GENERAL AGREEMENT ON

TARIFFS AND TRADE

RESTRICTED

C/RM/G/1523 August 1991

Limited Distribution

COUNCIL Original: English

TRADE POLICY REVIEW MECHANISM

NIGERIA

In pursuance of the CONTRACTING PARTIES' Decision of 12 April 1989concerning the Trade Policy Review Mechanism (L/6490), the initial fullreport by Nigeria is herewith submitted.

Note to Delegations

Until further notice, this document is subject to a press embargo.

91-1300

C/RM/G/15Page i

PREFACE

This report is an attempt to present the trade concepts, policies andpractices of Nigeria for the purpose of the GATT's Trade Policy ReviewMechanism (TPRM). I am aware that the purpose of the TPRM is not to serveas a substitute for the trade dispute settlement procedures of the GeneralAgreement. Neither is it also designed to serve as a forum for debate onthe legal consistency of individual GATT Articles with the provisions ofindividual trade measures of the contracting party under review. I amtherefore convinced that this report would serve its major purpose ofenhancing a collective appreciation and evaluation of the trade policiesand practices of Nigeria and their consequent impact on the functioning ofthe multilateral trading system.

The decision of the Nigerian Government to bring its trade policiesand practices under the TPRM has been informed by the belief that theon-going comprehensive negotiations in the Uruguay Round which gave birthto the TPRM proposal, could, properly focused and balanced, have abeneficial effect on the Nigerian economy. Indeed, since 1985, there hasbeen a tremendous and progressive realignment of the country's tradepolicies and practices within the general framework of the StructuralAdjustment Programme (SAP). This trend towards greater liberalization, ifit must be appreciated and sustained, should be seen to comply with theGATT principles of openness and transparency. Furthermore, the issues thatemerge from this exercise are of great importance for future planning andeffective co-ordination of trade policies and practices in Nigeria. These,therefore, are some of the primary objectives that this initial review isexpected to achieve for Nigeria.

In conformity with the guidelines from the GATT secretariat, theCountry Report consists of five chapters. Chapter 1 describes theobjective of trade policy. The import and export systems are outlined inChapter 2. The process of trade policy formulation in Nigeria is thesubject of Chapter 3 while Chapter 4 is concerned with the implications ofthe country's trade policies. Chapter 5 demonstrates the economic anddevelopment needs of Nigeria which, together with the brief review of theeconomic environment, provide the relevant background for the assessment ofNigeria's trade policy measures. I am, therefore, confident that theinformation contained in this report will not only show the extent oftransparency of Nigeria's trade policies and practices to all contractingparties but will also serve as a useful reference material on the Nigerianeconomy.

The process of collection and compilation of the information outlinedherein was necessarily long and involved. It called for directparticipation of various Ministries and Inter-Governmental Agencies both inthe collation of data and other relevant materials, and the discussionsand consultations at the Inter-Ministerial level. It, therefore, behoveson me to thank all interests concerned for their co-operation andunderstanding which has made possible the success of this exercise.

C/RM/G/15Page ii

I must also not forget to thank the management and staff of theDevelopment Research Bureau, Ibadan, who acted as consultants for thisreport. My gratitude also goes to the staff of my Ministry who have workedhard and seen to it that this report is a reality.

I am also highly indebted to the President and Commander-in-Chief ofthe Armed Forces, General Ibrahim Badamasi Babangida, whose personalsupport and encouragement spurred us on to embark on this review exercise.It is my hope that not only the GATT contracting parties but the entireinternational business community will find this document a useful source ofeconomic trade information on the Federal Republic of Nigeria.

Senas J. UkpanahHonourable MinisterFederal Ministry of Trade and TourismGarkiAbuja

26 June 1991

C/RM/G/15Page iii

TABLE OF CONTENTS

Page

PREFACE i

TABLE OF CONTENTS iii

CHAPTER 1: ECONOMIC BACKGROUND i

CHAPTER 2: TRADE POLICIES AND PRACTICES 4

Objectives of Trade Policies 4

National Sectoral Policies: Economic Goalsand Significance 5

CHAPTER 3: DESCRIPTION OF THE IMPORT AND EXPORT SYSTEMS 13

Description of the Import System 13

Description of the Export System 17

CHAPTER 4: THE TRADE POLICY FRAMEWORK 19

Domestic Laws and Regulations Governing theApplication of Trade Policy Measures 19

Process of Trade Policy Formulation and Review 20

Summary Description of the Process of TradePolicy Formulation 22

Institutional Framework of TradePolicy Measures 23

Bilateral, Multilateral, Regional or Preferential TradeAgreements: Their Scope, Duration and Goals 31

CHAPTER 5: THE IMPLEMENTATION OF TRADE POLICIES 36

Measures Affecting Import3 36

Measures Affecting Exports 39

CHAPTER 6: RELEVANT BACKGROUND AGAINST WHICH THE ASSESSMENTOF NIGERIA'S TRADE POLICIES WILL BE CARRIED OUT: WIDERECONOMIC AND DEVELOPMENT NEEDS, EXTERNAL ENVIRONMENT 42

Wider Economic and Development Needs, Policiesand Objectives of Nigeria 42

C/RM/G/15Page iv

Page

Major External Economic Environment

Trends in the Balance of Payments, Reserves,Debt and Foreign Exchange Market

International Macro-Economic Problems AffectingNigeria's Foreign Trade

REFERENCES

APPENDICES

47

60

69

72

77

C/RM/G/15Page 1

CHAPTER 1

Economic Backrround

Nigeria with an estimated population of over 100 million has thelargest economy is sub-Saharan Africa (except South Africa). The GNP percapita in 1988 was US$290, which was lower than the 1983 figure of US$770,while the GNP average annual growth rate for 1965-83 was 3.2 per cent, thegrowth rate for 1965 to 1988 was only 0.9 per cent (World Bank DevelopmentReports, 1985 and 1990).

Nigeria is basically an agricultural country. Agriculture currentlyemploys about two-thirds of its labour force. In the 1960s a significantproportion of the Gross Domestic Product originated in agriculture. On theaverage, agriculture accounted for about 40 per cent of GNP between1987-1989 (Central Bank, Nigeria, Annual Reports). Nigeria at presentproduces a number of cash crops with cocoa being the most important non-oilexport crop. Other cash crops include oil palm, rubber, groundnuts andcotton. The main food crops are yams, cassava, roots and tubers, sorghumand millet. In general, agricultural productivity is low with considerablepotential for improvement. The value added in agriculture at constantfactor cost (millions of 1980 US dollars) fell steadily from the 1987/88value of 5.5 per cent to 4.8 per cent and 4.2 per cent for 1C88/8> and1989/90 respectively (African Development Report, 1991 pages A-10). Theindustrial sector of the economy is small with the manufacturing sectoraccounting for less than 10 per cent of GDP. The value added inmanufacturing at constant factor cost in millions of 1980 US dollars rosefrom 2,492 in 1970 to 10,334 in 1990. The growth rate between 1989 to 1990was 7.3 per cent.

Nigeria came into the league of oil-producing nations in May 1970.It benefitted from the oil shocks of the early 1970s. The rising oilrevenue improved Nigeria's prospects. The forceful arrival of oil on theeconomic landscape made it the most significant event of the 70s and early1980s. Petroleum soon became the main engine of growth. It had by 1976become the major source of government revenue and the main foreign exchangeearner - over 80 per cent in both cases. The bouyant oil revenues of the1970s provided the basis for large increases in government expenditures.Substantial amounts of money were spent on the expansion of infrastructuralfacilities and programmes designed to increase the productivity of thenon-oil sector. The substantial revenue also served the political andsocial purpose of healing the wounds necessitated by the civil war(1967-1969) which actually ended in 1970.

While it is true to say that some successes were achieved in theutilization of the funds from oil, there was also some degree of misuse andinefficiencies. Indeed, it has been alleged that many public investmentprojects were undertaken without due attention paid either to economicviability or the absorptive capacity of the economy. Agriculture wasignored and Nigeria became a monoproduct economy.

C/RM/G/1SPage 2

With the increased spending, prices rose especially in the non-tradedsector and thereby undermined the necessary incentive framework for thetraded sector. In the early 1970s, specifically 1972 and 1973, Nigeria'sinflation rate was about 6 per cent. It leapt up thereafter to about12.5 per cent in 1973/74 and to 33.8 per cent by 1974/75. The exchangerate appreciated substantially.

Table 1.1

Nigeria: Some Macroeconomic Indicators

Year Oil price Nominal Inflation ratecurrent exchange rate Z

US$ (rate of exchange)

1970 2.4

1971

13.6

3.2

1972 3.4

1973

2.2 16.1

-1.4

4.0

1974 11.3

1975 11.3

1976 13.9

1977

2.8

8.0 5.5

-7.5 12.5

-0.5 33.8

-7.2

14.5

1978 13.9

1979

24.2

5.2 19.5

10.6

21.3

1980 35.4

1981

1982

1983

1984

Sources:

38.9

18.6

0.1 11.1

-7.4 11.4

-3.2

35.8

30.0

28.5

20.9

-2.7 7.7

-0.5 18.9

-3.8 39.6

1. IMF: international Financial Statistics 1988

2. Brian Pinto (1987) Nigeria during and after the oil boom:A policy comparison with Indonesia. The World Bank EconomicReview, Vol. 1, No. 3.

C/RM/G/15Page 3

The relevant statistics are shown in Table 1.1 for the referenceperiod 1970-84. When the oil market weakened in the early 1980s, Nigeriawas hard hit and the vulnerability of the economy to external shocks wasexposed. This signalled the beginning of the economic problems. Whatemerged first were sizeable external and fiscal imbalances. By 1983, theexternal current account deficit, and the fiscal deficit were 6 per centrespectively of the GDP in 1983, (World Bank, 1990 Trends in DevelopingEconomies, Washington D.C., page 395). Consequently, the deficits werefinanced by public sector borrowing, running down of international reservesand a large accumulation of payment arrears on external trade credit. Thestock of external debt (World Bank, 1990, World Debt Tables 1989-1990External Debts of Developing Countries, page 282) which was aboutUS$8.9 billion in 1980 steadily rose to US$12.8 billion in 1982. By 1964,it had reached US$18.4 billion. The total external debt - GNP ratio was8.9 per cent in 1980 but rose to 20.9 per cent in 1983. While the externaldebt/exports of goods and services ratio was 31.9 per cent in 1980, it roseto 148.9 per cent in 1984. The interest/GNP ratio was about 3.3 per centin 1980, it rose to 13.0 per cent and 15.7 per cent respectively in 1983and 1984.

Between 1983 and 1984, the government resorted to austerity measuresrelying heavily on controls and regulations. Such controls and measuresincluded slashing budgetary expenditures, administrative controls overimports in the form of import licences and prohibitions. Instead ofcorrecting the imbalances and distortions, it worsened the situation.

With the ascendancy of a new government to power in 1985, policieschanged towards a desire to combine austerity with adjustment. Thedramatic fall in the price of oil in 1986 increased the urgency of reform.By July 1986, the Structural Adjustment Progranme was introduced. Theprogramme initially meant for a two-year period was chiefly aimed atredressing the structural imbalances existing in the economy. Specificallyit aimed at restructuring and diversifying the economic base in order toreduce Nigeria's dependence on oil. The elements of the SAP are discussedin detail in Chapter 6.

Since the introduction of the Structural Adjustment Programme, therehave been significant changes in the economy. While some of these havebeen mostly positive, there have been nevertheless some negative effects.Suffice to say that one can look to the future with optimism if the variousprogrammes are judiciously but carefully implemented. It is expected thatfor 1991 according to the President's 1991 Budget Speech, the GrossDomestic Product at 1984 constant prices will grow at 4.8 per cent.Inflation rate which was reduced to 16 per cent in October 1990 would befurther reduced to 8 per cent in 1991. In general, it is expected that theexchange rate will be stable throughout 1991.

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CHAPTER 2

Trade Policies and Practices

1. Objectives of national trade policies

The Federal Government has recently approved the Trade and TourismPolicy for Nigeria. The main thrust of this policy is the encouragement ofproduction and distribution of goods and services to satisfy both thedomestic and international markets for the purpose of achieving acceleratedeconomic growth and development. In pursuance of this objective, thegovernment provides a conducive and acceptable domestic and internationalbusiness environment, the necessary facilities and incentives forengagement in commercial activities by individuals, and an organizedprivate sector.

Other broad objectives of trade policy include:

(a) the promotion and development of domestic trade includingintra-State trade and inter-State commerce;

(b) the development and promotion of oil and non-oil exports;

(c) deregulation and liberalization of trade; and

(d) promotion of Nigeria's bilateral and multilateral tradeinterests.

External trade is fostered in order to achieve economic developmentand a healthy balance of payments. Additionally, part of the policyobjective in this area includes market expansion, and the protection ofinfant industries. In order to achieve the above-mentioned policyobjectives, the strategies employed include:

(a) export trade and promotion;

(b) bilateral trade arrangements;

(c) intra-African trade relations; and

(d) counter trade/buy-back arrangements.

A number of incentives for trade promotion as set out in the Export(Incentives and Miscellaneous Provisions) Decree of 1986 include thefollowing (for more details see Chapter 5):

- Export Development Fund;

- Export Expansion Grant Fund;

Export Adjustment Scheme Fund;

C/RM/G/15Page 5

D Duty Drawback/Suspension Scheme;

- Pioneer Status;

- Capital Assets Depreciation;

- Tax Relief on Interest Income;

- Rediscounting of Short-Term Bills;

- Retention of Export Proceeds;

- Export Credit Guarantee and Insurance Scheme;

- Manufacture-In-Bond Scheme;

- Credit Lines to Export Business.

2. National sectoral policies: economic goals and significance

The extent of growth of a nation's trade depends crucially on thestructure of the economy especially the dominant sector with greatestmultiplier effects on the economy. In the Nigerian context, the policiesof two sectors of the economy have significant effects on the developmentson the trade policy profile. These sectors are agriculture and industry.Both sectors are important to the overall growth of the economy. In thecase of agriculture, emphasis is on the production of food crops andexports. In the industrial sector, the incentive packages are forindustries which are not only less dependent on imported raw materials butalso produce more local value added. The general trend in the volume ofproduction in agriculture and industry is shown in Appendix I. Thefeatures of these two sectors and their respective policies are brieflydescribed below.

(a) Agriculture

Agriculture is the mainstay of Nigeria's economy. It employs overtwo-thirds of the total labour force. In the early 1960s over 50 per centof the Gross Domestic Product (GDP) originated in agriculture. Since theemergence of petroleum in the export sector of the economy, agriculture'scontribution to GDP has fallen considerably from the figures of the 1960s.In the 1970s and early 1980s, the contribution of agriculture to the GDPhas varied considerably. The share of agriculture in the Gross DomesticProduct is shown in Table 2.1.

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Table 2.1

Share of Agriculture in Gross Domestic Productat 1984 Factor Cost*

Year Share

1987 40.2

1988 39.8

1989 40.0

*Agriculture is defined as Agricultural Crops, Livestock, Forestry andfishing

Source: CBN Annual Report and Statement of Accounts, December 1989, page 17

The Ministry of Agriculture and Natural Resources co-ordinates all thepolicies and programmes of the agricultural sector. The importance of theMinistry vis-a-vis the economy is underscored by the fact that Agricultureprovides employment for the majority of Nigerians. Hence, the performanceof this sector has a lot of impact on economic growth and development aswell as the standard of living of the Nigerian populace. In addition, itis believed that a successful industrial take-off which has eluded thecountry so far depends largely on a sound agricultural base.

Over time, the policies of the agricultural sector have undergone manychanges since independence in 1960. Each change reflected the currentthinking on government's perception of the best approach to agriculturaldevelopment in a manner consistent with the evolvement of a self-relianteconomy. Some of the policy changes were, however, brought about not onlyas a result of the non-continuity of government policies and programmes butalso from changes in the government itself.

Three main phases of agricultural policy changes are discernible inthe country. The first phase covered the period 1960 to 1970,characterized be a decentralized approach to agricultural development. Thecentres of agricultural development efforts were based in the regions andlater the States, while the Federal Government played only supportiveroles. Consequently, there was neither uniformity in agricultural policiesand programmes, nor with respect to the relative importance attached tothis sector by the various operating units within the Federation. Onecommon feature, however, was the combination of private-sector!small-holder-farmer and government direct production approaches.

The second era, 1970-1985, witnessed greater involvement of theFederal Government as well as the State Governments in agriculturaldevelopment efforts. This was in response to the deterioration of theactivities in this sector. Consequently, new policies, programmes andprojects were launched at an unprecedented rate. Notable among these were

C/RM/G/15Page 7

the Operation-Feed-the-Nation Programmes of 1976 to 1979 and the GreenRevolution Programme, 1979 to 1983. During this period, many agriculturaldevelopment institutions were established. Among these were the NigerianAgricultural and Co-operative Bank and the launching of specialagricultural credit schemes. Also established were the NationalAccelerated Food Production Programme, the Integrated AgriculturalDevelopment Programmes and the River Basin Development Authorities, amongothers. As part of the programme for increased agricultural productionwere the introduction of Agricultural Development Projects (ADPs). Theseprojects promoted agriculture in all the States. The various assistancesunder the ADPs include the supply of farm inputs such as fertilizers andseed multiplication at subsidized prices and the supply of such services asland clearing and tractor hire. It was also during this decade that theFederal Government took over the procurement and distribution offertilizer, coupled with the launching of an ambitious input subsidy schemeand a guaranteed minimum price scheme for grains.

