutional changes are being implemented and, 
hopefully, improvements will be seen in the near future.  
(i) Financial sector changes 
14. Following the banking sector consolidation in 2006, a credit boom ensued.  However, the 
consolidation and the credit expans ion were not accompanied by ade quate supervision or enforcement 
of regulations.  Most of the loans were used to buy equities.10  However, when the equity bubble 
burst, many banks were left with a large portfol io of non-performing loans (NPLs).  The resulting 
banking crisis caused a credit crunch for the real sector and credit to the private sector dried up as 
banks became risk averse.  To ensure the smooth flow of credit, the Central Bank of Nigeria (CBN) 
intervened in several ways, principally by provid ing liquidity injections, guarantees for all interbank 
transactions, and a commitment to protect creditors and depositors against losses.  Bank supervision 
by the CBN was also strengthened.  Additiona lly, in November 2010 the Asset Management 
Corporation of Nigeria was established to buy NPLs from the stricken banks so as to recapitalize them 
and clean up their balance sheets.  Furthermore, the CBN increased its development finance 
operations and provided direct loans at preferential interest rates as well as loan guarantees to certain 
sectors and small and medium enterprises (SMEs).  In  this regard, the CBN created an intervention 
fund of N 500 billion for power and industry in 2009. Of this N 300 billion would be provided to the 
power sector and N 200 billion to the SME manufacturing sector.  Thus far the SME facility has been 
fully utilized, while the power-sector facility re mains unused.  The CBN also put in place loan 
guarantees for SMEs, which would enable then to obtai n loans at preferential rates.  Additionally, a 
preferential commercial credit scheme for agriculture  was announced in April 2009 (Chapter IV(1)). 
15. The CBN is of the view that such interventi on was necessary to ensure that productive sectors 
of the economy were extended credit at affordab le (below market) rates.  Had the CBN not 
intervened, bank lending would have focused on large, low-risk clients and would have been at much 
higher interest rates, which would have further increased the cost of doing business in Nigeria.11 
(ii) Nigeria Sovereign Investment Authority 
16. Oil revenue accounts for nearly all of Nigeri a’s export earnings and a significant proportion 
of total government revenue.  However, any windfa ll gains from increases in global oil prices appear 
to have been disbursed in an ad-hoc manner and not utilized for development or stabilization 
                                                      
8 World Economic Forum (2010) and World Bank (2010). 
9 Over 70% of the firms surveyed re ported that they experience 26 pow er shortages in a typical month. 
10 IMF (2011). 
11 IMF (2011). Nigeria WT/TPR/S/247 
 Page 7 
 
 
purposes.  Thus, to better manage and utilize ex cess oil revenues, the authorities have proposed 
setting up the Nigeria Sovereign Investment Author ity (NSIA), which would replace the current oil 
savings mechanism.  The NSIA would be divided into three funds;  a stabilization fund, a fund for future generations, and a domestic infrastructure f und.  The infrastructure fund would be used to fund 
investments in several areas, including:  the power sector (generation, transmission, and distribution);  
water and sewage treatment and delivery;  and transp ort (roads, railways, ports, and airport facilities).  
Any improvements in infrastructure would significantly bring down the cost of doing business in Nigeria and should result in increased investment flows (both domestic and foreign).
12 
17. Under the proposed legislation, a minimum of 20% of surplus oil revenues would be allocated 
to each fund, while the remaining 40% would be allocated by the Board of Directors among the 
three funds.  Furthermore, any withdrawals from th e stabilization fund would need to be approved by 
the Minister of Finance and would only be permitte d if oil revenues were l ess than the benchmark 
level. 
18. However, legislation that would establish the NSIA is under consideration by the National 
Assembly (since 2010).  Experience shows that enacti ng legislation in Nigeria is a long and onerous 
process, thereby making it unclear when the NSIA would be operational.13 
(4) BALANCE OF PAYMENTS  
19. Nigeria's current account surplus decreased fro m US$38 billion in 2005 (33.2% of GDP) to 
US$23 billion in 2009 (13.8% of GDP), reflecting a narrowing of the gap between gross national 
savings and gross domestic investment (Table I.3).  The decline in the surplus came about mainly due 
to increased service payments on account of higher travel and transportation payments .  The positive 
trade balance rose steadily from approximately US$3 0 billion in 2005 to appr oximately US$42 billion 
in 2008.  However, it declined to US$30 billion in 2009 due to lower international oil prices.  
Furthermore, net income payments also increased during the review period. 
Table I.3 
Balance of payments, 2003-09 
(US$ million) 
  2003 2004 2005a 2006a 2007a 2008a 2009b 
Current account 5,161.6 15,537.0 37,920.5 33,972.0 32,883.7 28,276.0 22,784.4 
  Goods  8,906.0 19,763.8 29,713.1 35,050.5 40,264.2 41,774.8 30,133.0 
    Exports f.o.b.  22,621.9 34,777.3 56,174.7 57,103.6 70,440.8 74,738.9 59,047.7 
       Oil 21,927.5 33,921.2 55,353.3 56,062.1 68,751.7 72,869.3 57,114.6 
        Crude oil .. .. 52,276.3 50,974.2 61,513.3 66,019.6 48,946.2 
        Gas .. .. 3,077.0 5,087.9 7,238.4 6,849.7 8,168.4 
      Non-oil 694.3 856.1 821.4 1,041.5 1,689.1 1,869.6 1,933.1 
    Imports f.o.b.  -13,715.8 -15,013.6 -26,461.5 -22,053.1 -30,176.6 -32,964.1 -28,914.7 
      Oil -2,630.3 -2,403.6 -5,618.7 -5,041.9 -5,926.1 -9,519.4 -6,804.0 
      Non-oil -11,085.6 -12,610.0 -14,119.5 -14,312.0 -19,495.4 -23,444.7 -22,110.7 
      Trading Partner Adjustment .. .. -6,723.3 -2,699.2 -4,755.2 0.0 0.0 
Table I.3 (cont'd) 
                                                      
