25 June 1998
POLICY REVIEW BODY: REVIEW OF NIGERIA
TPRB'S EVALUATION Back to top
The Trade Policy Review of the World Trade
Organization (WTO) concluded its second review of Nigeria's trade policies on 23 and 24
June 1998. The text of the Chairperson's concluding remarks is attached as a summary of
the salient points which emerged during the discussion.
The review enables the TPRB to conduct a collective
examination of the full range of trade policies and practices of each WTO member country
at regular periodic intervals to monitor significant trends and developments which may
have an impact on the global trading system.
The review is based on two reports which are
prepared respectively by the WTO Secretariat and the government under review and which
cover all aspects of the country's trade policies, including: its domestic laws and
regulations; the institutional framework; bilateral, regional and other preferential
agreements; the wider economic needs and the external environment.
A record of the discussions and the Chairperson's
summing-up, together with these two reports, will be published in due course as the
complete trade policy review of Nigerai and will be available from the WTO Secretariat,
Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following
reports have been completed: Argentina (1992),
Australia (1989 & 1994), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia
(1993), Botswana (1998), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992,
1994 & 1996), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995),
C˘te d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic
(1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 &
1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary
(1991), Iceland (1994), India (1993 & 1998), Indonesia (1991 and 1994), Israel (1994),
Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996),
Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mauritius (1995), Mexico (1993
& 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998),
Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997),
Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994),
Singapore (1992 & 1996), Slovak Republic (1995), South Africa (1993 & 1998), Sri
Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996),
Thailand (1991 & 1995), Tunisia (1994), Turkey (1994), the United States (1989, 1992,
1994 & 1996), Uganda (1995), Uruguay (1992), Venezuela (1996), Zambia (1996) and
TRADE POLICY REVIEW BODY:
REVIEW OF NIGERIA
CONCLUDING REMARKS BY THE CHAIRPERSON Back
Over the past two days the TPRB has conducted the
second review of Nigeria's trade policies and practices. These remarks, prepared on
my own responsibility, are intended to summarize the main points of the discussion, and
they do not constitute a full report. Details of the discussion will be reflected in
the minutes of the meeting, and you will recall that the Nigerian delegation provided
written replies in the context of this meeting.
The discussion developed under three themes:
(i) economic performance and institutional framework; (ii) trade measures; and
(iii) sectoral issues.
Economic performance and institutional framework
Members welcomed the progress made since 1995 in
restoring macro-economic stability, under an extensive programme for private sector-led
growth, encompassing the liberalization of foreign investment and a reform of the capital
market. However, they noted that development remained uneven and social indicators were
not improving. Noting that the economy remained dependent on oil export revenues,
members asked about future economic prospects in the context of weak oil prices.
They emphasized that integration of the informal sector into the economy could
increase tax revenue and provide a more stable basis for trade.
Some Members stressed that the Nigerian economy had
suffered from persistent political and institutional uncertainty. They emphasized
that democracy, good governance and the rule of law were fundamental to economic
development and urged the new Government to continue the reform programme, including the
transition to democratic civilian rule. Members stressed the need for clarification
regarding the new Government's plans to adopt well-defined constitutional arrangements.
Participants asked how the Government intended to
address the problem of foreign public debt, which was a serious burden on the
economy. It was also noted that the use of a dual exchange rate system distorted
public sector accounts and was an obstacle to resumption of multilateral credits and debt
Participants urged Nigeria to pass domestic
legislation implementing the WTO Agreements and, where necessary, to seek assistance from
the relevant WTO Committees to bring its legislation into conformity. Some members urged
Nigeria to establish a consistent follow-up mechanism which would provide a framework to
measure achievements, implement further legislative amendments and define technical
assistance needs. Some Members asked how the ECOWAS trade liberalization scheme had
reinforced trading links among countries in the region, and what benefits it had brought
In response, the representative of Nigeria observed
that the uneven distribution of growth had resulted from the lagged response of some
sectors to the economic reforms undertaken in recent years. The Government was
making efforts to address these problems, particularly in manufacturing and services. He
recognized that the economy remained dependent on oil revenue, and that weak oil prices
would affect the Budget outcome. However, foreign exchange reserves of over US$8
billion, prudent fiscal policies and budget adjustments would ensure the effective
implementation of the 1998 Budget.