The third and last feature of the developments in the agriculturalsector is embedded in the on-going Structural Adjustment Programme (SAP) ofthe Federal Government. In 1986, the government lifted the prohibitions onthe exports of agricultural products and introduced a number of incentivesfor exports. The incentives include the right to retain foreign exchangeearned from non-oil exports, among many others. One feature of SAP whichhas direct bearing on the agricultural sector is the deregulation of theexport trade sector. Indications are that the responses of the sector tothis development are very encouraging. Generally, the take-home pay offarmers increased significantly, while the depreciation of the nationalcurrency, the naira, enhanced the competitiveness of Nigeria's agriculturalproducts in international markets. The government abolished in 1986 thesix commodity marketing boards. The abolition of the marketing boardscoupled with the depreciation of the naira boosted incentives foragricultural production.

It is against this background of the discussion above that one couldappraise the current agricultural policy recently approved by the FederalGovernment of Nigeria. In the main, the objectives are (among others) to:

(a) ensure adequate supply of food to feed the ever-growingpopulation;

(b) provide the much-needed inputs for the manufacturing sector ofthe economy, especially with a view to enhancing thelocal-resource content of processing activities;

(c) ensure availability of suitable land for agricultural purposes;

(d) protect and promote ecological and forestry endowments andreserves;

(e) ensure reasonable and stable prices for agricultural produce,both for local consumption and for exports.

C/RM/G/15Page 8

To enhance the realization of the policy objectives of this sector,some incentive packages and policy decisions are being implemented. Ofnotable importance are the following:

(a) The introduction of the Structural Adjustment Programme (SAP) in1986. The main objective in this regard being to allow marketforces to determine the naira exchange rate and thereby eliminatediscretionary administrative fixing of rates. It is hoped thatthe ensuing depreciation of the over-valued naira would makeexportable agricultural products more competitive.

(b) Reduction in the list of banned items from seventy-four tosixteen, largely in favour of agricultural inputs.

(c) The abolition of the 30 per cent consolidated import levyintroduced at the beginning of 1986. Similarly, import duties onagricultural inputs were reduced.

(d) Introduction of a new tax relief of five years to companiesengaged in production and processing of agricultural productswithin Nigeria.

(e) The classification of the agricultural sector into the highpriority area for the purpose of bank lending and governmentalfinancial allocation.

All these have assisted in boosting agricultural production both for localconsumption (food crops) as well as for exports (cash crops). Inparticular, the liberalization of export trade led to a substantialincrease in cash crop production. In addition, the disposable incomes offarmers as mentioned earlier have increased substantially thus encouragingfurther participation in agricultural production.

With the depreciation of the naira, the cost of agricultural inputshas risen. This is one of the bases for the agitation against subsidyremoval especially as far as agricultural inputs are concerned. Theevaluation of the merits and demerits of these agitations are still beingundertaken by the appropriate agencies both in the public and the privatesectors of the economy.

As part of Nigeria's agricultural policy, the importation of a numberof its agricultural products is prohibited. These include:

- meat and chicken (whether frozen or not);

- fish (except those caught and landed by licensed authorizedvessels);

- poultry;

- vegetables;

C/RM/G/15Page 9

_ eggs;

- fruits and fruit juices;

- mineral waters;

- soft drinks and beverages;

- beer and stout;

- malt and barley;

- sparkling wines;

- vegetable oils;

- rice;

- maize;

- wheat.

These goods are often banned for such reasons as national foodsecurity, public health and safety. In some cases, the import prohibitionof a number of products is for balance-of-payments reasons. These importprohibitions apply to locally-produced agricultural and textile products.The measures serve as important instruments for the promotion of localsourcing of raw materials for the manufacturing sector and importsubstitution in the country. By 1989, about 20 per cent of allagricultural items (using the HS tariff lines) were under import ban.

In more recent years, measures have been taken to stop the exportationof some important raw primary commodities. At the moment, the listcontains the following:

(a) Timber (whether processed or not) and wood in the rough, witheffect from 1 January 1988.

(b) Beans, with effect from 16 February 1989.

(c) Cassava, with effect from 16 February 1989.

(d) Maize, with effect from 16 February 1989.

(e) Rice, with effect from 16 February 1989.

(f) Yam tuber, with effect from 16 February 1989.

(g) All products or derivatives of items 1 to 6, with effect from16 February 1989.

C/RM/G/15Page 10

(h) All imported food items, with effect from 16 February 1989.

(i) Raw hides and skins, with effect from 16 February 1989.

(j) Raw palm kernel, with effect from 1 January 1990.

In order to raise agricultural productivity and reduce rural poverty,the Directorate of Food, Roads, and Rural Infrastructure (DFRRI) providesphysical infrastructures including feeder roads, potable water andhousing, and electricity to the rural dwellers.

(b) Industrial policy

Policies enunciated in the industrial sector also have a direct impacton the trade sector. This is due to the fact that it is the industrialsector which not only enhances the utilization of local resources from theagricultural sector but also the extent of diversification of the exportbase of the economy. The industrial sector also determines the quantum ofunprocessed raw materials that could be exported directly. This in turninfluences the prices which the raw materials could attract ininternational markets.

One of the major objectives of government industrial policy isincreasing the local content of Nigerian industrial output. In order toachieve this objective, the government uses various measures including hightariffs, import prohibition, financial assistance to the research anddevelopment of domestic raw materials which could be substitutes forimports. Prior to the adoption of the structural adjustment programme, thefollowing minimum local sourcing targets for Nigerian industries were setby the government:

- 100 per cent for soft drinks and breweries;

- 80 per cent for agro-food industries;

- 70 per cent for agricultural processing industries;

- 60 per cent for chemicals;

- 50 per cent for petrochemicals and machine tools.

The Government in 1988 created the Raw Materials Research and DevelopmentCouncil which is charged with the responsibility of allocating resources toresearch and development of identified raw materials, substitutes oralternatives.

Although various policies and programmes have been implemented overthe years, none of these were articulated into a policy document until1987. This was the year when the Federal Government approved and publishedthe industrial policy of Nigeria. According to the document, the majorobjectives of the policy include:

C/RM/G/15Page 11

(a) provision of greater employment opportunities;

(b) increasing the export of manufactured goods;

(c) dispersal of industries;

(d) improvement in local technological skills and capabilities;

(e) increasing the local content of industrial output;

(f) attracting foreign capital investment; and

(g) increasing private sector participation in theindustrial/manufacturing sector of the economy.

To enhance the realization of these objectives, the followingstrategies and actions were embarked upon by the Federal Government:

(a) privatization and/or commercialization of public enterprises witha view to reducing public sector holdings in existing industrialenterprises and thereby encouraging increased private sectorparticipation;

(b) extending the frontiers of industrial activities by playing acatalytic role in establishing new core industries;

(c) provision of, and improvement to, infrastructural facilities;

(d) improving the regulatory environment;

(e) improving the investment climate for both foreign and localinvestors;

(f) establishment of a clear set of industrial priorities;

(g) harmonization of industrial policies at the Federal, State andLocal Government levels; and

(h) establishment of financial schemes especially for small-scaleindustries whose activities have significant relevance toemployment-generating potential within the economy.

Some sets of incentives were also approved by the government tofurther enhance the realization of the objectives of the industrial policy.Some of these incentives are briefly discussed as follows:

(a) The adoption of some fiscal measures on taxation and interestrates geared towards the provision for deduct ons and allowancesin the determination of taxes payable by manufacturing

C/RM/G/15Page 12

activities. Some of these include the pioneer status whichbestowed on new industries some tax holidays on corporate income,as well as tax relief on Research and Development (R & D)activities. Furthermore, the Companies Income Tax Act wasamended whereby corporate tax rate was reduced to 40 per cent asfrom 1987.

(b) Ensuring effective protection of local industries throughadjustments to tariff levels. The essence is to ensure thatlocally-produced goods are competitive in both domestic andexport markets.

(c) Introduction of a variety of measures in favour ofexport-oriented industries. Most of these have been articulatedin Decree No. 18 of July 1986. Among these are the import dutydrawback scheme, export-licence waiver, export credit guaranteeand insurance scheme, export development fund, and repatriationof imported capital, among others.

(d) The establishment of the Industrial Development Co-ordinatingCommittee (IDCC) to act as a one-step point for all foreigninvestors wishing to invest in Nigeria. This was a significantimprovement on the old practice whereby a prospective investorwould repeatedly visit many agencies and organizations before adecision could be reached on an application.

All of these incentives are expected to encourage the inflow offoreign capital. In recent times, there has been an influx of applicationsto IDCC. With the positive developments in the agricultural sector asdiscussed earlier, the use of local resources within the industrial sectorhas improved significantly. These, in no small measure, are expected toenhance the level of economic activities in the country as well as increasethe quantity and diversity of products available for both domestic andexport trade.

C/RMIG/15Page 13

CHAPTER 3

Description of the Import and Export Systems

A. Description of the import system

With the exception of trade with South Africa which is prohibitedbecause of the Republic's apartheid policy, Nigeria has practised anon-discriminatory trade system since independence in 1960. In the main,the import and export systems are operated in order to accelerate thecountry's economic development and industrialization without necessarilydisrupting international trade flows or violating international agreementsgoverning such trade. The trading system is characterized mainly by:

(a) dominance of tariffs;

(b) relatively minimal use of non-tariff measures especially sincethe introduction of the Structural Adjustment Programme in 1986;

(c) an on-going scheme of liberalized trade across the nation'sborders especially under the auspices of the West AfricanEconomic Community arrangements;

(d) a regular assessment and reform of measures which are aimed atenhancing transparency through the minimal use of administrativecontrols in the application of import trade measures.

Before the Structural Adjustment Programme (SAP) was introduced in1986, imports into Nigeria were subjected to stringent regulations whichincluded stiff tariff regimes, import prohibition, import licensing andnon-tariff barriers. The payments crisis which Nigeria experienced pushedit to increase and tighten direct control. In essence, Nigeria maintainedrelatively protectionist trade policies including substantial non-tariffbarriers (NTBs), and direct controls on all imports. The switch in tradepolicy is demonstrated by the tables on average tariff rates and incidenceof non-tariff barriers (see Tables 3.1 and 3.2).

Table 3.1

Nigeria's Average Tariff Rates*

1980-81 1982-84 1988

14 19 -

*Calculated as tariff revenues as a percentage of imports(-) Not available

Source: Laird, Sam and Julio Nogues 1989"Trade Policies of the Highly Indebted Countries' in World BankEconomic Review, Vol. 3, No. 2, page 243.

C/RM/G/15Page 14

As can be seen from the tables, the average tariff rates increasedfrom 14 per cent in the 1980-81 period to 19 per cent in the 1982-84period. In the 1980-81 period, the incidence of non-tariff barriers washigh. As a result of the liberalization policy adopted in 1986, theincidence was low by 1988. it is important to note that between 1982-84,the incidence of NTB was high.

Table 3.2

Nigeria - Incidence of Non-Tariff Barriers

1980-81 1982-84 1988

High 100(T) Low

(T) - Number of items affected by NTBs over value of total output

Source: Op. cit., page 244

The deregulation of the economy brought about by the StructuralAdjustment Programme (SAP) notwithstanding, there are still some itemswhose importation remain banned. The liste of items tend to vary from timeto time and are usually made known during the annual budgets. In 1990 and1991, for example, a total of fifteen goods were put on the prohibitionlist. These were:

(a) live or dead poultry;

(b) vegetables including tomato puree and paste, roots, tubers, etc.;

(c) processed wood excluding wood in the rough, wooden cabinets forradio and television;

(d) fruits, fresh or preserved and fruit juices;

(e) mosquito repellent coils;

(f) textile fabrics of all types and articles thereof, with theexception of twelve which are listed in the prohibition list;

(g) domestic articles and wares made of plastic materials includingbabies' feeding bottles;

(h) Evian and similar waters, soft drinks and beverages, beer andstout, malt and barley;

(i) rice and rice products;

(j) maize and maize products;

C/RM/G/15Page 15

(k) wheat and wheat products;

(1) all sparkling wines including champagne;

(m) vegetable oils excluding linseed and castor oils used asindustrial raw materials;

(n) aluminium sulphate including alum;

(o) branched alkyl benzene, bentonite and barytes.

Although many of the quantitative import restrictions which had beenin use before 1986 were abolished with the inception of SAP, the followingnon-tariff measures however, are still in place.

(i) The Comprehensive Imports Supervision Scheme (CISS)

All imports are subject to a Comprehensive Supervision Scheme which isaimed at ensuring that imported goods are supplied to Nigerian importersstrictly in accordance with the specifications on the pro-forma invoices.It is also to avoid malpractices such as the unauthorized and unfavourablevariations in respect of quality, quantity and prices of goods purchased.

The Pre-Shipment Inspection of Imports Decree of 1978, Decree 36,introduced a scheme which subjected goods except those specificallyexempted by the decree such as firearms and ammunition to be imported intoNigeria to pre-shipment inspection by overseas inspectors to ensure theirquality, quantity as well as their comparative pricing. Foreign exchangeneeded in respect of imports would only be released after a clean report offindings has been issued by the inspectors.

The pre-shipment inspection scheme and the comprehensive importssupervision scheme are both designed to avoid situations which were verycommon during the oil boom years, in which importers brought in sand andsawdust as industrial raw materials. This became necessary in the face ofdwindling foreign exchange earnings following the decline in the worldprice for oil, the nation's main foreign exchange earner.

(ii) Health and safety standards requirements

Health and safety standards requirements in respect of imports intoNigeria are designed to protect the safety and good health of Nigerianconsumers.

(iii) The customs, excise tariff, etc., (Consolidation Amendment Decree1990 - otherwise known as Decree 1)

The harmonized tariff structure came into being under the Customs,Excise Tariff etc., (Consolidation) Decree 1988. The Amendment which cameinto force in 1990 lists a total of 179 items which are subject to tariffsranging from 5 to 200 per cent. However, in line with the country'sdevelopment strategy, goods which are considered to be essential to

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nat-onal developmental needs are accorded preferential tariff treatment.For example, while mosquito coils attract a 200 per cent tariff,agricultural insecticides attract only 5 per cent, while completely knockeddown parts (CKD) for commercial vehicle assemblers and manufacturers didnot attract any duty in 1990. However, a duty of 15 per cent wassubsequently imposed on the CKD parts in 1991. Most of the tariffs are tolast for a period of four years, 1991 to 1994.

Other decrees regulating trade in the country include the following:

(a) The Excise and Tariffs Act of 1973 which was amended by Decree 24and 25 of January 1984. The Decree later became known as theHarmonized System of Tariffs Convention Decree, Decree 1, of1988, the year Nigeria also joined the Harmonized Tariff System.

(b) The Law on Imports Prohibition (other than trade) is contained inthe Nigerian Customs and Excise (H.S.) Tariff Schedules 3 and 4,of 1988. The Law has been amended several times sinceJanuary 1988. The most recent amendment was carried out inApril 1990 and is known as Decree 7.

(iv) The Import Duty Monitoring Scheme known as Import Duty Report (IDR)

The scheme was introduced in 1988 and became effective on 1 April 1988.The aim was to improve duty collection and revenue of the government. Underthe arrangement, all IDRs are to be used in clearing goods from all theports in the Federation. Accordingly, importers and officials are to beheld responsible for ensuring that official IDR is used for the clearing ofgoods. All containerized goods, irrespective of their value, shall besubjected to pre-shipment inspection and are subject to a Clean Report ofFindings and Import Duty Report.

All non-containerized goods imported into the country worth more thanUS$1,000 shall be subject to pre-shipment inspection and the use of IDRsand CRFs. This means in effect, that only imports worth US$1,000 and beloware exempted from pre-shipment inspection in Nigeria.

(v) Deferred payment arrangement

All imports of machinery and other capital equipment valued at morethan US$1.0 million shall be on the basis of deferred payment of a maximumof 15 per cent of the invoice value. Payment of the remaining portion willbe spread over a period of not less than six months.

In addition to the above import restrictions, importers are allrequired to use approved Form M. The form duly completed must be submittedto the pre-shipment inspection liaison office in Lagos within thirty daysof registration.

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Several economic reasons have been adduced by several successiveadministrations for the imposition of restrictions. These include the needto:

(a) prevent dumping and to protect home industries. In that regard,some private organizations in the country such as Dry CellBatteries Producers Association, Peugeot Automobile of Nigeriaetc., are given a free hand by the government to propagate to thepublic the dangers involved in buying imported inferior products;

(b) conserve scarce foreign exchange especially in the wake of theglobal economic recession and the down-turn in the price of crudeoil in the later 1970s and early 1980s;

(c) encourage local sourcing of raw material inputs;

(d) maintain national security. For example, the ban on imports andexports from and into the Republic of South Africa because of itsapartheid policy.

B. Description of the export system

As a developing nation, the export trade policy of Nigeria has overthe years been designed in such a way as to promote rapid economic growth,development and overall diversification of the national economy. Inparticular, emphasis has been placed on the promotion of non-oil exports inorder to reduce the country's dependence on oil which at the momentaccounts for over 80 per cent of all export earnings.

Made in Nigeria goods may be exported freely out of the country.Since the introduction of the Structural Adjustment Programme, a number ofmeasures have been adopted to encourage the export of non-oil products andto discourage the exportation of primary agricultural goods in their rawform without value added.

A package of export incentives has been put in place by the governmentthrough the Nigerian Export Promotion Council (NEPC). The details of theincentives are mentioned in another section of this report :see Chapter 4).However, the following are worth mentioning at this point.