12 Poor infrastructure is cited as the main impediment to business, investment, and trade in Nigeria. 
13 For example, a draft bill on competition policy, wh ich as not yet been enacted, was already under 
consideration by the National Assembly in 2005, when dr aft bills on Intellectual property rights were also being 
prepared (WTO, 2005). WT/TPR/S/247 Trade Policy Review 
Page 8 
 
 
  2003 2004 2005a 2006a 2007a 2008a 2009b 
  Services (net)  -2,115.0 -2,638.1 -4,916.1 -9,470.0 -13,900.3 -19,216.1 -15,269.5 
      Transportation .. .. -1,489.7 -1,475.8 -4,429.4 -5,060.8 -4,937.6 
      Travel  .. .. -188.4 -1,771.5 -2,332.9 -8,234.8 -3,466.0 
      Insurance services  .. .. -3.6 -274.8 -218.8 -906.3 -385.5 
      Communication services .. .. -141.2 -162.2 -196.0 -183.0 -305.2 
      Construction services  .. .. -46.3 -53.2 -64.3 -60.0 -43.2 
      Financial services  .. .. -14.9 -18.7 4.9 -15.1 -28.6 
      Computer & information services  .. .. -153.3 -176.0 -212.8 -198.6 -185.3 
      Royalties and license fees  .. .. -68.7 -84.5 -184.2 -170.2 -207.5 
      Other business services  .. .. -2,931.6 -4,738.5 -4,383.8 -3,718.0 -4,733.4 
      Personal, cultural & recreational services .. .. -0.3 -0.3 -0.4 -0.4 -0.4 
      Government services  .. .. 122.1 -714.4 -1,882.7 -668.8 -977.0 
  Income (net)  -3,095.8 -4,292.9 -2,296.2 -8,602.1 -12,533.7 -11,042.6 -9,973.9 
      Compensation of employees .. .. 103.2 125.9 202.9 82.3 100.4 
      Investment income  -3,095.8 -4,292.9 -2,399.4 -8,728.0 -12,736.6 -11,124.8 -10,074.3 
        Direct investment  .. .. -2,649.0 -9,757.5 -13,906.4 -12,713.8 -10,598.8 
        Portfolio investment  .. .. -262.8 -428.4 -566.9 -184.1 -34.5 
        Other investment  .. .. 512.3 1,458.0 1,736.8 1,773.1 559.0 
  Current transfers (net)  1,466.4 2,704.3 15,419.6 16,993.5 19,053.6 16,759.8 17,894.7 
    General government  -76.6 -60.5 60.4 121.2 101.9 67.3 87.8 
    Other sectors  1,543.0 2,764.7 633.5 117.6 0.5 -346.0 -312.1 
    Workers' remittances  .. .. 14, 725.7 16,754.7 18,951. 2 17,038.5 18,119.0 
Capital and financial account -6,270.3 -6,907.5 -19,355.7 -16,934.1 -8,064.2 -5,985.3 17,004.6 
  Capital account (net)  19.2 35.7 7,464.9 10,586.9 0.0 0.0 0.0 
  Financial account (net)  -6,289.5 -6,943.2 -26,820.6 -27,521.1 -8,064.2 -5,985.3 17,004.6 
    Direct investment 1,893.0 1,875.5 5,056.4 4,846.5 5,934.9 4,588.3 5,621.5 
      Abroad .. .. -14.9 -22.3 -502.3 -318.3 -138.9 
      In the reporting country .. .. 5,071.3 4,868.8 6,437.2 4,906.6 5,760.3 
    Portfolio investment (net) 172.6 177.9 -496.6 1,291.9 852.8 -3,042.6 -186.9 
      Asset .. .. -1,396.0 -1,517.0 -1,966.1 -4,228.2 -907.9 
      Liabilities .. .. 899.5 2,808.9 2,819.0 1,185.5 720.9 
    Other investment (net) -8,355.1 -8,996.6 -19,844.8 -19,723.5 -5,296.6 -6,049.6 1,116.2 
      Asset .. .. -1,347.0 -4,034.4 -6,168.7 -6,545.0 -1,819.4 
      Liabilities .. .. -18,497. 8 -15,689.0 872. 1 495.4 2,935.6 
    Reserve assets .. .. -11,535.6 -13,935.9 -9,555.2 -1,481.3 10,453.8 
Net errors and omissions -80.3 -135.7 -18,564.8 -17,037.8 -24,819.5 -22,290.7 -39,788.9 
Overall balance -1,189.0 8,493.8 .. .. .. .. .. 
.. Not available. 
a Revised. 
b Provisional. 
Source: Central Bank of Nigeria 2009, Statistical bulletin:  2009 .  Viewed at:  http://www.cenbank.org/Out/2010 
/publications/sta tisticalbulletins/2009/index.html. 
20. The capital and financial account turned from a deficit of about US$20 billion in 2005 to a 
surplus of over US$17 billion.  The authorities attributed the turnaround to Nigeria paying off its external debt.   
21. Net errors and omissions in the balance of pa yments data are as larg e as the current account 
balance.  The authorities stated that due to capacity  constraints, not all transactions are recorded under 
separate heads but are instead lumped together as errors and omissions.  Nigeria WT/TPR/S/247 
 Page 9 
 