The representative also pointed out that the stock of external debt had been reduced to
US$28 billion as of December 1996. The Government intended to achieve sustainability
of external debt service and debt stock by the turn of the century. Reconciliation
of the various debt estimates continued; Nigeria's total debt to the Paris Club
members had fallen to just under US$19 billion on 31 December 1997. On the dual
exchange rate he noted that the use of the official rate was strictly limited to settling
public foreign debt payments and transfers to Nigerian missions abroad.
The representative of Nigeria stated that a new
constitution would be promulgated on 1 October 1998. All laws that inhibited
competition and reduced transparency were being reviewed. An interministerial
committee had been established to advise on changes required to bring domestic legislation
into conformity with the WTO Agreements. Gaps had already been identified in areas
such as intellectual property, government procurement, anti-dumping, safeguards and
The representative noted that Nigeria's bilateral
agreements did not include preferential trade arrangements. Nigeria was
participating actively in the ECOWAS scheme, which however had been hampered by the volume
of informal trade within the region and by the failure of some members to meet their
Steps were being taken to integrate the informal
sector into the mainstream economy, including setting up border markets, which the
authorities expected would help reduce smuggling.
The representative of Nigeria indicated that
technical assistance was required to study the informal sector and develop the ECOWAS
scheme. Assistance was also needed to realign domestic regulations with multilateral
rules and develop the institutional capacity to implement the WTO Agreements, notably on
While welcoming the reduction in tariff levels and
dispersion since 1995, participants noted that duties on consumer products remained high
and that Nigeria's tariffs were subject to frequent changes; they called for a
simplification of the system by removal of annual duty rebates and import surcharges.
Predictability would also be enhanced by increasing tariff bindings on industrial
products, and closing the gap between applied and bound rates.
Members noted that import procedures were cumbersome
and lengthy; reference prices were still in use; the preshipment inspection scheme
appeared to be expensive, discriminatory and inefficient; and Customs frequently
re-evaluated upwards payable duty as assessed by the PSI companies. In this context,
some Members asked about the Government's plans to introduce the ASYCUDA scheme for
customs data processing and how the Government intended to comply with the provisions of
the WTO Customs Valuation Agreement by the end of the transitional period.
Members welcomed proposals submitted to the Nigerian
Government to phase out all remaining import prohibitions by the year 2000.
Meanwhile, some Members regretted the maintenance of import prohibitions and sought
clarification on their WTO justification in the absence of WTO-consistent domestic
legislation on safeguard measures.
Members also questioned the coherence of Nigeria's
export policies. They noted that several prohibitions continued to restrict
potential export diversification while administrative export requirements, designed
primarily to ensure repatriation of export proceeds, also acted as a constraint to export.
In contrast, a wide array of export assistance instruments remained in place.
Public sector companies continued to dominate large
segments of the economy and trade, accounting for 30-40% of fixed capital investment.
Participants deplored the lack of transparency in public procurement. While
welcoming the announcement of the privatization of several public entities, including that
of the telecommunications operator before the end of 1998, Members emphasized the need for
a competition policy to ensure market efficiency.
Some participants noted the need for improved
enforcement of intellectual property rights, and asked for the Government's plans to bring
its intellectual property legislation into conformity with the provisions of the TRIPS
The representative of Nigeria replied that Nigeria's
import and export regimes had undergone several reforms since 1991 to establish a more
stable framework for trade. The overall objective of the Nigerian tariff structure
was to encourage efficiency by reducing tariffs on consumer goods relative to those on raw
materials and intermediate products.