(i) Duty Suspension Scheme and the Manufacturing-in-Bond Scheme

Both schemes were approved in 1988 but only the Duty Suspension Schemecame into force in 1991 while guidelines for the Manufacturing-in-BondScheme are being worked out for implementation. Under the arrangements,Nigerian manufacturers are allowed to import duty-free raw materials forthe production of exportable goods on the basis of a bond issued by thebank, which guarantees that all the end products will be exported. Theperformance-in-bond will be discharged after evidence of exportation andrepatriation of the foreign exchange earned has been produced.

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(ii) The Foreign Input Facility (FIF)

The Foreign Input Facility was introduced in 1989. It facilitatesaccess to foreign exchange by export-oriented industries for theprocurement of essential raw materials needed for production(see Chapter 4).

(iii) The Non-Oil Export Supervision Scheme

The scheme was introduced after the introduction of SAP in 1986 toprotect the quality and markets of Nigerian exports. The new scheme isdesigned to enforce quality control standards on primary products as wellas to issue quality standard certificates in respect of all non-oil exportsfrom Nigeria.

There were taxes on exports but these were abolished following theintroduction of SAP in 1986. There are restrictions on the export ofcertain commodities from the country in accordance with internationalagreements and conventions. In addition, the export of goods classified asantiques or, of historical and/or archaeological heritage, is strictlyprohibited. Exporters of contemporary works of art are required to contactthe National Commission on Museums and Monuments for a clearancecertificate if they want to take out of the country a substantial number ofsuch works.

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CHAPTER 4

The Trade Policy Framework

A. Domestic laws and regulations governing the application of tradepolicy measures

There are a number of domestic rules and regulations that providelegal framework for the effective operation of trade policies in Nigeria.Besides, there are general guidelines applicable to trade policy issues.For instance there are laws contained in the Trade and Tourism Policy ofNigeria. Some of the relevant laws and regulations governing the workingof Nigeria's trade policy include:

(i) Customs und Excise Management Act No. 55 of 1958;

(ii) The Custonms Duties (Dumped and Subsidized Goods Act) 1958;

(iii) Customs (drawback) Regulation Legal Notice No. 70 of 1959;

(iv) Registration of Business Names Act 1961, No. 17;

(v) Income Tax Management Act 1961, No. 18;

(vi) Exchange Control Act 1962, No. 18;

(vii) Immigration Act 1963, No. 6;

(viii) Trademark Act 1963, No. 29;

(ix) Industrial Inspectorate Act 1970, No. 53;

(x) Patents Designs Act 1970, No. 53;

(xi) Industrial Development (Income Tax) Act 1971, No. 22;

(xii) Industrial Training Fund Act 1971, No. 56;

(xiii) Standards Organization of Nigeria Act 1971, No. 56;

(xiv) Customs Tariff (Consolidation) Act 1973, No. 6;

(xv) Excise Tariff (Consolidation) Act 1973, No. 7;

(xvi) Weight and Measures Decree 1974;

(xvii) Weight and Measures (Amendment) Decree 1977;

(xviii) Nigerian Enterprises Promotion Decree 1977 as amended;

(xix) Dumping Act of 1968;

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(xx) Labour Act 1974, No. 21;

(xxi) Trade Dispute Act 1976, No. 7;

(xxii) Trade Disputes Essential Services Act 1976, No. 23;

(xxiii) Productivity, Prices and Incomes Board Act 1977, No. 36;

(xxiv) Customs, Excise Tariff, etc. (Consolidation) Decree 1988;

(xxv) Pre-Shipment Inspection of Imports Act, 1978, No. 36;

(xxvi) Import Prohibition Order LN 10 of 1979;

(xxvii) Bankruptcy Act 1976, No. 16;

(xxviii) Companies Income Tax Act 1979, No. 28;

(xxix) Industrial Promotion Act 1979, No. 40;

(xxx) National Office of Industrial Property Act 1979, No. 70;

(xxxi) Securities and Exchange Commission Act 1979, No. 71;

(xxxii) Harmful Waste (Special Criminal Provisions, etc.)Decree 1988;

(xxxiii) Export (Incentives and Miscellaneous Provisions) DecreeNo. 18, 1986;

(xxxiv) Second Tier Foreign Exchange Market Decree No. 23, 1986;

(xxxv) Import (Prohibition) Decree No. 36 of December 1989;

(xxxvi) Securities and Exchange Commission Decree 1988, etc.;

(xxxvii) Companies and Allied Matters Decree 1990;

(xxxviii) Companies Act 1968.

These regulations have at various times been subjected to amendmentsto suit the changing needs of the economy.

B. Process of trade Dolicy formulation and review

Nigeria has witnessed several administrations since it attainedpolitical independence in 1960. For most of the period 1960 to 1991, itwas governed by military administrations. The political systems as well asthe style of administration have therefore inevitably varied over theyears.

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The hierarchy of political power during a civilian administration is,by necessity, radically different from that of a military regime. In theperiod immediately after independence, Nigeria operated a Westminster typeof political system. Between 1979 and 1983, it operated a presidentialsystem of government patterned along the American model.

During the first Republic, 1963 to 1966, it was the prerogative ofparliament to make laws for Nigeria as a whole or any of its four regions,with respect to trade and commerce between Nigeria and other countries,including the export of commodities from, and import into the country.Parliament was also charged with the responsibility for the promulgation oflaws establishing and regulating the grades and standards of quality forsuch commodities especially those destined for the export market.Parliament could confer on any individual or organization exclusive rightfor the export of any commodity. It could regulate the prices to be paidby a purchasing authority. Finally, Parliament was the authorityresponsible for the enactment of laws for treaty implementation,conventions or agreements between Nigeria and other nations orinternational agencies for the purpose of trade promotion.

Under the Second Republic, 1979 to 1983, legislative authority wasvested in the hands of the National Assembly and Senate. All treatiesentered into by the Executive had to be ratified by the Senate before theycould become law. In the four years between 1979 and 1983, however, nosuch treaties or laws were rejected by the Senate.

Out of the total of thirty-one years since political independence,Nigeria was under military administration for twenty-one years. Under thefirst military administration, 1966 to 1979, executive power was vested inthe Supreme Military Council (SMC) whose chairman was the Head of State andCommander-in-Chief of the Armed Forces. The Supreme Military Council inthis period provided general guidelines within which the affairs of Statewere conducted, including trade policy formulation. It ruled by decreeswhich were expected to be applicable to every part of the Federation. Inthe period 1967 to January 1970, Nigeria was involved in a civil war andthe decrees were in applicable to the then Eastern Region of the country.

Next to the SMC was the National Council of States (NCS) comprisingrepresentatives from all the States of the Federation. It is safe to saythat the NCS was less powerful than the SMC and that the latter exercisedexecutive authority. The National Council of States played a supportingrôle, and its suggestions were subject to approval of the SMC.Significantly, while the SMC was composed exclusively of military men, theNCS was made up of both military and civilian members.

Since the present administration came into power in 1985, power hasbeen vested in three bodies:

- The Armed Forces Ruling Council (AFRC)- The National Council of State (NCS)- The National Council of Ministers (NCM)

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The AFRC is the highest political and policy-making body in thecountry, just like its predecessor, the SMC. It is the executive andlegislative branch of government. As a military administration, much ofthe legislation is done by decrees. The chairman of the AFRC is thePresident, who exercises executive authority. All decrees issued by theAFRC in respect of different aspects of governance including trade policy,are applicable to all parts of the Federation.

The National Council of States (NCS) is made up of the MilitaryGovernors of the twenty-one States of the Federation and the Minister ofthe Federal Capital Territory, Abuja. The NCS meets from time to time atthe request of the AFRC to deliberate on various matters of nationalinterest. All decisions of the NCS have to be approved by the AFRC to havethe force of law.

The National Council of Ministers (NCM) is made up of all the FederalMinisters who hold their offices at the pleasure of the President. The NCMacts as the cabinet of the AFRC. Arising from their deliberations, theyidentify all matters directly affecting the various States of theFederation for implementation. The Council meets from time to time eitherin response to a request by the President or the AFRC to consider nationalissues including those affecting trade. As the chief executives in theirvarious ministries, the Ministers are also charged with implementingdecisions of the AFRC and the National Council of States as they affecttheir respective ministries.

A new Federal Constitution has been adopted by the AFRC and theCouncil of States in readiness for the return to civilian rule in 1992.The 1989 Republican Constitution for the Third Republic, like its SecondRepublican counterpart, is fashioned along the lines of the AmericanPresidential System. Executive powers shall be vested in the President ofthe Federation. Any laws made by the National Assembly may be implementedby him either directly or through the Vice President or Ministers of thegovernment of the Federation or other offices in the public service of theFederation.

There shall also be a National Assembly which shall be charged with thepower to make laws for the peace, order and good government of theFederation, with respect to any matters including trade and commercebetween Nigeria and other countries of the world. As was the case in theSecond Republic, some of these laws would have to be ratified by the Senateand require Presidential assent before they could become laws.

C. Summary description of the process of trade policy formulation

Trade policy is within the realm of macroeconomic policy. Under thepresent political arrangement in Nigeria, there are four principal organsresponsible for decision making. These are presently, the President,followed by the Armed Forces Ruling Council (AFRC), the National Council ofState and National Council of Ministers in that order. The direction ofthe flow of authority is shown in Figure 4.1. Each of the organs performsseparate functions with similar aims and objectives in the interest of the

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nation. The President is an important determinant of trade policyformulation process, and can speak for the national interest in externalaffairs and trade-related issues with other countries on behalf of thenation. The AFRC constitutes the legislative arm of the government. Itreviews and gives legal backing to any policy with respect to trade andgeneral national interest.

The National Council of States comprises the Military Governor of eachState. They meet from time to time to discuss issues of national interestand trade-related matters and make recommendations to the AFRC. Theyidentify the implications of a proposed trade policy on the various Statesof the Federation and assist in the State-level implementation of policiesfinally approved by the AFRC. The National Council of Ministers whichconstitutes the Federal cabinet also meets from time to time to considernational issues and implement decisions taken by the government. Allmembers of the various organs retain their offices at the pleasureof the President, who is also the Chairman of each of these organs.

An important trade policy co-ordinating body is the Federal Ministryof Trade and Tourism which is statutorily charged with the responsibilityfor trade matters (domestic and foreign). Trade policy formulationgenerally revolves around relevant ministries and public departments aswell as relevant private sector organizations.

Figure 4.1

Structure of Decision-Making Process in theFederal Republic of Nigeria

President|

IArmed Forces Ruling Councill

National Council of States|

National Council of Ministersi

D. Institutional framework of trade policy measures

Although an oil-producing nation and a member of the Organization ofPetroleum Exporting Countries (OPEC), Nigeria did not escape the adverseeffects/impact of the global economic recession of the late 1970s and early1980s. The economic crisis brought into focus the serious structural

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weaknesses, distortions and imbalances in the national economy.Consequently, trade policy measures have been targeted at enhancing therestructuring of the economy, obtaining a satisfactory share of globalmarkets for Nigerian goods, and promoting economic growth and developmentgenerally.

Government has placed emphasis on trade policy in the following areas:

(i) promotion and development of international trade;

(ii) encouragement and promotion of non-oil exports to ensure thedevelopment of the agricultural sector;

(iii) deregulating and liberalizing both domestic and external trade;

(iv) promoting the country's bilateral and multilateral tradeco-operation and agreements, etc.

A myriad of institutions are either directly or indirectly involved intrade policy formulation/implementation in Nigeria. This is reflective ofthe increasing interdependence among the countries of the world and theconsequent thinning out of the demarcation between what are domestic andforeign policy matters and issues. These various institutions and theirrôles are discussed.

(1) The Presidency

The Presidency assumed a leading role in trade policy mattersparticularly since 1986 and is responsible for the co-ordination of thetrade and trade-related policies of other bodies.

(2) Federal Ministry of Trade and Tourism (FMT & T)

This is the Ministry that is most directly involved in trade policymatters. Since 1986, the Ministry has played a leading role in findingways and means of expanding the country's non-oil exports. Amongst theimportant functions are the following:

(a) Basic functions affecting the process of trade policy formulation

- The Ministry has an external trade department which advisesthe Federal Government on what measures it should adopt toenhance external trade.

- It has a standing committee which advises the Minister onrequisite documents to be used by exporters in order tostreamline administrative procedures and bottlenecks whichtend to hinder export trade.

(b) Policies aimed at promoting external trade

- Refund of import duty to importers of raw materials whichare used for the production of wholly exportable goods.

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- Refund of excise duty paid on exported manufactured goods.

- Exemption from 30 per cent import duty on raw materialsimported specially to produce exportable goods.

- Preferential treatment to be given to raw materials requiredfor use in the manufacture of exportable products, whenissuing import licences. This scheme came to arn end afterthe deregulation of the economy in 1986 when the importlicence scheme was scrapped.

- Retention by the exporter of 25 per cent of foreign exchangeearned from all non-oil exports trade in a domiciliaryaccount.

- It played a significant rôle in the introduction of theExport Credit Guarantee and Insurance Scheme.

(3) The Central Bank of Nigeria (CBN)

The role of the Central Bank of Nigeria in trade policy formulationis related to its basic function as the watchdog of the economy.Consequently, its concern for monetary policy measures, interest rates,money supply and foreign exchange management etc. are all related to trade.

(4) Federal Ministry of Budget and Planning

The Ministry is basically concerned with fiscal and trade regulation,i.e. trade prohibition, tariffs, etc. In 1988, the Ministry initiatedacross-the-board increases in tariffs although it has not yet focused itsattention on a commodity-specific tariff regime. Accordingly, it has setup a Tariff Review Board made up of government officials, the privatesector and the universities as members. The Tariff Review Board has theresponsibility for reviewing additionally each tariff proposal on its ownmerit. It examines petitions from private organizations in relation totariffs, and amends anomalies in the customs and excise tariffs. The Boardensures that a tariff regime remains in place for at least seven years toattract investors into the country. The Ministry also co-ordinatesanti-dumping activities in collaboration with relevant ministries andFederal agencies, in a manner that is consistent with prevailinginternational agreements and policies. It also co-ordinates tariff reviewactivities with relevant government agencies and organized private sectororganizations such as the Manufacturers Association of Nigeria (MAN), theNational Association of Chambers of Commerce, Industry, Mines andAgriculture (NACCIMA) and the National Association of Small ScaleIndustries (NASSI).

(5) Ministry of Petroleum Resources

At the moment, oil accounts for over 80 per cent of foreign exchangeearnings. The Ministry therefore occupies the major "commanding height" ofthe economy in international trade. The Ministry advises the government on

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all matters concerning oil and the oil industry, and sells oil to anybuyers with the exception of the Republic of South Africa and Israel, bothof which are blacklisted.

Since Nigeria is a member of the Organization of Petroleum ExportingCountries (OPEC), the Ministry ensures the faithful adherence to theorganization's guidelines on quota ceilings and prices. It encouragesinvestment in all aspects of the oil industry. It offers incentives toprospective investors in the form of tax holidays and attractive capitalallowances in gas-based projects. The Ministry also encourages investorsto participate in the development of the nation's huge reserves of naturalgas.

(6) Ministry of External Affairs

The Ministry is mainly concerned with enhancing the smoothparticipation of Nigeria and its citizens in international trade.Accordingly, it has an economic department in each of the country'smissions abroad which advises on investments, trade and related promotionalactivities. It encourages bilateral and multilateral trade agreements andarrangements between Nigeria and other countries of the world. It iscurrently initiating (in 1991) bilateral trade arrangements with severalcountries with a view to attracting foreign investment into the country inline with the on-going SAP Programme.

The activities are carried out in either of two divisions in theMinistry. These are the Trade and Investment Division and the MultilateralCo-operation Division. The latter deals mainly with international agenciessuch as GATT, the EEC, the International Cocoa Agreement Association andthe Economic Community of West African States (ECOWAS), etc.

The co-ordinating activities of the Ministry are carried out mainly bythe Trade and Investment Division. Specifically, these include closeliaison with the Nigerian Export Promotion Council (NEPC), the IndustrialDevelopment Co-ordinating Committee (IDCC) of the Federal Ministry ofIndustries, and the Federal Ministry of Trade and Tourism, on all trade andtourism policy matters. In conjunction with the Federal Ministry of Tradeand Tourism (FMT & T), Interpol and other relevant agencies, it intervenesin trade disputes, especially those arising from trade malpractices. Itliaises with the organized private sector with regard to matters such asthe provision of information on trade and/or investment opportunitiesabroad, especially within the ECOWAS member States.

(7) Federal Ministry of Finance and Economic Development (FMF & ED)

This Ministry was hitherto directly involved in trade policy matterssuch as foreign exchange allocation to importers, in collaboration with theCBN. It now functions mainly as the Treasury of the nation, and makespolicies on trade-related matters having foreign exchange implications.For example, policies on the Comprehensive Import Supervision Scheme (CISS)are made by the Federal Ministry of Finance and Economic Develoment, whileday to day administration is vested in the CBN.

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Important too, is the annual budgetary foreign exchange allocation tothe various sectors of the economy which is undertaken by the FederalMinistry of Finance and Economic Development. While fiscal policies arenow essentially under the Federal Ministry of Budget and Planning, monetarypolicies are jointly formulated and managed by the Ministry and the CentralBank, even though CBN is independent of the Federal Ministry of Finance andEconomic Development. The Ministry has residual functions relating toforeign exchange rates, policies on debt management and monitoring theproceeds, especially from the sale of the country's crude oil. It alsomakes policies on foreign loans and external borrowing.