 
(5) DEVELOPMENTS IN TRADE AND FOREIGN DIRECT INVESTMENT  
22. In 2009, the share of merchandise exports in GDP was nearly 36% compared with 
approximately 25% in 2003.  However exports were equivalent to nearly 50% of GDP in 2005.  The 
share of merchandise imports declined from approximately 21% of GDP in 2003 to nearly 17% of 
GDP in 2009.  The deficit in services trade rose from 3.3% of GDP in 2003 to 9.3% of GDP in 2009. 
(i) Composition of trade 
23. Although some diversification has taken place, fuel continues to dominate Nigeria's exports, 
accounting for over 90% of total merchandise e xports in 2009 compared with 98% in 2003 
(Chart I.2).  The shares of manufacturing and agricu lture in exports have ri sen during the period under 
consideration;  agricultural exports are dominated by cocoa beans (Table AI.1). 
24. The share of primary products in total merc handise imports more than halved between 2003 
and 2009 from nearly 34% to approximately 16%.  The decline was due to a fall in fuel imports.  In 
contrast, the share of manufactures rose, with machinery and transport equipment being the most important component.  The shares of iron and steel imports and of chemicals declined during the period (Table AI.2). 
(ii) Direction of trade 
25. Nigeria's main import suppliers in 2009 were the EU-27, China, and the United States.  
During the period under review, the shares of the EU -27 and of the United States declined sharply, 
while the shares of China, Asia as a whole, Africa, and other America rose (Chart I.3 and Table AI.3).  The authorities stated that Chin a's share rose because of its lower prices and the effectiveness of 
China's trade promotion strategy. 
26. Nigeria's main export destination in 2009 were the United States, EU-27, India, and Brazil.  
Despite a considerable decline, the United States remains Nigeria's largest export market.  During the 
period under review, the shares of the EU-27, Brazil, and Africa showed an increase (Chart I.3 and Table AI.4).  The shares of Equatorial Guinea a nd Barbados showed a significant increase between 
2008 and 2009 but this appears to be a statistical a nomaly and is not reflected in import data for these 
two countries.   WT/TPR/S/247 Trade Policy Review 
Page 10 
 
