RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/247 
24 May 2011  
 
(11-2541) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
NIGERIA 
 
  
 
This report, prepared for the fourth Tr ade Policy Review of Nigeria, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Nigeria on its trade policies and 
practices. 
 
Any technical questions arising from this  report may be addressed to John Finn 
(00 41 22 739 5081) and Usman Ali Khilji (00 41 22 739 6939). 
 
Document WT/TPR/G/247 contains the policy statement submitted by Nigeria. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Nigeria. Nigeria WT/TPR/S/247 
 Page iii 
 
 
CONTENTS 
 
  Page 
SUMMARY   vii 
I. ECONOMIC ENVIRONMENT 1 
 (1) I NTRODUCTION  1 
 (2) M ACROECONOMIC DEVELOPMENTS  4 
 (3) S TRUCTURAL POLICIES  5 
 (i) Financial sector changes 6 
 (ii) Nigeria Sovereign Investment Authority 6 
 (4) B ALANCE OF PAYMENTS  7 
 (5) D EVELOPMENTS IN TRADE AND FOREIGN DIRECT INVESTMENT  9 
 (i) Composition of trade 9  (ii) Direction of trade 9 
 (iii) Foreign direct investment 12 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 13 
 (1) T
RADE POLICY FORMULATION AND IMPLEMENTATION  13 
 (2) T RADE POLICY OBJECTIVES  15 
 (3) I NVESTMENT REGIME  16 
 (4) T RADE AGREEMENTS  19 
 (i) World Trade Organization 19  (ii) Regional agreements 21 
 (iii) Non-reciprocal and asymme tric preferential arrangements 22 
III. TRADE POLICIES AND PRACTICES BY MEASURE 23 
 (1) M
EASURES DIRECTLY AFFECTING IMPORTS  23 
 (i) Procedures 23 
 (ii) Tariffs 25  (iii) Duty exemptions and concessions 27 
 (iv) Preferential tariffs 27 
 (v) Other duties and taxes 29  (vi) Rules of origin 30 
 (vii) Import prohibitions, restrictions, and licensing 30 
 (viii) Contingency measures 31  (ix) Other measures 32 
 (2) M
EASURES DIRECTLY AFFECTING EXPORTS  32 
 (i) Procedures 32  (ii) Export taxes, charges, and levies 33 
 (iii) Export prohibitions and controls 33 
 (iv) Export incentives 33 
 (v) Export processing zones (EPZs) 34 
 (3) M
EASURES AFFECTING PRODUCTION AND TRADE  35 
 (i) Incentives 35 
 (ii) Government procurement 35 
 (iii) Standards and quality infrastructure 36  (iv) Intellectual property rights 39 WT/TPR/S/247 Trade Policy Review 
Page iv 
 
 
   Page 
 
 (v) Privatization 40 
 (vi) Competition policy and price controls 41 
IV. TRADE POLICIES BY SECTOR 43 
 (1) A GRICULTURE , FISHING AND FORESTRY  43 
 (i) Agriculture 43  (ii) Fishing 50 
 (iii) Forestry 53 
 (2) M
INING AND ENERGY  54 
 (i) Crude oil production 54 
 (ii) Downstream oil 56 
 (iii) Gas 57  (iv) Solid minerals 59 
 (v) Electricity 61 
 (3) S
ERVICES  63 
  (i) Transport 63 
  (ii) Telecommunications 68 
  (iii) Financial services 70 
  (iv) Tourism 74 
V. AID FOR TRADE 76 
 (1) M AINSTREAMING TRADE INTO THE NATIONAL DEVELOPMENT STRATEGY  76 
 (i) Mainstreaming at the policy level 76 
 (ii) Mainstreaming at the government-donor partnership level 76 
 (2) A ID-FOR-TRADE NEEDS  77 
 (3) S PECIFIC TRADE -RELATED TECHNICAL ASSISTANCE NEEDS  78 
 (4) A ID-FOR-TRADE SUPPORT TO NIGERIA  79 
 