(8) Federal Ministry of Internal Affairs

The Ministry plays an important part in the country's trade policythrough its Department of Customs and Excise (DCE). Its mainpreoccupation is to ensure that appropriate fees (duties) are paid oneligible products imported into the country. However, such products mustalso not be on the prohibition list.

At border posts, sea ports and at international airports, customsofficers ensure that prohibited trade items commonly known as contrabandare not imported into the country. Before 1986, they were also involved inensuring that foreign currency regulations in respect of travellersforestalled the unauthorized importation or exporation of hard currency.The deregulation of the economy since 1986 has abolished this function.Travellers now fill in currency forms only for statistical purposes.

(9) The Federal Ministry of Justice

The Ministry offers legal advice and services to the FederalGovernment and other Federal agencies as and when the need arises onmatters relating to trade agreements between Nigeria and other countries aswell as multinational corporations. It vets agreements so concluded toensure that they are not to the disadvantage of the country.

(10) Federal Ministry of Industries

The Federal Ministry of Industries has a principal responsibility ofcoordinating all activities relating to industrial development in Nigeria.It also works in collaboration, particularly with the Federal Ministry ofTrade and Tourism, to ensure that the trade policy of the country is notsuch that it can hinder rapid industrial development. To this end, tradepolicies are streamlined with the industrial policy of the country.

Some of the Ministry's Departments like Industrial InspectorateDepartment (IID), Industrial Develoiment Co-ordinating Department (IDCD),Policy Analysis Department (PAD), Federal Industrial Promotion Department(FIPD), etc. play a great role in ensuring that the trade policy andindustrial policy are not at variance with each other.

The Ministry is encouraging the sourcing of local raw materials withincentive provision for companies that comply with this dispensation. This

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function is under the supervision of FIPD and is expected to expand theinternal market and at the same time to increase the export potential ofmanufactured goods of Nigeria. The success of the just concludedInternational Investors Forum organized by the Ministry in collaborationwith UNIDO is a testimony of the Ministry's involvement in promoting theindustrialization of the country. With the expansion of Nigeria'smanufacturing sector, the trade potential of the country is bound toincrease.

The Industrial Development Co-ordination Committee (IDCC) has been setup to serve as a one-step agency for the issuance of the initialauthorizations for the establishment of new industries. The IndustrialDevelopment Co-ordination Department (IDCD) of the Ministry houses thesecretariat to IDCC.

The Policy Analysis Department undertakes the collection of data,conducts economic research and policy analysis necessary for the evaluationof the effectiveness or otherwise of industrial policy. This department isthe technical arm of the Tariff Review Board. As part of its functions, itcarries out investigations into complaints raised by industrialists as toascertaining their genuineness and makes recommendations to the Board.

The Industrial Inspectorate Department (IID) plays a pivotal role incertifying the actual values of capital investments in buildings,machinery and equipment of various industries. The department alsocertifies the date of commencement of production of companies that enjoypioneer status, and the value of imported industrial machinery andequipment for the confirmation of approved status for non-resident capitalinvestment. The department also plays a key rOle in the monitoring of thecomprehensive import supervision scheme (CISS) to ensure that theoperations are in the spirit of the Agreement. The department alsosupervises the pre-shipment inspection of goods imported into Nigeria.

(11) Federal Ministry of Health

The Food and Drugs Administration and Control Department of theFederal Ministry of Health is charged with the responsibility to ensurethat all food, drugs, cosmetics and medical devices manufactured, imported,distributed, sold and used in Nigeria are of good quality, safe andefficacious. The department maintains and reviews the Essential Drugs Listand no drugs not listed therein are permitted to be imported, exported,manufactured, distributed, sold or used in Nigeria.

(12) The Nigerian Export Promotion Council (NEPC)

The NEPC came into existence under Decree 21 of 1976. It, however,came to the centre stage in 1986 following the deregulation of the economy.As mentioned earlier, all exporters have to register with the NEPC. Theregistration, which is valid for a two-year period, is renewable. Theregistration fee is N 10 while the renewal is free. The main function ofthe NEPC is to administer the incentives for promoting Nigerian exports soas to encourage a meaningful diversification of the economy. In order to

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facilitate this objective, it operates a set of incentives which includethe following:

(i) Export Development Fund. This allows a maximum of N 20,000 tobe provided to a company to cover in part, the costs of initialexpenses in respect of promotion activities, i.e. trainingcourses, advertising, etc.

(ii) An Export Expansion Grant Fund: This is a cash inducement for anexporter who exports a minimum of N 507000 worth ofsemi-manufactured and manufactured goods in a year. The purposeis to increase export volume and diversify products.

(iii) Duty Draw Back Scheme: The scheme allows for a refund of dutieson raw materials including packing and packaging materialsutilized for the production of goods destined for export.

In addition to administering these incentive schemes, the NEPC also:

(i) carries out export market surveys to identify markets for goodsmade in Nigeria as well as identifying the products suitablefor specific markets;

(ii) collects information from various friendly countries on issuesrelating to trade restrictions and/or import requirements, aswell as the characteristics of their various markets;

(iii) carries out studies to identify goods that would be readilyaccepted in the EEC member countries, the Commonwealth andECOWAS;

(iv) establishes commercial desks and trade centres overseas to amongothers:

- collect, collate and disseminate useful information toNigerian exporters;

- link Nigerian exporters with potential importers in thezones covered by the desk/trade centres;

- assist Nigerian trade missions and individual businessmenon trips to the zones;

- assist propagation of Nigeria's participation ininternational trade fairs and exhibitions.

(13) Manufacturers' Association of Nigeria (MAN), National Association ofChambers of Commerce, Industry and Agriculture (NACCIMA), Associationof Small Scale Industries (ASSI) and Association of NigerianExporters (ANE)

All four Associations are umbrella organizations for the organizedprivate sector for the promotion of their interests as well as the

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promotion of export trade in the country. They act essentially as pressuregroups on behalf of their members to ensure that their views are adequatelyreflected on issues affecting their interests.

Since the deregulation of the economy, all the agencies, especiallythe first two, MAN and NACCIMA, are represented on some government bodiessuch as the Tariff Review Board, trade missions abroad, etc. From time totime, the agencies on their own, undertake reviews of the Nigerian economyand publish their findings. That way, they hope to influence governmentpolicy. Above all, however, they are concerned with promoting andproviding a congenial business environment for their members with minimumgovernment interference in the operations of the organized private sectorin the country.

(14) The Nigerian Shippers' Council (NSC)

The Nigerian Shippers' Council was set up by Decree 13 of 1978 toprovide a forum for the protection of the interest of shippers on mattersaffecting the shipment of imports and exports to and from Nigeria. TheCouncil also provides a forum for the national implementation of variousprovisions relating to shippers in the United Nations Code of Conduct forLiner Conferences.

The Council's basic objectives and activities include:

(i) ensuring that the cost of shipping Nigerian goods (exports andimports) is kept as low as possible from a commercial point ofview;

(ii) ensuring that adequate and qualitative supply of shippingservices are provided for Nigerian exports and imports and thatstable freight rates are maintained for the conduct of thetrades;

(iii) enhancing the contribution of shipping to balance of paymentsthrough minimization of freight costs for the country's exportsand imports.

(15) National Maritime Authority (NMA)

The National Maritime Authority was set up by Decree No. 10 ofApril 1987. Some of its objectives are:

(i) to regulate and improve the Nigerian Shipping Industry;

(ii) to improve Nigeria's balance-of-payments position, enhancingthe earnings and conservation of foreign exchange from theshipping industry;

(iii) use the National Shipping Policy as an instrument for promotingthe export trade of Nigeria and thus accelerate the rate ofgrowth of the national economy;

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(iv) provide bulk cargo carrying services necessary for thepromotion, maintenance and expansion of the foreign commerce ofthe Federal Republic of Nigeria.

E. Bilateral, multilateral, regional or preferential trade agreements:their scope, duration and goals

Like other developing countries of the world, Nigeria's external tradepolicies are designed to create a niche for her products in internationalmarkets, especially those of the developed countries of Europe, America andJapan without prejudice to the promotion of intra-African trade. Tradepolicies are forumlated in such a way as to make access to foreign marketseasier for Nigerian products. It is hoped that, in this way, the nation'sindustrialization process would be enhanced. Additionally, it is hopedthat trade in non-oil exports would also be promoted so as to discouragethe export of unprocessed agricultrual commodities in the long run.

Nigeria has, in pursuit of the above objectives, entered intobilateral, multilateral, regional and preferential trade arrangements withdesired export trade environments for its industrialists. To date, severalbilateral agreements have been concluded with friendly countries both inAfrica and outside the continent, to promote trade and improve economicrelations between them and Nigeria.

There are in existence a number of bilateral trade agreements with anumber of countries. These agreements cover some products which are ofinterest to Nigeria. These include mineral resources (such as crudepetroleum, zinc, tin ore, coal, etc.), chemicals, pharmaceuticals and othermanufactured products such as canned food, leatherware and shoes, andseveral agricultural products. Five-year-term trade agreements exist withthe Soviet Union, Czechoslovakia and the Federal Republic of Germany.Other trade agreements include those of India and Pakistan which are validuntil 1993, Jamaica valid until 1994, Bulgaria valid until 1995 and Ugandavalid until 1995. In the spirit of trade promotion and investmentpromotion, Nigeria has also concluded an Investment Promotion Agreementwith France. Similar agreements are being contemplated for some othercountries.

Nigeria has since independence been playing a prominent rOle inencouraging the creation of regional and continental markets in Africa suchas the Economic Community of West African States (ECOWAS), and the AfricanEconomic Community (AEC). The treaty of the AEC was ratified at the OAUsummit meeting in Abuja Nigeria in the first week of June 1991.

(1) The ECOWAS Trade Liberalization Scheme

Nigeria was one of the main driving forces behind the creation of theEconomic Community of West African States (ECOWAS) in 1975. The overallobjective of the Community is to integrate the economies of its members.

The broad objectives of the scheme as far as trade is concerned are:

(a) the elimination of customs duties among members;

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(b) abolition of quantitative and administrative obstacles to trade;

(c) the establishment of a unified customs tariffs system;

(d) abolition of all obstacles to the free movement of persons andservices within the Community;

(e) -~common monetary system.

Nigeria has taken a leadership role in the implementation of theobjectives of the scheme. Nigeria is particularly supportive of the ECOWASTrade Liberalization Scheme which is seen as fundamental to the promotionof intra-regional trade. Nigeria places a lot of hope in the expansion oftrade among the States in the sub-region. Thus, the government has decidedto fully implement the trade liberalization policies of ECOWAS.

Goods from one member country to another could move freely withoutquantitative restrictions. However, the Nigerian government is yet topromulgate the necessary decree that would give the Trade LiberalizationScheme force of law in the country.

Specifically, the scheme covers a range of commodities all of whichare produced in member States. However, to qualify for a waiver, goodsmust be accompanied by a Certificate of Origin issued by the exportingState and subject to the following pre-conditions:

(a) the goods must be products of an enterprise in which indigenousequity participation is at least 20 per cent;

(b) the local value added must be at least 35 per cent;

(c) raw materials must be sourced locally to the tune of 60 per centfor total raw materials required or at least 40 per cent of thevalue of the raw materials must be secured internally.

To encourage trade among members, the West African Sub-regionalCommittee of Governors of the Association of African Central Banks set up aclearing house, which is located in Freetown, Sierra Leone, known as theWest African Clearing House (WACH). The WRAF was established in 1975 andbegan operations in July 1976 with thirteen countries - seven infrancophone countries (Benin, Burkina Faso, Côte d'Ivoire, Niger, Senegaland Togo) and seven other West African countries (Ghana, Guinea, Liberia,Mali, Nigeria, Sierra Leone, and the Gambia). The main function of theWACH is to facilitate payments of goods bought within the Community in thelocal currency of the purchasing State. This arrangement is designed toovercome the almost chronic shortage of foreign exchange in the sub-region,as well as the presence of inconvertible currencies in most member States.To date, progress in respect of intra-regional trade is very slow.Businessmen experience a lot of difficulty through the clearing housegetting money from one country to another. Besides, many of the traders inthe region prefer to by-pass the clearing house to enable them to purchasehard currency on the black market after their transactions. The value of

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transactions channelled through the WACH has been increasing. The value oftransactions rose from N 102.1 million in 1988 to N 120.1 million in 1989(see CBN 1989 Annual Reports and Statements of Accounts page 138).

(2) Lomé Conventions, EEC/ACP Preferential Trade Relations

Nigeria is a member of the EEC/ACP Lom6 Conventions. Indeed, Nigeriaprovided the leadership with successfully led other ACP countries in thenegotiations leading to the first Lomé Convention which was signed in Lomé,Togo, in 1975. The Conventions, four in all now, each lasts for a periodof five years and brings together sixty-eight African, Caribbean andPacific Countries on the one hand and the twelve EEC countries on theother, in a multilateral trade preferential scheme.

The major objective of the Lomé Convention is to obtain dutyconcession for its members' products thereby creating market accessibility.Under the convention's Free Access Provisions, agricultural andmanufactured products from the ACP States are in theory admitted free intoEEC markets subject to agreed rules of origin contained in Table 1 ofProtocol 1 of the Fourth Lomé Convention. Apart from the rules of origins,there is also the requirement of 'Proof of Origin', under Title 11 ofProtocol 1.

One of the most innovative aspects of the Lomé Convention is theStabilization of Export Earnings Scheme (STABEX). The scheme, in broadterms, provides for EEC compensation to ACP States in respect of anyrevenue loss due to a decline in world prices for their agriculturalcommodities. The overall aim of the Scheme is to guarantee thestabilization of export earnings derivable from ACP States' export to theCommunity or other destinations, of products on which their economies aredependent and which are affected by fluctuations in price or quality orboth of these factors.

Article 187 of the Lomé Convention lists forty-nine commodities whichare covered by the scheme. Many of the commodities such as rubber, palmoil and palm kernel oil, cocoa beans, etc., are also export commodities ofNigeria. However, the scheme does not cover crude oil, which has beenNigeria's major export commodity for several decades.

Like STABEX, the Mineral Products Special Financing Facility (SYSMIN),has been operative under the Lomé Convention. The scheme is for ACPcountries whose mining sectors occupy an important place in their economiesand are facing difficulties either at the time of signing the agreement orat some time in the future. The specific objective of SYSMIN is tosafeguard the mining production and export sectors of their economiesthrough preventive action designed to alleviate the economic consequencesof a decline either in mineral production or export capacity or exportearnings in the mining sector.

To qualify for the facility an ACP State must have, over the last fouryears preceding the request for aid, derived 15 per cent or 20 per cent ormore from a number of mineral products such as iron ore, tin, bauxite, etc.

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Again, it is important to point out that Nigeria is not noted as a big-timeexporter of these minerals. The conclusion then, is that the country hasnot benefitted much from the facility.

(3) The Generalized System of Preferences (GSP)

This scheme became operative in 1971. It is a preferentialarrangement between developed countries on the one hand, and the developingnations on the other, which provides global market access for specifiedcommodities from the latter.

The GSP duty rates are significantly lower than those offered underthe Most-Favoured-Nation (MFN) arrangements in respect of the commoditiesthat are eligible. In addition, GSP quota restrictions and non-tariffmeasures are also more liberal than those found in MFN arrangements.

Out of sixteen GSP schemes entered into by the country, that operatedby the United States of America does not give any preferential status toNigeria due to the latter's membership of OPEC.

Until recently, there was inadequate informatin on the existence ofGeneralized System of Preferences (GSP) arrangements in Nigeria. As such,business in particular, and the whole country in general, did not benefitmuch from the operations of the scheme.

(4) The Global System of Trade Preferences (GSTP)

Nigeria is a signatory to the Agreement on the Global Syatem of TradePreferences (GSTP). The GSTP which was signed by forty-eight developingcountries in 1988 came into force for fifteen developing countriesincluding Nigeria on 19 April 1989. Under GSTP, Nigeria grantedconcessions of lower tariff rates on a number of items. The concessionsare extended on a most-favoured-nation (m.f.n) basis to all participants inthe GSTP. A number of concessions granted under the GSTP is shown in theAppendix.

(5) The General Agreement on Tariffs and Trade (GATT)

GATT is a world multilateral trade body. Nigeria automatically becamea member of GATT at the attainment of independence. Since that time, thecountry has participated in many multilateral trade negotiations under theauspices of the GATT. These include the Tokyo Round and Uruguay Roundnegotiations. Indeed GATT forms the main pillar of the nation's tradepolicies.

(6) UNCTAD and other multilateral organization.

There are many multilateral organizations related to trade to whichNigeria belongs. These include such bodies as the United NationsConference on Trade and Development (UNCTAD), the International MonetaryFund (IMF) and the World Bank. In addition, Nigeria is a member and/orsignatory to many international agreements and organizations such as the

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Organization of Petroleum Exporting Countries (OPEC), the InternationalCotton Advisory Committee and the Association of Tin Producing Countries.Since Nigeria produces coffee, cocoa and rubber, she participates in theinternational commodity agreements for these commodities.

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CHAPTER 5

The Implementation of Trade Policies

There are different kinds of measures/regulations affecting trade -imports and exports in Nigeria. Those affecting imports and exports arehereby discussed. Some of these have been mentioned in an earlier chapter(see Chapters 2 and 3).

A. Measures affecting imports

Imports into Nigeria are guided by a number of measures andregulations which include the following:

- registration and documentation;- tariffs;

- customs valuation and pre-shipment inspection;

- import surcharge;- import prohibition - absolute and conditional prohibition;- technical requirements, sanitary and phytosanitary regulations;- marking, labelling and packaging regulations.