 
Chart I.2
Structure of merchandise trade, 2003 and 2009
2003 2009
(a)  Exports (f.o.b.)
Total:   US$24,078.3 million Total:  US$49,937.5million
(b)  Imports (c.i.f.)
Total:   US$14,892.5 million Total:   US$33,906.3 millionPer cent
Source :  WTO Secretariat estimates, based on UNSD, Comtrade database (SITC Rev.3).Manufactures
66.3Manufactures
83.6Agriculture
16.1
Mining
17.6
Chemicals
10.3Textiles and 
clothing 1.3
Other semi-
manufactures
8.4Electrical 
machines
8.3Transport 
equipment  13.0
Iron and 
steel
5.4Other 
3.0
Non-electrical 
machinery
16.7Primary 
products
33.7Primary 
products
15.6Agriculture
5.7
Fuel
90.4Other
0.5Manufactures
3.6
Agriculture
12.8
Mining  2.8
Chemicals
13.4Textiles and 
clothing 1.4
Other semi-
manufactures121
2.2Electrical 
machines
10.4Transport 
equipment
21.9Iron and steel
3.9Other 
5.5
Non-electrical 
machinery
15.7Fuel
97.9Manufactures
2.1
 Nigeria WT/TPR/S/247 
 Page 11 
 
 
Chart I.3
Direction of merchandise trade, 2003 and 2009
2003 2009
(a) Exports (f.o.b.)
(b) Imports (c.i.f.)Per cent
Source:  WTO Secretariat estimates, based on U NSD, Comtrade database (SITC Rev.3).Total: US$14,892.5 millionUnited States
15.6
Belgium
3.6France
3.2
United 
Kingdom
9.5
Other 
EU(27)
16.7Other 
Europe
2.1Other
19.5
China
7.2
Africa
5.1Other America
3.9
America
16.2Total: US$24,078.3 millionFrance
5.6India
9.9
Other Africa  
4.4Other 
Asia
9.4Other
1.2
Asia
19.3
EU(27)
21.8
Total: US$49,937.5 million
Total: US$33,906.3 millionOther Asia  
13.6Asia
22.7EU(27)
49.0United 
States
38.3
Other 
EU(27)  7.2
Spain
6.2Côte d'Ivoire
1.5
Other 
America
11.0Italy
2.9
America
21.1
Asia
34.4
EU(27)
23.0Africa
8.4
United 
States
6.0
Belgium
4.8France
5.8
United 
Kingdom
4.5
Other 
EU(27)
7.9Other 
Europe
10.0Other
4.4
China  
17.7
Africa
7.1Other 
America
15.0Other 
Asia  
16.7America
49.3
France
5.4India
9.5
Other Africa 
3.9Other 
Asia
5.0Other
2.1
Asia
14.5
EU(27)
22.4United 
States
27.3
Other 
EU(27)  8.5
Spain
4.4Côte d'Ivoire
3.0
Other America
16.6
Italy
4.2Africa
17.0America
43.9
South Africa
2.4South Africa
3.4
Equatorial 
Guinea
6.7
 WT/TPR/S/247 Trade Policy Review 
Page 12 
 
 
(iii) Foreign direct investment 
27. During the period under review, foreign direct i nvestment (FDI) inflows were robust.  FDI 
rose from approximately US$5 billion in 2005 (4.5% of GDP) to nearly US$6 billion in 2009 (3.4% of GDP).  Inflows have been concentrated in the o il and gas sector and the le vel of inward investment 
has traditionally been correlated to global oil prices.
14  However, foreign direct investment remains 
low in other sectors.  For example, according to UNCTAD, "FDI has not had a meaningful impact on 
the development of Nigeria's manufacturing sector, wh ich has stagnated over the past 30 years.  Of 
course for much of this period, FDI was on a low sc ale, either because it was unwelcome or because 
general business conditions were inhospitable for th ose foreign investors who remained during the 
indigenization period."15  Reasons cited for the low level of inv estment are the lack of infrastructure, 
lack of an adequate regulatory framework in many sectors and, in certain cases, the erosion of investor confidence.  For example the Government annulled the sale of Nigerian Telecommunications 
and rescinded the concessions for steel and iron ore that had been awarded to an Indian company 
(Chapter III(3)(v)).  Furthermore, it appears that FD I deteriorated in 2010 as investors awaited the 
outcome of the Petroleum Industry Bill, which has been under consideration by the National 
Assembly since 2008.
16 
                                                      
14 UNCTAD (2009). 
15 UNCTAD (2009). 
16 IMF (2011).