REFERENCES   83 
 APPENDIX TABLES  87 
 
 
CHARTS 
 
 I. ECONOMIC ENVIRONMENT 
 
I.1 Excess crude account and fiscal deficit, 2004-09 5 
I.2 Structure of merchandise trade, 2003 and 2009 10 
I.3 Direction of merchandise trade, 2003 and 2009 11  
III. TRADE POLICIES AND PRACTICES BY MEASURES 
 III.1 Breakdown of import duty rates, 2011 26 
III.2 Tariff escalation by ISIC 2-digit industry, 2011 29 
  
 
  Nigeria WT/TPR/S/247 
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  Page 
TABLES 
 
I. ECONOMIC ENVIRONMENT  
I.1 Selected macroeconomi c indicators, 2003-09 2 
I.2 Basic economic and soci al indicators, 2003-09 3 
I.3 Balance of payments, 2003-09 7 
 
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES  
II.1 Selected trade an d trade-related legislation, December 2010 14 
II.2 Taxes and investment incentives 17 II.3 Selected notifications to the WTO, March 2005 to January 2011 20 
II.4 Outstanding notifications to the WTO, January 2011 21 
 III. TRADE POLICIES AND PRACTICES BY MEASURES 
 
III.1 Structure of MFN tariffs, 2011 26 
III.2 Summary analysis of import duty tariff, 2011 28 
III.3 Goods and services exempt from VAT, 2011 30  
IV. TRADE POLICIES BY SECTOR 
 IV.1 Production of selected crops, 2003-08 44 
IV.2 Livestock production, 2003-08 44 
IV.3 Exports of agricultural products, 2003, 2006-09 45 IV.4 Imports of agricultural products, 2003, 2006-09 46 
IV.5 Federal Government and state governments' expenditure on agriculture, 2005 and 2006-09 47 
IV.6 Procurements and releases from government stocks, selected years 48 IV.7 Estimated output for fisheries, 2004-07 51 
IV.8 Trade in fish products, 2003 and 2006-09 51 
IV.9 Oil reserves and production, 2005-09 54 IV.10 Natural gas production, 2005-09 58 
IV.11 Production of solid minerals in Nigeria, 2004-08 60 
IV.12 Ports performance, 2005-10 66 IV.13 Air traffic data, 2004-09 67 
IV.14 Telecommunications data, 2004-09 70 
 
V. AID FOR TRADE 
 V.1 Aid-for-trade support, 2002-08 79 
 
APPENDIX TABLES 
 
I. ECONOMIC ENVIRONMENT 
 AI.1 Structure of exports, selected years 89 
AI.2 Structure of impo rts, selected years 90 
AI.3 Origins of imports, selected years 91 AI.4 Destinations of ex ports, selected years 92 
 
III. TRADE POLICIES AND PRACTICES BY MEASURES  
AIII.1 Import prohibitions, January 2011 93 
AIII.2 Absolute import prohibitions, January 2011 95Nigeria WT/TPR/S/247 
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SUMMARY 
 