Under what may be considered first principle rules, the importation offood, drugs and cosmetics is subject to specific health standards andsanitary regulations. These are, in addition, subject to import inspectionand surveillance and laboratory analysis.

For the importation of certain animals, animal products, plants,seeds, soil, and used merchandise, sanitary certificates are required fromthe exporting countries. In addition, special import permits granted bythe appropriate Nigerian authorities are required.

Under the Food and Drug Decree of 1974, the manufacture, sale and theadvertisement of food, drugs, cosmetics and pesticides are regulated. Theimportation of foods, drugs, cosmetics and pesticides must be accompaniedby a. "combined certificate of manufacture of Free Sale". This certificate,to be issued by the relevant authority in the country of manufacture, is toensure that the products concerned are manufactured following acceptableinternational specifications and standards. The certificate must also havea declaration that the products do not contain any detrimental substanceand that the product can be sold freely in the country of manufacture.Products not so accompanied by the certificate can be refused entry intothe country.

Under the rules, all shipping companies or agents are requested toregister with the Nigerian Ports Authority and give not less than twomonths' detailed notice of proposed sailings to Nigeria.

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For all importers, form M issued by the Central Bank of Nigeria andobtainable from commercial banks under the Central Bank guideline isrequired for all imports. It is after form M has been registered that animporter can confirm his order. It is also after the registration thatletters of credit can be opened and foreign exchange allocated.

There is pre-shipment inspection, the purpose of which is to ensurethat the quantity and quality of the imports are in line with the agreedterms (contracts). The pre-shipment inspection is also to ensure that thenormal price of the product in the country of supply is paid. This isintended to prevent the over-invoicing of imports, and also to preventunder-invoicing and/or other unacceptable trade practices. When the goods(quality and quantity) and their prices are in conformity with thepro-forma invoice, a "Clean Report of Findings" (CRF) is issued by theinspection agency. If, however, the necessary criteria (in terms ofquality, quantity and price) are not satisfied, a "non-negotiable report offinding" is issued. When a CRF is issued, "Import Duty Reports" are filedto verify the amount of duty to be paid.

Nigeria operates an ad valorem tariffs system in respect of imports.The exceptions are certain manufactured tobacco and their substitutes.Before 1986, the tariffs in existence were the Customs Tariff(Consolidation) Decree No. 24 of 1984 and the Excise Tariff (Consolidation)Decree No. 25 of 1984. In 1986 in the context of the Structural AdjustmentProgramme, interim reductions in tariffs were introduced. These interimchanges remained in existence till 1988 when a new tariff system known asthe Customs, Excise Tariff, etc. (Consolidation) Decree 1988 wasintroduced. This was designed to harmonize and rationalize the tariffsystem in line with international customs and practices. Under theharmonized tariff scheme, different rates of duty are set for raw materialimports, semi-manufactures, capital goods and food items which areconsidered essential for the growth of the economy. The Decree establishedthe structure of tariffs to be applied for seven years. The Decree alsocontains import prohibitions.

In the period 1989 to 1991 a number of amendments were introduced. InJanuary 1989 for example, in an attempt not only to raise governmentrevenue but also to forestall or discourage smuggling, some products wereremoved from the import prohibition list. The import duties for theseitems were substantially raised. Similarly, in order to protect domesticindustries, there were substantial increases on duties for a number ofproducts. The products which were removed from the prohibition listinclude cigarettes, articles of jewellery and precious metals, gamingmachines and particle boards. Import duties on these were raised to200 per cent, 100 per cent and 50 per cent respectively. Those productswhose tariffs were increased in order to protect domestic industriesinclude:

- footwear- sorghum- cigars- perfumes

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- calendars- some iron and steel articles- aluminium plates- some industrial machinery- various paper- glass and ceramic products- motorcycles and bicycles- mosquito repellent coils

In 1990, the import duties were raised to 200 per cent for variousstarches from wheat, maize, peptons, etc., primary cells and batteries,electric lamp bulbs and glass envelopes for these bulbs. The tariffchanges in 1991 included increases of duties on a number ofsemi-manufactured steel products and uncoated kraft paper and paperboard.Duties were reduced on crude or unrefined salt, certain textile fabrics andcertain bricks, among many other products.

Nigeria applies several import surcharges. Three important changesare the Port Development Charge of 5 per cent, the Shippers CouncilSurcharge of 1 per cent and the Raw Materials Research and DevelopmentCouncil Surcharge of 1 per cent. These are levied together as a 7 per centacross-the-board surcharge by the Department of Customs and Excise. Thesesurcharges are utilized by the various bodies for the maintenance of theirservices.

Since the introduction of the Structural Adjustment Programme (SAP) in1986, the number of items in the prohibition list has been substantiallyreduced from about seventy-five to about sixteen broadly defined productcategories excluding those banned for such reasons as national security,public health, safety and morality. Upon review, the 1988 Customs Schedulelisted a total of twenty products under absolute prohibition of imports andanother eighteen under the category of conditional prohibition. Theabsolute prohibition list of imports under Customs, Excise Tariffs, etc.(Consolidation) Decree of 1988 and the Import (Prohibition) Decree of 1989is shown in Appendix II. In the 1989 Decree, the importation of certainfoodstuffs into Nigeria, especially those contaminated by toxic substancesor other harmful waste as defined in the Harmful Waste (Special CriminalProvision, etc.) Decree of 1988, were absolutely prohibited. Through thisDecree, it is intended that the imports of prohibited goods from theexporting countries will be prevented. Efforts are being made to ensurethe consistency and stability in tariff policies. In this regard, thegovernment has set up a Tariff Review Board whose approved recommendationsare to last at least seven years. This provision is, however, withoutprejudice to the powers of the government to make routine amendments toaddress emerging trade-related issues in a manner consistent with fosteringits national interest.

In its attempt to discourage trade malpractices and ensure that thecountry receives value for money on imports, the government appointed someinspection agencies to put under check abuses relating to over-invoicing.Savings from this endeavour have been very substantial, thus freeing morefunds for additional imports. This step has therefore enhanced the growthof international trade and development.

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An important development is also the formal recognition of the role ofthe private sector in the march towards the economic emancipation of theeconomy. Hence, representations from the organized private sectorconstitute an important input into the trade-related decision processes ofthe government. These organizations are also formally represented byagencies such as the Tariff Review Board as well as trade missions anddelegations to other countries. They also provide inputs for considerationin the budgetary decision-making processes of the Federal Government ofNigeria.

B. Measures affecting exports

The collapse of oil prices in the late 1970s led to a vigorous exportdrive (especially non-oil exports) in order to reduce Nigeria's dependenceon oil. The export promotion campaign is aimed at encouraging Nigerianmanufacturers and industrialists to develop an export-oriented culture.

The export drive gained momentum after the introduction of theStructural Adjustment Programme in 1986, with its attendant deregulation ofthe economy. The Export (Incentives and Miscellaneous Provisions) Decreewas enacted in 1986. It contained, among other measures, various incentiveschemes. All the incentives are being administered by the Nigerian ExportPromotion Council (NEPC) which was reorganized in order to strengthen itscapabilities to respond adequately and promptly to the needs of exporters.Also, exporters are required to register with the NEPC. Registration isrenewable every two years.

Specifically, the Decree introduced the following incentives, thedetails of which are given in Appendix III:

(i) The Export Development Fund,

(ii) The Export Expansion Grant Fund,

(iii) The Export Adjustment Fund,

(iv) The Duty Drawback/Suspension Scheme,

(v) Pioneer status,

(vi) Capital Assets Depreciation Allowance,

(vii) Tax relief on interest income,

(viii) Rediscounting of short-term bills,

(ix) The Export Credit Guarantee and Insurance Scheme,

(x) The Manufacturing-In-Bond Scheme.

The Export Expansion Grant Fund is for the purpose of providing cashinducement for exporters who have exported semi-manufactured ormanufactured products up to a minimum of N 50,000. The Export AdjustmentFund is meant to serve as a supplementary export subsidy. Exporters arecompensated for high costs of production arising from factors outside theircontrol such as infrastructural deficiencies and purchasing commodities atprices higher than world market prices.

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In 1959, a duty drawback scheme under the Customs (Duty Drawback)Regulation was introduced in Nigeria. Under it, importers could claimrepayment of import duty paid for materials used in producing exportablegoods. Until recently, the scheme had hardly been used because of itscomplexity and the small number of exports that could qualify. In 1986, anew duty drawback and suspension scheme to encourage non-oil exportersunder the Export (Incentives and Miscellaneous Provisions) Decree 1986 wasintroduced. A committee known as the intra-agency Duty Drawback Committeewas set up in 1987 to be convened and serviced by the Nigerian ExportPromotion Council. The function of the intra-agency Duty DrawbackCommittee is to fix and publish in the Gazette the unit or duty drawbackfor each export product. Under the Decree, an exporter is, on applicationto the Committee, entitled to a 50 per cent reimbursement on such chargesas import duties, levies, surcharges or export duties paid in respect ofall imports including raw materials, etc. used in export production. Inaddition, an exporter is entitled to a reimbursement of 50 per cent onexcise duties paid for all export products and export product components.Only applicants who are incorporated companies or individuals resident inNigeria can qualify. The sum of N 10 million was made available under theduty drawback scheme in 1989 and 1990. This was increased in 1991 toN 50 million.

The Manufacturing-In-Bond Scheme was introduced in the January 1991,Budget Speech. According to the scheme, manufacturers could import, freeof duty, raw materials for production of exportable products backed by abond issued by a bank which guarantees that all the end products will beexported.

The 1979 Companies Income Tax was amended in 1986 by the Export(incentives and Miscellaneous Provisions) Decree to grant a depreciation of5 per cent annually to manufacturing exporters on plants and machinery. Inorder to meet the eligibility criteria, at least 50 per cent of the annualturnover must be exported. In addition, the local content must be at least40 per cent or 35 per cent of domestic value added.

The Export Development Fund provides financial assistance to privatecompanies to cover initial expenses incurred in export promotionactivities. Such expenses include the cost of participation in trade fairsand the conduct of foreign market research.

As part of the incentive scheme, the Nigerian Export Credit Guaranteeand Insurance Corporation (NEXIM) was established by a Decree in 1988 andcommenced operation in January 1991. NEXIM is expected to provide a widerange of facilities in both naira and foreign currency. NEXIM is empoweredto provide external trade, supplier and buyer of credit facilities.Currently NEXIM operates the Rediscounting and Refinancing Facility (RRF)and the Foreign Input Facility (FIF). Both of these were formerly operatedby the Central Bank of Nigeria. The aim of RRF is to provide banks withliquidity for export finance. Under the scheme, banks may provideexporters with both pre and post-shipment rediscounting facilities andlong-term export credit. The Foreign Input Facility (FIF) is a foreignexchange loan provided to exporters by NEXIM through the exporters banks

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for the import of raw materials, capital equipment, packaging materials andspare parts necessary for the production of exportable products. Exporterseligible under the scheme are those whose enterprise assets (excludingland) are not over US$5 million.

In addition to the above incentives, the government through relevantbodies and agencies does introduce other export measures which includeactive participation in foreign trade fairs, joint export marketing, theestablishment of commercial desks and permanent showrooms in selectedNigerian missions abroad and finally, opening trade centres in strategiccities/countries to promote made-in-Nigeria goods.

Discussion bearing on the Nigerian trade policy would be incompletewithout a fairly detailed highlight of the features of the StructuralAdjustment Programme (SAP) introduced in 1986 by the Federal Government.The details of SAP are discussed in the next chapter. A few points need tobe mentioned here. Trade-wise, the main thrust of SAP is the deregulationof several facets of the economy. The scrapping of the State-owned tradingagencies was one significant outcome of this endeavour, whereby the exporttrade was open to all and sundry without any hindrance. The abolition ofthe import licensing system also gave rise to the reduction of the relativeposition of quotas and import prohibition as major tools for importcontrol.

Another major fall-out of this programme is the adoption of amarket-determined exchange rate, whereby the value of the nationalcurrency, the naira, was allowed to be determined by the forces of demandand supply. Thus, the distortions arising from subsidies inherent ininternational trade in a regulated exchange rate regime were eliminatedonce and for all. In addition, several packages were introduced to fosterthe growth of non-oil exports. The establishment of the Nigerian ExportPromotion Council (NEPC) and the various technical services and incentivesbeing operated by the agency are geared towards creating an export-orientedculture.

The major thrust of SAP as it enhances international trade and thefree-flow of resources across economies could be summarized as follows.Firstly, the adoption of a free-floating exchange rate regime and theattendant significant depreciation of the naira have made Nigeria'sproducts cheaper on international markets. This has, to a reasonableextent, facilitated the growth of the country's non-oil exports. Secondly,the new thrust has greatly facilitated the growth of international trade.It has also enhanced the adherence by the country to the trade agreementsand covenants of various multilateral and bilateral trade agencies.

The degree of success attained in this regard could be measured by thechanges in the degree of openness of the economy over the last threedecades.

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CHAPTER 6

Relevant Background against which the Assessment of Nigeria'sTrade Policies will be Carried Out: Wider Economic and

Developmental Needs, External Environment

A. Wider economic and developmental needs, policies and objectives ofNigeria

(i) Introduction

As an attempt to establish a good foundation for the country's orderlyeconomic development and trade, Nigeria embarked upon the use ofdevelopment plans immediately after independence. The First and SecondDevelopment Plans of 1962-1968 and 1970-1975 respectively, laid thefoundation for the development of the first generation of industries in thecountry after independence. The policies were designed mainly to promoteeven development and fair distribution of industries in all parts of thecountry to ensure rapid expansion and diversification of the industrialsector.

The Second and Third Development Plans sought to establish someinstitutions that would enhance rapid economic development and trade. Itbelieved that through this process Nigerians would be able to take greatercontrol in the management of certain key industries and become involved inthe country's economic planning and development. The Nigerian EnterprisesPromotion Decrees of 1972 and 1977 were the resultant effects of thisthought process.

The Fourth Development Plan which was abandoned as a result of seriouseconomic dislocations, also aimed at the acceleration of the rate ofindustrialization, in the economy in general.

(ii) The introduction of the Structural Adjustment Programme (SAP)

Several factors both internal and external which had unfavourableimpacts on the national economy led to the introduction of the StructuralAdjustment Programme. These major factors included among others:

(a) fast-dwindling oil revenue;

(b) the volatile international oil and commodity market and worseningterms of trade on primary commodities;

(c) law industrial capacity utilization;

(d) over-valued exchange rate;

(e) global depression;

(f) rising trend in interest rates.

Even though Nigeria benefitted from the oil shocks of the 1970s, theslump in the late 1970s and early 1980s provided the immediate occasion for

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Nigeria's economic crisis. Corrective measures such as the EconomicStabilization Act of 1982, and the subsequent counter-trade andbelt-tightening measures, were introduced by civilian and military regimesbetween 1979 and 1985. These, however, were unsuccessful in containing thedeepening economic and structural problems facing the economy.

It was clear by the end of 1985 that stabilization policies alone werenot sufficient to redress the fundamental imbalances in the economy. Inother words, what was needed was a complete restructuring and overhaulingof the economy to promote agricultural production, encourage industrieswhich depend on local raw materials, while the enterprising spirit ofNigerians would be reawakened and galvanized to build a self-relianteconomy within a realistic global situation.

The above thinking informed the introduction of a full-blownStructural Adjustment Programme (SAP) in 1986. The broad objective of theSAP was to free the economy from administrative bottlenecks and give a freerein to market forces. The exchange rate policy and trade policy reformsare aimed at the promotion of economic efficiency and long-term growth ofthe economy. This, along with stabilization policies, was aimed at therestoration of price stability and balance-of-payment equilibrium.

(iii) Maior objectives of the Structural Adjustment Programme (SAP)

The Structural Adjustment Programme (SAP) has many objectives. Themajor ones include:

(a) restructuring and diversifying the productive base of the economyin order to reduce dependence on the oil sector and on imports;

(b) achieving fiscal and balance-of-payments viability over theperiod;

(c) laying the basis for a sustainable non-inflationary or minimalinflationary growth;

(d) lessening the dominance of unproductive investments in the publicsector, improving the sector's efficiency and intensifying thegrowth potentials of the private sector;

(e) strengthening strong demand management policies;

(f) the adoption of measures to stimulate domestic production andbroadening the supply base of the economy for a greater relianceon market forces;

(g) the adoption of appropriate pricing policies, especially forpetroleum products and public enterprises; and

(h) privatization and commercialization of public sector enterprises.

These various objectives aim at altering and realigning aggregatedomestic expenditure and production patterns so as to minimize dependenceon imports, enhance the non-oil export base and thus bring the economy back

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on the path of steady and balanced growth. In order to achieve theobjectives, the core policies involved actions to:

(a) correct the serious over-valuation of the naira through thesetting up of a viable foreign exchange market;

(b) overcome the observed public sector inefficiencies throughimproved public expenditure control programmes and the speedyrationalization of the parastatal sector; and

(c) relieve the debt burden and attract a net inflow of foreigncapital.

In order to achieve these objectives, the following measures amongothers were adopted:

(a) introduction of a two-tier foreign exchange market in order todetermine the realistic exchange rate of the naira. The two-tierexchange rate was subsequently merged. The introduction of theSecond-Tier Foreign Exchange Market (SFEM) was the centre-pieceof the Structural Adjustment Programme;

(b) abolition of the import licensing system, commodity marketingboards, and removal of price controls;

(c) replacement of most import prohibitions with tariffs;

(d) reduction in export prohibitions to a handful of commodities;and

(e) the introduction of a new customs and excise tariff in the 1988budget following a comprehensive review.