Customs clearance procedures were being reformed to
implement fully the Kyoto Convention. Preshipment inspection was being applied
across-the-board without discrimination. Documentation requirements had been
drastically reduced through the introduction of a Single Goods Declaration, which was a
first step towards implementation of the ASYCUDA scheme. The objective was to allow
importers to clear goods within 48 hours. Nigeria had also produced a draft Customs
code that was already approved by the World Customs Organization; this code, and
answers to the WTO customs valuation questionnaire, would be forwarded to the Secretariat
The representative restated that prohibitions
falling under balance-of-payments provisions would be phased out by 1 January 2000:
and in this regard, a notification would be submitted very soon. In addition, his
Government was studying a proposal to address all remaining items on the Import
Prohibition List with a view to their eventual phase out. Licensing had been
abolished except for prohibited items allowed as part of foreign investment contracts, on
which a 100% duty was imposed.
Anti-dumping duties were not incorporated into the
tariff structure. Nigeria did not yet have the capacity to investigate dumping
claims, but plans to establish an investigating authority were under consideration.
Nigeria provided export incentives but no subsidies
to trade. The Government was reviewing those incentives to ensure their WTO
consistency. There were no state-trading companies in Nigeria and no import
privileges were granted, except for those awarded to the national oil company as an
emergency measure following the breakdown of the country's refineries. There was no
express policy giving preference to local goods in government procurement.
The representative noted that a full description of
Nigeria's technical regulations was already available in WTO documents, and that Nigeria
had complied with all its notification obligations under the TBT and SPS Agreements.
Nigeria was reviewing its laws on intellectual
property to make them WTO consistent. Certain legislative gaps and enforcement
problems had been identified, and would be addressed in collaboration with WIPO and
WTO. The authorities were also aware of the need to ensure that appropriate
competition rules were put in place.
Members raised questions on various sectoral issues,
- The performance of the agricultural sector, which was inhibited by certain import and
export prohibitions, despite recent liberalization of fertilizer imports and cassava
- Structural and environmental issues relating to
oil and gas production, which represented 95% of export earnings and three-quarters of
government revenue, including fuel shortages resulting from a breakdown of refinery
- The need for a reform of the mining law to
encourage development of the solid mineral sector;
- Obstacles to industrial development stemming from
the complexity of import and export policies and the high level of Government
intervention, and the prospects for reform;
- Obstacles stemming from infrastructural
inadequacies in ports, transport, power and telecommunications, and the prospects for
improvements through privatization and other measures to enhance efficiency.
In response, the representative indicated that
agricultural trade had been further liberalized. He emphasized that there was no
import ban on meat and meat products. Measures to enhance competition in the
provision of infrastructure and foreign exchange were expected to improve prospects for
Nigeria had begun a review of the Minerals Act to
encourage foreign investment in the solid minerals sector, while the capital gains tax had
already been abolished. Nigeria recognized the adverse environmental consequences
associated with gas flaring and was providing incentives for producers to decrease such
Recognizing the problems associated
with the operation of ports, the representative indicated that the Government had already
started a reform programme in that area. The privatization of NITEL would begin
before end 1998, while the electricity utility NEPA was being reorganized in view of
privatization. Nigeria's shipping policy was also under review with a view to
liberalization. A number of other activities were already open to private
investment, including banking, air and road transport.
In conclusion, let me say that in this review, most
Members have recognized the progress made by Nigeria in macroeconomic and trade policies
in recent years. However, at the same time, Members have pinpointed, in a clear and
frank manner, a large number of governance, structural and policy-related issues that
still inhibit the development of Nigeria's economy and trade.
As Chairman, I welcome the frankness of the discussion and of the replies made by
the Nigerian delegation. I hope that Nigeria's transition to a democratic regime
clearly signalled by the Delegation will resolve many of the serious
concerns expressed in this meeting regarding governance, stability and predictability of
policies. I welcome Nigeria's identification of technical assistance needs, the
indications that have been given as to where such assistance can be found, and hope that
the dialogue initiated in the last two days can be continued. I also trust that the
questions and points raised by delegations will be taken seriously into consideration by
the new administration in Abuja, and translated into a positive programme of ongoing
economic reform that can enable Nigeria and all its people in all economic sectors to
fulfil their considerable potential as a major economic power in Africa. Back