1. Nigeria has benefited from several 
years of robust economic growth, averaging 
over 6% per year in real terms since 2005.  
Growth has been quite broadly based with wholesale and retail trade, communications, and agriculture contributing most strongly.  Despite high oil prices, the importance of the 
petroleum sector to the economy has actually 
declined, from 27% to 16% of GDP during 2003-09.  However, although oil and gas employ relatively few people, they continue to be critical for the economy as they make up over 90% of exports and 80% of government 
revenue as well as being the main objective for 
foreign direct investment. 
2. Nigeria's international trade more than 
doubled in the 2003-09 period, with exports rising to nearly US$50 billion and imports to 
nearly US$34 billion.  Although oil accounts 
for nearly all the value of exports there was strong growth in exports of agriculture products over this period.  Tariffs are the main trade policy instrument, as Nigeria has been aligning its tariff with the ECOWAS common 
external tariff.  As a result, the average applied 
MFN tariff declined from 29% in 2003 to 12% in 2009.  However, the average bound tariff was 118% in 2009 and only 20% of tariff lines are bound.  The significant gap between the 
average applied MFN tariff rates and the 
average bound rates, and the low coverage of bindings makes the tariff quite unpredictable and acts as a significant disincentive to investment. 
3. In addition to tariffs, Nigeria charges a 
number of additional duties on imports, which vary from one product to another and can add considerably to the cost of business.  There are also some inconsistencies in taxes charged on imported goods and domestically produced 
goods.  For example, excise duties are not 
levied on imports, only on domestically produced goods.  In addition to facing tariffs and other duties, imports entering Nigeria by road cannot be in containers, which places an 
additional obstacle to regional trade while 
doing nothing to reduce congestion in the sea ports.  Nigeria also has two import prohibition 
lists:  the Absolute Import Prohibition List, which is based on security, health, and morality grounds; and the Import Prohibition 
List, which is used mostly to protect domestic 
industry and which has been reduced steadily over the past few years.   
4. Exports are also subject to some taxes 
and restrictions.  All exports of goods are 
subject to a levy of 0.5% to cover the cost of 
preshipment inspection, even exports to destinations that do not require preshipment inspection.  Some goods are also subject to an export prohibition, and there are some inconsistencies between this list and the 
import prohibition list, with imports of some 
food products prohibited in order to reduce competition for domestic producers and exports of other food products prohibited on 
the grounds of food security.  According to the 
authorities, legislation is currently being 
prepared to abolish the export prohibition list. 
5. Customs procedures have been 
simplified over the last six years with the introduction of improved systems and increased automation.  However, the customs 
legislation is out of date and does not provide 
for modern processing and clearing methodology and techniques.  New legislation to replace the Customs and Excise Management Act is being prepared and is 
expected to be enacted during the current year.  
The draft legislation allows for the use of electronic documents, signatures, and payments as well as the application of proper risk management, post-clearance audits, and 
special simplified procedures for qualified 
traders.  Furthermore, it will strengthen the penalty structure to ensure an adequate level of deterrence. 
6. To encourage investment, Nigeria 
provides a broad range of incentives nearly all 
of which are tax or import-tariff related and 
apply to enterprises producing for the domestic as well as export markets.  In addition, 11 export pr ocessing zones, with 
more under development, are overseen by the 
Nigerian Export Processing Zone Authority.  WT/TPR/S/247 Trade Policy Review 
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Despite these incentives, foreign direct 
investment remains concentrated in the oil and gas sector.  In order to improve services for investors the One Stop Investment Centre was 
opened in the Nigerian Investment Promotion 
Commission in March 2006.  The Centre brings together the agencies responsible for the processes, procedures, and requirements for business entry permits, licences, and 
authorizations in order to reduce the cost of a 
business entering and establishing in Nigeria by simplifying procedures and speeding up the processing of application forms.   
7. Nigeria enacted a new Public 
Procurement Act in 2007.  The Act created the 
National Council on Public Procurement and 
the Bureau of Public Procurement.  This legislation is expected to reduce corruption and improve the transparency and efficiency of the public procurement process.   
8. In the early 2000s, Nigeria made 
considerable progress in privatization and the programme continues with some successes, such as in concessions for operating ports, which have resulted in improved services.  However, in other areas progress has been 
much slower and in some, such as steel and 
telecommunications, sales have been annulled.  Current activity is concentrated in the power sector. 
9. Although the petroleum sector 
dominates the economy, agriculture is more 
important to most Nigerians as it represents over half of employment.  Agriculture production has been increasing steadily for several years as it has benefited from better 
prices, a more stable policy environment, and 