Other supportive programmes which have direct bearing on the promotionof trade are the Directorate of Food, Roads and Rural Infrastructure(DFRRI) and the National Directorate of Employment (NDE). DFRRI wasestablished to promote rural agro-industrialization through the provisionof rural feeder roads, rural water supply, rural electrification, etc. Theself-employment scheme in NDE is to involve a large number of people inagriculture, small-scale industries and crafts. While the Mass TransitProgramme was introduced to reduce the impact of structural adjustment onthe masses, it continued to serve as a vehicle for the promotion of tradeas well as inter-State movement of goods and persons.

As part of the transformation process and trade liberalization, someof the new measures emanating from the SAP include a private investmentpolicy which allows greater foreign participation in the Nigerian economy.In some cases up to 100 per cent in foreign equity is permitted. This cameinto effect in 1989. An inter-ministerial body, the Industrial DevelopmentCo-ordinating Committee (IDCC) serves as a one-step approval centre for newventures in order to reduce delays inherent in application processingbefore approval is given. The IDCC is also responsible for the issuance ofinitial expatriate quotas.

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As part of the structure of the economy through the SAP, Nigeriaembarked upon a comprehensive reform of her ailing public sectorenterprises. A committee known as the Technical Committee on Privatizationand Commercialization (TCPC) has been set up to prepare and supervise theimplementation of this programme. In 1986, seventeen public enterprises,mainly in agro-industries, were privatized. The first public offer wasmade in February 1989. By February 1990, over 100 million shares in aboutsixteen other public enterprises were sold. Many other commercialenterprises remaining in the Federal public sector are expected to beeither fully or partially commercialized.

(iv) Package of incentives

In order to ensure that these policies work as effectively asexpected, several incentives have been provided to encourage both domesticand foreign investors. These include:

(a) Fiscal measures such as pioneer status in which a five-year taxholiday is provided for the establishment of industriesconsidered beneficial to the country; tax relief for researchand development of up to 140 per cent of total expenses onresearch and development; a corporate profit tax rate of40 per cent; capital allowance of between 66 per cent and100 per cent depending on the type of activity; tax-freedividends; tax relief for investments in economicallydisadvantaged local government areas, and elimination of doubletaxation on investment income.

(b) Effective protection with import tariffs such as the impositionof ad valorem customs and excise duties payable on goods importedand manufactured in Nigeria and imposition of a special duty onany goods which are dumped in Nigeria or subsidized by anygovernment or authority outside Nigeria provided it does notconflict with GATT provisions.

(c) Export promotion of Nigeria's products with incentives such asan import duty drawback scheme, export licence waiver, ExportCredit Guarantee and Insurance Scheme, Export Development Fund,Export Expansion Fund, Export Adjustment Scheme Fund,rediscounting short-term bills for export and tax relief oninterest income.

(d) A foreign currency facility for international trade such asliberalization of foreign exchange markets, permits for timelyrepatriation of remittances and other capital claims, payment oftechnology fees ranging from 2 to 5 per cent for royalties andtechnical/management services, and foreign currency domiciliaryaccounts under which it is possible for exporters of non-oilproducts to retain the proceeds of the exports in bank accountsdenominated in foreign currency.

(e) Development banking such as the Nigerian Bank for Commerce andIndustries (NBCI), the Nigerian Industrial Development Bank(NIDB), State-investment corporations, etc., for provision ofloans to investors.

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(f) Amendment of the Nigerian Enterprises Promotion Decree (NEPD),1977 to open up more areas for foreign investment. Foreignersand Nigerians alike are now free to own up to 100 per centequity, separately or in partnership, in any of the scheduledenterprises.

(g) Privatization and commercialization of public-sector investmentin order to increase private-sector participation in the economy,and increase efficiency.

(h) A Debt conversion programme, the objectives of which are:

(i) to improve Nigeria's external debt position by reducing thestock of outstanding foreign currency denominated debt inorder to alleviate the debt-service burden;

(ii) to improve the economic environment and make it attractiveto foreign investors;

(iii) to serve as an additional incentive for the repatriationof flight capital;

(iv) to stimulate employment-generating investments inindustries which are dependent on local inputs;

(v) to encourage the creation and development of an exportbase of the Nigerian economy;

(vi) to increase access to appropriate technology, externalmarkets and other benefits associated with foreigninvestment;

(vii) liberalization of the procedure for business registration.

(v) National rolling plans, 1990-1992 and 1991-1993

The 1991-1993 rolling plan involves a "roll-over" of the 1990-1992plan. It aims at the consolidation of the achievements that have beenattained by fine tuning the existing policies and strategies with thegeneral programme of economic recovery. The macro-objectives of the1991-1993 rolling plan are no different from the 1990-1992 plan. Theobjectives are as follows:

(a) laying a solid foundation for self-reliant industrial developmentas a key to self-sustaining dynamic and non-inflationary growth;

(b) promoting industrial peace and harmony;

(c) attainment of a higher level of self-sufficiency in theproduction of food and other raw materials;

(d) creating ample employment opportunities as a means of containingunemployment problems;

(e) enhancing the level of socio-political awareness of the peopleand further strengthening the base for a market-oriented economy.

C/RM/G/15Page 47

In line with the stated objectives, the priority programmes for the1991-1993 rolling plans are as follows:

(a) strengthening of the rural development programmes including theAgricultural Development Programmes (ADPs) throughout theFederation, programmes of the River Basin Development Authorities(RBDAs), and the Directorate of Food, Roads and RuralInfrastructure (DFRRI);

(b) strengthening the support services of the local governments inthe area of improving rural feeder roads, water supply, etc.;

(c) provision of basic infrastructure including rural and urbanaccess roads, electricity, and mass transportation facilities;

(d) completion of on-going base industries and strengthening ofexisting ones;

(e) development of small-scale industries;

(f) bold frontal attack on mass unemployment while strengthening theprogrammes of the National Directorate of Employment (NDE) andthe Directorate of Food, Roads and Rural Infrastructure (DFRRI).

B. Maior external economic environment

1. Major trends in imports and exports

Recent developments in the Nigerian economy have been largelyinfluenced by both domestic and external factors. Distorted prices and thestructure of the domestic economy, high inflationary pressures, over-valuedexchange rate, global depression and a rising trend in interest rates,among others, have had differing effects on the value and volume of thecountry's imports and exports. Present developments in the import endexport sectors are largely a reflection of the liberalization policyenshrined in the Structural Adjustment Programme. Shown in Appendix 4 arethe statistics of the external trade of Nigeria listing the major productsof imports and exports.

Imports

There have been occasions when the government in order to boostdomestic production for exports, has had to encourage the importation ofcertain critical inputs. However, in recent times, the policy of thegovernment has been to reduce imports and step up all exports especially ofnon-oil items.

Table 6.1 shows that there was a significant increase in importsbetween 1987 and 1989, particularly in machinery and transport equipment,manufactured goods, chemicals, food and miscellaneous manufactured goodssectors. The import growth rate during this period was about 32 per cent.The significant increase in imports between 1988 and 1989 was due primarilyto the substantial increase in the imports of machinery and transportequipment. The decline in imports in the 1983-1984 period was theresultant effect of the Economic Stabilization Measures of 1982. The

C/RM/G/15Page 48

import Gross Domestic Product (GDP) ratio increased from 7.7 per cent in1986 to 22.5 per cent in 1987. The import-GDP ratio was 35.9 per cent in1989. The import trend reflects the impact of government policy ofencouraging as much as possible, the importation of capital goods and rawmaterials to enhance industrial capacity utilization in the export-basedindustries. The increasing import trend in certain import groups is nodoubt the resultant effect of various factors. These include thedepreciation of the naira, the relative ease in procuring foreign exchangefrom the foreign exchange market, and increased funding of imports fromautonomous sources. Table 6.2 shows the value of imports by regionalgroupings. Western Europe has been Nigeria's major source of importsaccounting for about 41 per cent of imports in 1989. The United Kingdom,the United States and Japan accounted for 16 per cent, 12 per cent and7 per cent respectively. Table 6.3 shows the share of imports from thevarious countries over the period 1980-1989. Some countries have managedto increase their share of imports while some have not faired very well.The share of Western Europe was about 49 per cent in 1986. The sharedeclined steadily thereafter to about 41 per cent in 1989. The share ofthe United Kingdom which was about 20 per cent in 1985 declined to about16 per cent in 1989. The relative share of each country is shown inTable 6.3.

Shown in Table 6.4 are the imports by three major groups - consumergoods, capital goods, raw materials and miscellaneous. This is shown forthe pre-SAP periods 1983-1985 and after the SAP period 1987-1989. Consumergoods which had a share of about 42 per cent in 1983 declined to about27 per cent in 1989. On the other hand, capital goods and raw materialswhich had a share of 58 per cent in 1983, had a share of 73 per cent in1989. The increasing share of this group can be attributed to governmentalpolicy in fostering industrial development. The findings in this table areconsistent with the analysis shown in Appendix 5. In 1984, food and liveanimals were about 19 per cent of total imports. This declined to onlyabout 7 per cent in 1989, reflecting the policy of the government withregard to self-sufficiency in food. Similarly, machinery and transportequipment which was 36 per cent in 1984, rose to 40 per cent in 1989.

TABLE

6.1

VALU

EOF

MAJORIMPORT

GROU

PSBY

S.I.T.C.

SECTIONS

(NMI

LLIO

N)

Beve

rage

sCr

ude

Mine

ral

Anim

alMa

nufa

ctur

edMa

chin

ery

Misc

el.

Misc

el.

Year

Food

and

material

fuel

sve

geta

ble

Chemicals

good

sand

transport

manu

fact

-tr

ans-

Tota

lto

bacc

oin

edib

leoi

lsequipment

ured

goods

actions

1979

952.4

8.1

117.

412

6.8

90.0

647.0

1,44

2.6

2,40

1.8

349.

625.5

6,169.2

1980

1,049.0

12.8

164.1

118.

896.4

881.

01,929.3

3,36

3.1

589.

912.7

8,127.1

1981

1,82

0.1

16.5

218.

915

1.1

128.

71,

220.

42,540.7

5,54

8.1

944.3

10.2

12,5

99.1

1982

1,64

2.2

16.4

207.2

115.5

151.

4981.6

2,13

7.0

4,169.9

642.3

36.6

10,1

00.2

1983

1,296.7

13.1

204.4

53.0

105.6

714.

01,

477.

12,

366.

0316.6

9.2

6,55

5.7

1984

843.2

10.4

187.5

52.1

101.

8656.4

846.0

1,60

4.4

171.

211.5

4,88

4.5

1985

940.6

7.4

274.8

47.9

55.7

868.

91,

263.

61,892.8

176.

09.2

5,536.9

1986

801.9

14.5

193.9

32.0

124.

91,039.0

1,237.1

2,27

7.8

246.

46.

15,973.6

1987

1,646.5

27.0

702.6

67.2

57.7

2,65

0.6

3,94

0.,

5,99

9.6

596.2

7.0

15,695.3

1988

1,694.2

85.8

579.0

214.5

64.3

4,24

6.2

4,954.0

8,621.2

965.

121

.421,445.7

1989

2,005.9

154.

3834.9

216.

092.6

6,665.8

6,357.2

13,208.2

1,256.0

9.3

30,8

60.2

Sour

ce:

Cent

ral

Bank

ofNi

geri

a:Annual

Repo

rtan

dStatement

ofAc

coun

ts,

various

issues

C/RM/G/3Page49

C/RM/G/1

5

Page

50

TABLE

6.2

IMPORTS

BYRE

GION

ALGROUPINGS

(NMI

LLIO

N)

Year

Comm

onwe

alth

East

ern

Japa

nUnited

United

ECOW

ASWe

ster

nOthers

Total

countries

Euro

peKi

ngdo

mSt

ates

Europe

1980

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1981

716.

522

8.5

1,68

4.3

2,33

4.3

1,34

6.6

36.5

5,134.4

1,11

8.0

12,5

99.1

1982

489.

435

5.7

1,133.9

1,87

7.1

1,11

1.3

31.0

4,29

0.2

811.

510,100.1

1983

293.5

308.

661

3.9

1,080.1

771.6

34.1

2,75

2.6

701.

36,555.7

1984

236.8

165.6

368.

082

9.5

567.

457.5

1,93

1.6

328.1

4,484.5

1985

304.

123

8.7

403.

31,098.7

741.

729.3

2,110.7

605.

45,

536.

919

86312.4

411.9

309.9

1,075.0

712.0

47.6

2,704.3

398.8

5,53

6.9

1987

628.

21,000.0

1,417.5

2,641.3

1,00

4.9

215.5

7,068.4

1,428.1

15,696.9

1988

1,23

6.8

936.8

1,314.4

2,79

3.5

1,852.5

149.

87,

714.

12,143.9

17,6

42.6

1989

1,19

5.1

585.3

1,707.0

4,09

5.3

309.

4130.3

10,424.2

3,94

4.1

25,1

75.3

Sour

ces

Cent

ral

Bank

ofNigeria:

Economic

and

Fina

ncia

lReview,

various

issues

TABLE

6.3

IMPO

RTS

BYREGIONAL

GROUPINGS

(PER

CENT

AGE

DIST

RIBU

TION

S)

Year

Commonwealth

Eastern

Japa

nUnited

Unit

edEC

OWAS

Western

Others

Tota

lcountries

Europe

King

dom

States

Euro

pe

1980

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1981

5.67

1.81

13.37

18.52

10.69

0.29

40.75

8.87

100.00

1982

4.85

3.52

11.2

318

.58

11.00

0.31

42.4

88.03

100.00

1983

4.48

4.71

9.36

16.4

811

.77

0.52

41.99

10.7

0100.00

1984

5.28

3.69

8.21

18.5

012

.65

1.28

43.0

77.

32100.00

1985

5.49

4.31

7.28

19.84

13.4

00.

5338

.12

10.93

100.00

1986

5.64

7.44

5.60

19.4

112

.86

0.86

48.8

47.

2010

0.00

1987

4.00

6.37

9.03

16.8

36.40

1.37

45.0

39.10

100.00

1988

7.01

5.31

7.45

15.8

310.50

0.85

43.72

12.1

510

0.00

1989

4.75

1.32

6.78

16.27

12.2

70.

5241

.41

15.67

100.00

Note

s:n.

a.in

dica

tes

not

avai

labl

e

Sour

ces:

CBN

Economic

and

Financial

Revi

ew,

seve

ral

years

C/RM/G/1

5

Page51

TABL

E6.

4

IMPORTS

BYMA

JORGROUPS

(NMILLION)

1983

1984

1985

1987

1988

1989

Cons

umer

goods

3,70

0.8

3,65

6.7

1,753.2

4,304.7

6,15

4.9

8,424.8

Dura

ble

858.8

632.

5618.8

839.5

214.

51,234.4

Non-Durable

2,842.0

2,024.2

1,13

4.4

3,465.2

5,940.4

7,190.4

Capi

talgods

and

rawmaterials

5,19

4.0

4,44

0.5

6,05

2.8

13,551.7

15,290.8

22,404.5

Capi

tal

Good

s2,886.3

2,30

7.2

2,768.6

7,568.0

6,86

2.6

13,7

94.5

RawMaterials

2,307.7

2,133.3

3,28

4.2

5,98

3.7

8,406.8

8,60

0.7

Miscellaneous

8.9

81.1

126.

95.

321

.49.

3

TOTAL

8,903.7

7,17

8.3

7,932.9

PERCENTAGES

OFTOTAL

Cons

umer

goods

41.6

37.0

22.1

24.1

28.7

27.3

Capi

tal

goods

and

rawma

teri

als

58.3

61.9

76.3

75.9

71.3

72.6

Misc

ella

neou

s0.1

1.1

1.6

0.0

0.0

0.1

Sour

ce:

CBN

Annual

Repo

rts

and

Stat

emen

tof

Accounts,

1985,

p.96

,and

1989

,p.

106.

C/RM/G/15 Page52

C/RM/G/15Page 53

Exports

Nigeria's exports are affected by international fluctuations incommodity prices and internationally determined oil prices. Over the lastseveral years, oil has remained the dominant item in Nigeria's totalexports. The contribution of oil exports remained at about 95 per cent in1989. This represents a fall of about 2 per cent from its share of97 per cent in 1984. The share of the major agricultural products rosefrom 2.3 per cent in 1983 to about 6 per cent in 1988. The share of themajor agricultural products fell to only 3 per cent in 1989 (CBN, AnnualReports and Statement of Accounts, 1985 p. 97 and 1989 p. 108).

It must be noted that Nigeria's export earnings from the oil sectordepends largely on the production quota allocated to her by OPEC as well asthe prevailing crude oil price in the world market. The price of oil hasbeen affected by the policies of OPEC and developments in the internationalscene. Before the Gulf War for example, Nigeria benefited from the suddenupsurge in oil prices.

In Tables 6.5 and 6.6 are shown the exports of goods and services atconstant prices (millions) of 1980 US dollars and exports of merchandisemillions of dollars respectively for the period 1970-1990. While theexports of goods and services at constant US dollars fell between 1980 and1985 by 56 per cent, there was a rise of 11 per cent, 6 per centrespectively in the period 1988 and 1989. In general, the exports ofmerchandise have risen since the adoption of the SAP in 1986. It rose by43 per cent in 1986/87 and by 21 per cent in 1987/88. Tables 6.7 and 6.8show the value of major export crops by S.I.T.C. sections in millions ofNaira and the exports and re-exports by regional groupings for the period1980-1988. Table 6.9 shows the percentage distribution along S.I.T.C.sections; mineral fuels remained the dominant sector. Shown in Appendix 6is the time series from 1970-1989. Table 6.10 shows the regional groupingsof exports in percentages. The most important country for Nigeria's exportwas the United States with a share of 53.3 per cent. Western Europe andECOWAS had shares of 34 per cent and 6 per cent respectively. The exportsto ECOWAS which was only about 2 per cent in 1983 rose to about 6 per centin 1989. Table 6.11 provides further information on Nigeria's externaltrade. The major direction of oil flaws is shown in Table 6.12. It can beseen that the preponderant proportion of oil went to the Americas, WesternEurope in that order between 1983 and 1989. The liberalization of tradeand the depreciation of the Naira and the long-standing trade links withthese trading partners point to potential increases in volume of exports tothem. The potential is, however, threatened by recent developments inregional groupings such as Europe 1992, etc. and the imposition of tradebarriers.

Over the last several years, Nigeria has not been spared from what hasbeen going on in the international economy. This is the declining terms oftrade against primary commodities. In general, the terms of trade has notbeen favourable as shown in table 6.13.

Up to 1989, the lull in the world commodity markets continued. Thisinevitably affected Nigeria's major agricultural export commodities.

C/RM/G/15Page 54

Table 6.5

Exports of Goods and Services at Constant Prices

(Millions of 1980 US Dollars)

Year

197019751980198519861987198819891990

Amount

14,01416,79526,99311,86011,52310,24811,35512,06112,139

19.860.7

-56.12.8

-12.410.86.20.6

Source: African Development Bank, African Development Report, p. A-8

Table 6.6

Exports of Merchandise

(Millions of Dollars)

Amount

1,2407,846

25,96712,5485,1577,3658,8729,704

Z Change

0

532.7230.9-51.7-58.942.820.59.4

Source: African Development Bank, African Development 1991, p. A-16

Year

19701975198019851986198719881989

Table

6.7

Valu

eof

Majo

rExport

Groups

bvS.

I.T.

CSe

ctio

ns

(NMillion)

Beverages

Crud

eAnimal

Chem

ical

sMa

nu-

Mach

iner

yMisc.

Misc.

and

mate

rial

,Mi

nera

land

factured

and

Manu

-transactions

Total

Year

Food

tobacco

inedible

fuels

vegetable

goods

tran

spor

tfactured

oils

equipment

good

s

01

23

45

67

89

1980

1981

1982

184.

025.6

8,929.8

2.5

0.1

14.3

0.1

40.1

9,196.4

1983

273.

922.3

7,30

4.0

3.9

8.7

0.3

138.

77,

751.

819

8423

0.7

15.4

8,685.4

4.7

1.0

12.4

0.9

184.

39,

138.

819

8524

3.8

15.2

11,335.8

0.4

1.4

6.3

0.8

0.0

114.2

11,7

20.8

1986

442.

50.5

55.9

8,42

5.8

1.0

1.7

1.7

118.

39,047.2

1987

871.0

11.8

228.

028,208.6

2.0

64.7

70.6

22,0

03.0

0.8

138.

529

,577

.91988

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1989

1,27

3.8

5.9

902.

656

7.6

255.5

61,1

148.

2280.2

59,870.6

C/RM/G/1

5Page55

C/RM

/G/1

Table

6.8

Page

56

_

Exports

and

Re-exports

byRegional

Grou

ping

sL

(NMi

llio

n)

Comm

on-

Eastern

Unit

edUn

ited

West

ern

Year

weal

thEurope

Japa

nKingdom

States

ECOWAS

Euro

peOthers

Tota

lcountries

1980

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1981

872.

6198.8

160.2

135.

83,928.6

299.5

4,23

5.3

1.203.0

11,033.8

1982

414.

951

.24.9

211.

52,983.2

230.4

3,369.4

1,930.4

9,196.4

1983

133.9

47.4

5.9

319.8

1,80

2.3

144.

33,

232.

62,065.4

7,75

1.8

1984

577.

837.9

6.1

422.7

1,21

2.9

300.0

6,16

6.1

465.3

9,138.8

1985

702.3

33.0

7.6

538.6

2,116.3

387.9

7,217.4

717.

711,720.8

1986

387.8

20.6

13.8

512.6

3,16

3.3

345.7

4,305.1

379.

39,

128.

81987

854.

38.2

22.9

530.

313

,897

.81,

635.

511,951.8

777.3

29,578.0

1988

937.6

60.6

37.3

591.0

14,3

37.6

1,73

6.0

12,0

42.8

1,66

7.3

31,192.8

1989

508.

160

.913

3.7

1,048.9

31,984.9

3,31

2.4

20,6

12.0

2,324.6

59,985.5

Sour

ce:

Cent

ral

Bank

ofNi

geri

a,Ec

onom

ican

dFinancial

Review,

various

issu

es.

Tabl

e6.9

Valu

eof

Major

Expo

rtGroups

byS.

I.T.

CSe

ctii

ns

(Percentage

Distribution)

Beve

rage

sCrud

eMineral

Anim

alManu-

Mach

iner

yMisc.

and

material,

fuel

sand

fact

ured

and

manu

-Misc.

Year

Foodtobacco

ined

ible

vegetable

good

stransport

fact

ured

Tran

sact

ions

Total

oils

equipment

good

s

1980

1981

1982

1983

1984

1985

1986

1987

1988

n.a.

n.a.

2.00

3.53

2.52

2.08

4.89

2.94

n.a.

n.a.

n.a.

0.01

0.04

n.a.

n.a.

n.a.

0.28

0.29

0.17

0.13

0.62

0.77

n.a.

n.a.

n.a.

97.1

094

.22

95.04

96.72

93.13

95.3

7n.a.

n.a.

n.a.

0.03

0.05

0.05

0.00

0.01

0.01

n.a.

n.a.

n.a.

0.00

0.00

0.01

0.01

0.02

0.22

n.a.

n.a.

n.a.

0.16

0.11

0.14

0.05

0.02

0.24

U.a.

n.a.

n.a.

0.00

0.01

0.01

0.01

n.a.

n.a.

n.a.

0.00

0.00

0.00

n.a

n.a.

n.a.

0.44

1.79

2.02

0.95

1.31

0.47

n.a.

n.a.

n.a.

100.

00100.00

100.00

100.00

100.00

100.

00n.

a.

Notes:

n.a.

-In

dica

tes

not

available

Sour

ces:

Calc

ulat

edfrom

CBN

Annu

alRe

port

san

dSt

atem

ent

ofAccounts,

several

year

s

C/RM/G/15 Page57

C/RM/G/15

Tabl

e6.

10

Exports

and

Re-E

xpor

tsby

Regional

Grou

ping

s

(Percentage

Distribution)

Comm

on-

weal

thcountries

Eastern

Europe

Japa

nUn

ited

King

dom

United

States

ECOW

ASWestern

Europe

Others

Total

1980

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1981

7.91

1.80

1.45

1.23

3'.6

12.

7138

.38

10.90

10(.00

1982

4.51

0.56

0.05

2.30

32.44

2.51

36.6

420.99

100.

001983

1.73

0.61

0.08

4.12

23.2

51.86

41.7

026.64

100.00

1984

6.32

0.41

0.07

4.62

13.2

73.

2866

.92

5.09

100.

001985

5.99

0.28

0.06

4.60

18.0

63.31

61.5

86.

12100.00

1986

4.25

0.23

0.15

5.61

34.6

53.

7947

.16

4.15

100.00

1987

1.89

0.03

0.08

1.79

46.99

5.53

4u.0

72.

63100.00

1983

3.01

0.19

0.12

1.89

45.96

5.56

38.6

15.

34100.00

1989

0.85

0.10

0.22

1.75

53.3

25.

5234.36

3.88

100.00

Note

s:n.

a.-

Indi

cate

snot

avai

labl

e

Sour

ce:

Calculated

from

CBN;

Annu

alRe

port

san

dStatement

ofAccounts,

seve

ral

year

s

Year

Table

6.11

Exte

rnal

Trad

e

(NMillion)

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

EXPORTS

Oil

sect

or(c

rude

petroleum)

Non-oil

sect

or

885.

41,

293.

41,423.2

2,278.4

5,794.8

4,925.5

6,754.1

7,63

0.6

6,364.4

10,8

36.8

14,1

86.7

510.0

953.0

1,176.2

1,893.5

5,36

5.7

4,56

3.1

6,32

1.6

7,072.8

5,653.6

10,166.8

13,6

32.3

10,6

80.5

375.

4340.4

258.

038

4.9

429.1

362.4

429.

555

7.8

662.8

670.

055

4.4

342.

8

EXPORT

OFMA

JOR

COMMODITIES

Cocoa

Groundnut

Palm

kernel

Rubber

(nat

ural

)Ti

mber

(log

and

sawn)

Tin

meta

l.Ot

her

expo

rts

IMPORTS

Oil

sect

orNo

n-oi

lse

ctor

133.0

43.6

21.8

17.4 6.2

33.8

119.

6

143.

224

.425.8

12.4 5.2

24.4

105.

2

102.1

19.1

15.7 7.4

8.1

19.1

87.5

112.

445.5

18.9

19.4 1.5

15.5

171.7

159.

06.

843.7

32.2

11.2

26.4

148.

8

181.

831

1.1

314.

10.

20.1

13.5

27.0

32.6

15.2

14.4

11.1

4.6

0.9

0.5

20.4

15.5

13.3

122.

715

2.6

189.

1

384.

30.

310.0

11.9 0.3

11.0

123.3

432.

231

1.1

11.8

14.1

13.0

14.4

10.8

14.2

147.

214

1.8

756.4

1,07

9.0

990.

11,

224.

81,736.5

3,721.5

5,148.5

7,11

6.6

8,211.7

7,47

2.5

9,09

5.6

12,7

19.8

52.2

704.

250

.61,

028.

445.2

41.0

52.4

118.

095

.0102.2

110.0

230.0

227.

419

9.8

944.9

1,18

3.8

1,68

4.1

3,603.5

5,053.5

7,01

4.4

8,101.7

7,242.5

8,86

8.2

12,5

20.0

IMPORT

OFPR

INCI

PAL

COMMODITIES

Beer

Cement

Clothing

Comm

erci

alvehicles

Cott

onpi

ece

good

sFl

our

Gene

ral

machinery

Medi

cine

Pass

enge

rca

rsCSI

roofing

shee

tsSt

ock

fish

Sugar

Othe

rs

1.1

8.1

4.8

50.8

28.2 0.6

84.7

25.5

13.8 1.8

2.0

11.4

471.

4

1.1

17.4

17.2

56.2

26.5 3.2

136.

941

.329.5 2.5

1.0

17.7

677.

9

1.3

11.7

18.9

47.0

16.7 1.1

125.

221

.954

.4 0.7

1.6

21.2

623.

2

1.3

17.1

16.8

59.4 8.1

1.8

133.5

39.4

76.6 0.3

3.8

30.0

795.

7

2.8

34.0

23.6

61.4 7.3

1.0

196.

946.6

97.0 1.4

2.1

26.2

1,183.8

31.9

71.8

62.3

229.

714

.470

.346

9.3

86.0

220.

38.1

24.3

74.0

2,241.8

46.0

73.0

79.8

686.

95.

397.5

1,36

3.1

107.1

261.

012

.039

.678

.62,

164.

8

72.4

168.

210

3.8

552.

65.7

28.6

1,39.59

131.

6297.4

159.

313.9

125.

63,

898.

5

5.5

184.6

100.

432

4.3

3.4

37.0

1,633.8

162.

022

5.6

156.

219.5

173.

84,

953.

6

2.5

162.1

37.6

262.

9

48.8

1,25

1.0

132.9

146.4

131.

034

.217

5.0

3,45

4.3

2.8

118.

852.9

325.

1

9.6

219.

211

4.4

35.0

214.

4n.a.

Sour

ce:

(1)

Federal

Office

ofStatistics,

Annual

Abstract

ofSt

atis

tics

Desc

ript

ion

1970

142.7

17.9

17.8

n.a.

26.8

71.2 4.1

207.

664.7

597.

2

40.5

382.

959

0.5

123.

549

0.3

C/RM/G

/1

Page59

C/RM/G/15Page 60

Table 6.12

Direction of Oil Exports

Region/Country 1983 1984 1985 1986 1987 1988 1989

Africa 2.2 3.9 3.2 4.5 5.8 6.4Americas 32.2 23.4 30.9 53.7 55.8 56.1Eastern Europe n.a. n.a. n.a. n.a. n.a. n.a. n.a.Western Europe 65.6 72.7 65.9 41.8 38.4 37.5Oceania n.a. 0.1 n.a. n.a. n.a. n.a. n.a.

Source: CBN Annual Report and Statement of Account, 1985, p.98 and 1989,p.109.

World price index computed in dollars declined sharply by about22.6 per cent. As can be seen from Table 6.14, the index for variouscommodities also declined. The prices of cocoa, coffee reached theirfourteen-year and twenty-year low respectively in 1989. The depressedworld commodity markets were brought about by a persistent state ofover-supply in most commodity markets and the continued ineffectiveness ofmany international commodity agreements. It must be said, however, thatall commodities except cocoa experienced substantial gains in prices as aresult of the depreciation of the naira.

C. Trends in the balance of payments, reserves, debt and foreign exchangemarket

The balance of payments

The current account remained in the deficit for most of the period1980-1989 shown in Table 6.15. Nigeria's balance of payments recorded asubstantial improvement in 1989. The improvement that occurred might bedue to some policy measures adopted since the adoption of the StructuralAdjustment Programme. The overall balance swung from a deficit ofN2,294.1 million in 1988 to a surplus of N8,727.8 million in 1989. Thiswas due to a turn-around of the current account position from a deficit ofN1,437.7 in 1988 to a surplus of N13,968 in 1989 as well as a decline inthe capital account deficit (CBN, Annual Reports and Statement of Accounts,1986 p. 101).

Between 1985 and 1989, deficit in the service account averagedN10 billion with an average annual growth rate of 71 per cent. The singlemost worrisome source of the growing service account deficit is investmentincome which on the average accounted for about 68 per cent of the totalaccount transactions between 1985 and 1989. This also reflects an increasein interest payment on outstanding external debt which has continued toincrease- Deferment of some interest payments however helped to reduce thelevel of the current account deficits, but increased out payment forshipment and other goods, services and income have also fuelled the deficitin the current account. The deficit on the unrequited transfer componentswas on the average about N260 million between 1982 and 1986. As a resultof substantial reduction in expatriate home remittances, the deficitnarrowed significantly in 1988.

C/RM/G/15Page 61

Table 6.13

Terms of Trade: Nigeria (1970-1990)

1970 23.4

1971 19.9

1972 18.9

1973 22.3

1974 65.1

1975 57.9

1976 63.2

1977 64.5

1978 58.0

1979 71.5

1980 100.0

1981 109.6

1982 101.3

1983 98.2

1984 99.2

1985 89.8

1986 44.6

1981 53.8

1988 40.1

Source: I.M.F. International Financial Statistics Year-book, 1988

C/RM/G/15Page 62

Table 6.14(a)

Indices of Average Prices (c.i.f.) in Dollars of Nigeria'sMajor Agricultural Commodities (1975 - 100)

Commodity

All CommoditiesBenniseedCocoaCoffeeCopraCottonGroundnut oilGingerGroundnutPalm kernelPalm oilSoya beansRubber

1987

1

127.4

144.9188.7124.5129.853.483.9

85.673.9

112.5121.4

1988

2

127.8

116.7195.8160.6137.462.170.5

151.8120.399.8

156.8162.0

Percentage change between

1989

3

98.9

71.2156.7139.4121.181.757.2

117.880.0

160.2122.7

4

0.3

-19.56.6

29.06.7

16.316.0

40.535.139.433.4

5

-22.6

-39.0-20.0-13.2-11.831.5

-18.9

-2.1-19.8

2.2-24.2

Sources: CBN Annual Reports and Statement of Accounts 1989

Table 6.14(b)

Indices of Average Prices (c.i.f.) in Naira in London of Nigeria'sMajor Agricultural Commodities (1975 - 100)

Percentage change between

Commodity

All CommoditiesBenniseedCocoaCoffeeCopraCottonGroundnut oilGingerGroundnutPalm kernelPalm oilSoya beansRubber

1987

1

833.1

949.61,198.8

823.3846.1349.4548.7

562.8683.5485.3796.1

1988

2

1989

3

935.4 1,182.1

854.51,442.51,178.5

988.0458.3496.4

855.41,125.1

773.21,109.0

854.41,869.11,667.91,467.8

981.9685.3

1,417.01,865.8

960.71,486.2

4

12.3

-10.020.343.116.331.2-9.5

52.064.659.339.3

5

26.4

0.029.641.548.6114.238.1

65.765.824.234.0

Sources: CBN Annual Reports and Statement of Account 1989

Table

6.15

Balance

ofPayments

-Summary

Stat

emen

t

Cate

gory

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

A.Cu

rren

taccount

2,355.3

-3,7

08.1

-4,8

79.5

-3,137.9

88.8

2,21

5.4

-6,318.7

-295.3

-1,4

37.7

13,9

68.4

Merc

hand

ise

6,132.7

-412

.2-1,810.2

-781

.42,299.8

5,06

5.1

-4,0

10.6

13,968.1

11,4

35.0

29,729.9

Serv

ices

and

income

-3,462.2

-2,779.9

-2,0

70.7

-1,957.2

-2,617.7

2,633.3

-14,167.2

-12,818.6

-16,440.1

Unre

quit

edtransfers

(net)

-315.2

-347

.5-289.4

-285.8

-253.8

-232

.0-240.4

-96.