the revaluation of the naira.  However, it is still operating well below potential and the challenges facing agriculture in Nigeria are considerable.  The small size of farms, the low levels of mechanization and input use, poor 
infrastructure, and many other problems need 
to be addressed, not least of which is the high level of post-harvest losses due to pests, poor transport, and storage conditions.  Some of these problems are being addressed by current 
programmes.  Furthermore, a legal bill to address land tenure has been prepared but has 
yet to go before the National Assembly.  Improved tenure would also  enable farmers to 
obtain better access to credit as their land 
could provide collateral for loans.   
10. Although the gas and petroleum sector 
is critical to the economy it too faces challenges, and production is well below potential due to security failures and 
subsequent damage to infrastructure as well as 
leaks and theft from pipelines.  The complex set of policies, taxes, rents, royalties, and other rules and charges also discourages investment.  The new Petroleum Industry Bill, currently before the National Assembly, would help to 
clarify and simplify them as well as addressing 
possible conflicts of interest in the state agencies involved in investing in the sector and overseeing the industry.  In the downstream petroleum sector, Nigeria 
continues to be a net importer of refined 
petroleum products as its refineries operate below capacity and cannot meet domestic demand while the fuel subsidy encourages greater consumption as well as being a considerable drain on government revenue. 
11. Despite considerable policy reform 
over the past few years, including the creation of the Nigerian Electricity Regulatory Commission (NERC), Nigeria continues to suffer from inadequate generation, 
transmission, and distribution of electricity. 
The Electric Power Sector Reform (EPSR) Act, passed in 2005, provided for the creation of the NERC and the end of the monopoly held by the National Electric Power Authority 
(NEPA).  To encourage investment in the 
electricity sector, the EPSR Act provides for a number of fiscal incentives, including a tax holiday of up to five years, accelerated capital allowances, investment allowances, tax relief on dividends, and tax exemptions for exports 
of electricity.  Furthermore, the Roadmap for 
the Power Sector, unveiled in August 2010, includes the sale to private investors of majority stakes in the 3 thermal generating plants and 11 distribution units;  concession 
agreements with the private sector for the 
6 hydroelectricity plants; and placing the Nigeria WT/TPR/S/247 
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transmission company under a private 
management company. 
12. During the period under review, the 
services sector as a whole has performed well, 
especially telecommunications, which has 
continued its rapid grow th and benefited from 
increased competition.  On the other hand, the banking sector, which underwent consolidation in 2006, was adversely affected 
by the global financial crisis in 2008, with 
credit conditions becoming tight and the ratio of non-performing loans to total loans rising.  The authorities took a number of measures to ensure the smooth flow of credit and liquidity in the system as well as to keep banks solvent.  
These measures appear to have been 
successful. 
13. According to several reports, Nigeria 
continues to be perceived as highly corrupt and a difficult place in which to do business.  
Several steps have been taken to address this 
image, including through legislative measures in the Corrupt Practices and other Related Offences Act, No. 5, 2000, and institutional reform in the Corrupt Practices and Other Related Offences Commission.  In addition, 
other governments have pursued cases where 
individuals and enterprises resident in their countries have been involved in corrupt practices in Nigeria. 
14. Despite problems, Nigeria's economy 
continues to grow and to diversify.  However, 
to sustain economic growth at current rates requires further diversification of the economy away from the petroleum sector.  This will require significant investment, which, 
according to the most recent development plan (Vision 20:2020), is to come from the private 
sector.  Attracting private investment will require far-reaching reforms in many areas, including competition law, infrastructure, 
access to credit and, probably of most 
immediate concern, adequate regulation of utilities.  Additionally, improving investor confidence requires legislation to protect security of investment in such areas as  
property ownership, intellectual property, and 
the security of contracts.  The authorities are aware of these issues, and draft legislation that deals with many of them has been prepared.  However, the step from planning and policy to legislative change and its implementation is 
slow.  In some cases, draft bills that were 
being considered by the National Assembly at the time of the previous Review of Nigeria in 2005, have yet to be enacted or implemented.  The climate for investment, business, and 
trade in all areas, would benefit from faster 
translation of official intentions into concrete action.  Where this has happened, such as telecommunications, air transport, and maritime port services, the results have been quite dramatic. 
15. The trade policy review process also 
highlighted problems related to lack of information and poor coordination between official agencies, which are noted in different areas of the report and make any description or 
assessment of Nigeria's trade policies 
particularly difficult.  Furthermore, without accurate and timely data , policy development, 
preparing legislation, and working on institutional changes is very difficult and may 
help to explain the slow pace of change in 
some areas in Nigeria.