2-54.1

678.

1

B.Ca

pita

l(Exc

ludi

ngD

and

E)97.4

692.

41,

026.

81,

373.

8-39.3

-3,8

02.2

-4,172.8

-16,743.3

-18,447.3

-16,874.9

Direct

inve

stme

nt-404.1

-101

.3290.0

264.

314

4.5

434.

1338.8

2,452.8

1,71

8.2

13,983.3

Port

foli

oinvestment

783.0

151.

64,353.1

2,61

1.0

-1,618.8

Othe

rca

pita

l-long-term

356.1

498.

473

6.8

1,109.5

-183

.8-5

,019

.3-4,663.2

-15,079.5

-16,

209.

5-17,984.7

Othe

rca

pita

l-

short-term

145.4

92.7

2,444.1

1,36

1.9

106.1

2,030.2

3,327.0

-8,469.7

-6,5

67.8

-11,254.7

TOTA

L(A

and

B)2,

452.

7-3

,015

.7-1

,408

.6-4

02.2

155.

644

3.4

-275

.6-17,038.6

-19,

885.

0-2,906.5

C.Net

erro

rsan

domissions

-50.5

-21.1

10.3

100.

9199.2

-94.3

-520.8

-1,2

26.2

-910.0

828.0

TOTAL

(A,

Ban

dC)

2,40

2.2

-3,036.8

-1,3

98.3

-301.3

354.8

349.

1-796.4

-18,

264.

8-20,295.0

-2,0

78.5

D.Exceptional

fina

ncin

g18

,424

.418,500.9

10,8

06.3

(i)

Promissory

notes

-arrears

5,80

4.0

(ii)

Differed/reach.

debt

service

11,8

20.0

18,049.1

7,45

8.1

(iii

)Others

800.0

451.8

3,348.2

TOTA

L(A

toD)

2,402.2

-3,0

36.8

-1,398.3

-301.3

354.8

349.

1-796.4

159.

2-2,294.1

8,727.8

E.Ch

ange

inre

serv

e-2,402.2

3,03

6.8

1,39

8.3

301.

3-3

54.8

-349.1

k+796.4

-159

.22,294.1

-8,7

27.8

Minus

(-)

sign

indi

cate

sin

crea

sein

rese

rve

Plus

(+)

sign

indi

cate

sdecrease

inre

serv

eC/R

M/GSo

urce

:Ce

ntra

lBank

ofNi

geri

a:An

nual

Report

and

Statement

ofAccounts

1982,

1984

and

1989

(D Page63

C/RM/G/15Page 64

The visible trade (merchandise trade) section has been in surplusexcept for the period 1981-1983. This surplus no doubt is created by inputfrom the oil sector as about 90 per cent of Nigeria's export earningsderived from oil. This means that the picture does not necessarily reflectany improvement in the overall performance of the economy as the non-oilsector continues to perform poorly.

The various components of the capital account showed varying patternswhile the "other capital short-term" showed surplus consistently from 1980to 1986. The capital account (excluding D and E) has shown consistentdeficit from 1984. The deficit in this account has shown deficits at anuncomfortable proportion particularly since the introduction of the SAP.The deficit on the account which was about N.8,447 million in 1988 declinedto N16,875 million in 1989. The decline resulted from increases in directinvestment and net inflow of capital and re-scheduling of some debts whichfell due in 1989.

The portfolio investment category which showed a significantimprovement in 1987 declined in 1988 with a surplus of N2,611.8 million.In 1989 there was a deficit of N1.618.8 million. The significant decreasewas due to a reduction in liabilities due to debt redeemed under the DebtConversion Programme (DCP). The amount of debt redeemed under theprogramme was N315 million in 1988 as opposed to N1,618.8 million in 1989.

On the whole, with the exception of 1986, the capital account hasconsistently been in deficit since 1985. This deficit arose mainly fromout payments in respect of outstanding external debts which increased from1986.

There was surplus in the balance-of-payment positions in five out ofthe ten years considered - 1980 to 1989. This almost tallied with theperiod when the current account was in surplus. Deficits in balance ofpayments occurred in 1981-1983 and in 1986. There were surpluses in 1987and 1989. The 1981/1983 period was characterized by poor economicmanagement.

External reserves

The external reserves position of Nigeria showed some improvementsrecently due largely to the Nigerian government's policy of reservebuild-up and re-scheduling of some debt service obligations that havefallen due. After some decline in 1987, total external assets rose between1988 and 1989. External assets rose by about 33 per cent between 1987 and1989. The external asset was N23,294 million in 1989. The proportion ofassets held by the Central Bank rose to about 58 per cent from 30 per centin 1988. The development arose from the deliberate policy of building upofficial reserves in order to consolidate and promote Nigeria's creditworthiness. The policy was facilitated by the new inflow of money from theUnited Kingdom, Japan and the World Bank.

C/RM/G/15Page 65

External debt

Although the magnitude of Nigeria's external debt remainscontroversial since statistical information on it is said to be deficientand unreliable. Since government took concrete steps to reconcile thesedebe figures, the wide disparities in the released figures haveconsiderably narrowed. Available data show that total outstandingexternal debt rose from N1.9 billion in 1980 to N17.3 billion in 1985.From 1986 because of the depreciation in the naira exchange rate, totaloutstanding debt rose from N42.2 billion in 1986 to N134 billion inSeptember 1988. External debt was N212.6 billion in September 1989.Table 6.16 shows Nigeria's debt outstanding for the period 1980-1989 bytype/source. Even after the re-scheduling of debt, debt conversion anddeferment of debt service, the debt service ratio remained high. Thisunfavourable external debt situation, coupled with declining foreignexchange inflow from export earnings and international financialinstitutions, has resulted in net transfer of resources from the country,thereby reducing the pace of economic growth and trade. This net transferhas been on the increase since 1984.

The composition of Nigeria's external debt is shown in Table 6.17.Debt from official sources which was about 69 per cent in the 1970-1972period fell to only 31 per cent in 1988. Debt from private sources rosefrom 31 per cent in the 1970-1972 period to 85 per cent in the 1980-1982period. By 1988, however, debt from private sources stood at 62 per cent.Nigeria contracted a lot of debt at floating rates rising from a lowpercentage of 0.7 in the 1973-1975 period to 40 per cent in 1988.

The burden of external debt in Nigeria can be seen from Table 6.18.From a principal payment of N6.2 million in 1980, it rose to N6,987.5million in 1989. The interest payment which was only N104.2 million in1980 rose to N8,590.2 million in 1989. The debt-export ratio which wasonly 32 per cent in 1980 rose 397 per cent in 1988. The total debt serviceration rose from 4.1 per cent in 1980 to 29.3 per cent in 1988 (World Bank,(1990) External Debt of Developing Countries, p. 282). Even after there-scheduling of debt, debt conversion and deferment of debt service, thedebt service ration remained high.

Table

6:16

Nigeria's

Exte

rnal

Debt

Outs

tand

ing

(NMi

llio

n)by

Sour

ce/T

ype

C/RM/G/15 Page66

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

I.C.M.

1,09

0.2

1,31

7.5

5,474.4

5,02

6.5

6,003.1

7,726.4

21,725.3

38,396.6

47,710.3

72,622.3

Multilateral

181.6

181.

9530.4

566.

41,271.2

1,28

3.5

4,67

0.2

8,78

1.5

9,991.8

18,0

80.4

Bilateral

483.

8656.1

163.

2179.3

351.3

365.1

1,159.1

1,968.9

3,30

8.7

5,307.1

Capitalized

interest

nana

nana

5,85

3.0

19,7

69.5

Unguaranteed

loau

s111.2

175.7

669.

752

2.1

312.

6477.4

1,300.0

1,897.9

5,898.3

7,904.7

Uninsured

supp

lier

scredit

5,670.4

11,892.0

Insured

and

uninsured

clai

ms1,524.6

1,155.0

1,273.6

4,152.6

20,6

34.7

25,7

42.1

56,316.3

Lett

erof

cred

it1,

981.

72,758.8

5,44

3.4

6,16

4.3

8,44

4.7

24,8

09.0

27,7

35.0

17,6

84.9

Accrued

Inte

rest

onLe

ttor

ofCr

edit

2,14

9.5

2,046.7

3,173.6

TOTAL

1,86

6.8

2,33

1.2

8,81

9.4

10,577.7

14,5

36.6

17,2

90.6

41,451.9

100,787.6

133,956.3

212,750.8

Source:

Central

Bank

ofNi

geri

a:An

nual

Repo

rts

and

Stat

emen

tan

dAc

coun

ts,

seve

ral

issues

C/RM/G/15Page 67

Foreign Exchange Market (exchange rate)

The volatility of exchange rates among the currencies of theindustrialized countries further compounds the problems of developingcountries which by and large denominate their trade in the currencies ofthese industrialized countries. Such a dilemma has led Nigeria toexperiment with different exchange rate regimes.

1960 to 1967 -

1974 to 1978 -

1978 to 1985 -

1986 to now -

A one-to-one relationship with the British poundsterling.

Exchange rate independently fixed to the U.S. dollarand British pound sterling based on the relativestrength of the two.

Based on an import-weighted basket of currencies of herstrongest trading partners.

Establishment of the foreign exchange market for thedetermination of a realistic exchange rate for thenaira through the operation of market forces of supplyand demand.

The major reasons for adopting the foreign exchange market was that thenaira was over-valued. For a while, the balance-of-payments position wasfavourable until it began to show signs of decline.

As import bills continued to mount and exports of non-oil productscontinued to decline, there arose the strong argument that a depreciatednaira would stem the rise in imports and encourage the export of non-oilproducts.

Nigeria today operates two foreign exchange markets: the officialmarket where official and institutional financial transactions areconducted and the bureau-de-change where small and medium investors can buyand sell foreign exchange.

Table 6.17

Composition of Debt Outstanding

(percentage)

Debt from officialsources

1970- 1980- 198872 82

68.8 14.6

Debt from privatesources

1970- 1980- 198872 82

31.2 31.2 85.4 62.1

Debt at floatingrates

1973- 1980- 198875 82

0.7 48.6 40.1

Source: World Bank, World Development Reports, 1988 and 1989

C/RM/G/15 Page 68

e6.18

Nigeria's

External

Debt

Service

(NMillion)

Prin

cipa

l6.

221

1.3

321.2

899.6

1,856.9

2,093.8

5,78

2.3

1,20

8.8

2,66

3.5

6,987.5

Inte

rest

104.

230

7.2

454.

0435.6

783.6

980.

5533.7

2,36

5.8

5,47

7.2

8,59

0.2

Tota

l110.4

518.5

775.2

1,33

5.2

2,64

0.5

3,074.3

6,31

6.0

3,57

4.6

8,140.7

15,5

77.7

Sour

ce:

Central

Bank

ofNi

geri

a:An

nual

Reports

and

Statement

ofAc

coun

ts,

seve

ral

year

s19

80-8

9

C/RM/G/15Page 69

There is evidence that the market-determined exchange rate system hasfacilitated trade, both domestic and external. Foreign exchange is noweasily obtained (though at a high cost), the rate of importation has sloweddown and exports of the non-oil sector has also improved. The nairaexchange rate has varied over time since the introduction of the ForeignExchange Market (FEM). Presented in Table 5.18 is the recent nairaexchange rate movement of FEM. The naira depreciated against the dollar by42 per cent between December 1988 and 1989, it depreciated by about23 per cent with the U.K. pound sterling.

D. International Macro-Economic Problems Affecting Nigeria'sForeign Trade

(i) Macro-economic situation and foreign trade

The international macro-economic situation would be seen against thephilosophy and conditionalities which necessitated the implementation ofthe Structural Adjustment Programme in 1986. The Structural AdjustmentProgramme which constitutes a radical departure from the developmentstrategies since 1970 was designed to get international support for therelief of the external debt problem and the domestic economic adjustmentnecessary to achieve balance of payments' viability and to place theeconomy on the path of sustained growth.

There are some problems in trying to reconcile the trade-liberalizationconditionality of the Structural Adjustment Programme and the market accessarrangements of the industrialized countries especially when the non-oilexports consist mainly of primary agricultural products the demand forwhich is low in the industrialized countries.

The essence of the Structural Adjustment Programme is to channelresources into the sectors in which the country has comparative advantageand to export these goods for foreign exchange. Since the major marketsfor Nigeria's exports remain the industrialized countries of Europe andAmerica and the non-oil exports of the country consist of goods for whichimport restriction in the industrialized countries is strictest, the volumeof trade is bound to be adversely affected.

It is equally difficult to see how the huge foreign exchange which isexpected to come from the export of goods to service the outstandingexternal debt would be generated under the depressed state of theinternational oil and commodity markets, and some restrictions tointernational trade (such as non-tariff barriers etc.).

The continuous fall in the prices of oil and agricultural commoditiesagainst increases in the price of imported goods cast serious doubts on theability of Nigeria to secure imports necessary to produce exportable goodsand still have foreign exchange left for external debt service.

Re-scheduling and refinancing of external debt which was based on theadoption of adjustment reforms of the economy, has not been done in

C/RM/G/15Page 70

significantly favourable conditions. The variable interest often chargedon the re-scheduled amount coupled with the increase in world real interestrate tends to aggravate the debt-servicing difficulty of the countrythereby further depressing investment in export-oriented sectors.

The continuous decline in access to foreign finance to support theadjustment programme tends to inhibit trade and the adjustment effort. Thelow level of foreign investment in the country has also tended to limittrade. The essence of the various incentives provided in the structuraladjustment package was, among other things, to encourage foreign capitalinflow into the export-oriented sectors in order to boost and diversify theexport base. This is important because foreign investment can contributedirectly to economic and social development without giving rise to externalindebtedness. Despite these incentives, not much foreign capital has comeinto the country.

(ii) Problems in external markets

Since Nigeria's trade is very much dependent on the growth of theindustrialized countries, the rapid growth of these countries and theabsence of serious trade barriers would stimulate Nigeria's trade.therefore, the type of problems Nigeria will encounter will depend on thetypes of products she exports and the economic region in which tradR isconcentrated.

The estimated component of total exports by 1989 shows that 3 per centare for agricultural products, 94.9 per cent for crude oil, 0.2 per centfor manufactures and semi-manufactures of agricultural products and2 per cent for other exports. These exports are heavily concentrated inthe industrialized countries of Western Europe and North America. With theemergence of Europe 1992, there is a potential obstacle not only for oilexports but also for other forms of trade from the EEC-member countries.

Since over 90 per cent of exports is in the form of crude petroleum,there is bound to be competition from other oil producing countriesparticularly the non-OPEC countries. The greatest problem however, lieswith the non-oil export consisting mainly of agricultural and otherproducts. These commodities are usually subject to import restrictions bythe trading partners through voluntary restraints on quota exported, ortariff and non-tariff measures including preference prices, etc.Generally, industrialized countries use all kinds of discriminatory tradepractices against developing countries. With increasing regionalizationand the constraints posed by it, Nigeria and other developing countries mayface difficulties in trading with the industrialized countries.

There is no doubt that non-tariff barriers do inhibit developingcountries' attempts to expand exports. Similarly trying to devisemechanisms to evade the barriers involves costs which may make productioninefficient.

C/RM/G/15Page 71

In order to show the extent of the potential export gains that anumber of highly-indebted countries will reap, consequent to fullliberalization of tariff and non-tariff barriers in the industrializedcountries, Laird and Nogues (1989) used 1983 data. Using three markets,EEC, Japan and the United States shown in the Table 6.19 below, the resultis very instructive. On the basis of the data, the estimated overallincrease in exports to the EEC, Japan and the United States that could havebeen expected to result from full (non-preferential) trade liberalizationis $35 million, 0.3 per cent of all imports into these markets. IfNigeria had had a relatively diversified export structure with themanufacturing sector constituting a substantial share, Nigeria would havehad a more significant increase in exports. The removal of tariffs leadsto a greater increase in export earnings than the removal of NTBs($25 million as opposed to $10 million) removal of NTBs would still beof significant importance.

Table 6.19

Simulated Effects of Full Trade Liberalization inthe EEC, Japan and United States on Imports From Nigeria

(Millions of dollars)

Increase in imports resulting fromfull liberalization of

tariffs and NTBs

Imports Tariffs NTBs $ Per cent

10,196 25 10 35 0.3

Source: Laird and Nogus Op.cit., page 255

The ECOWAS sub-region where there is some reasonable free movement ofgoods and services and the other African regions where the level ofvoluntary restraint measures on non-oil exports is generally low, offergreat opportunities for trade in the future if properly explored.

C/RM/G/15Page 72

REFERENCES

Central Bank of Nigeria

1. Federal Republic of Nigeria, Foreign Exchange InstructionsManual.

2. Central Bank of Nigeria, Monthly Report, February 1990.

3. Central Bank of Nigeria, Monthly Report, May 1990.

4. Guidelines on Debt Conversion Programme for Nigeria.

5. Central Bank of Nigeria Annual Report and Statement of Accountfor the Year Ending 31 December 1985.

6. Central Bank of Nigeria Annual Report and Statement of Accountfor the Year Ending 31 December 1988.

7. Central Bank of Nigeria Annual Report and Statement of Accountfor the Year Ending 31 December 1989.

8. Foreign Trade ard Exchange Policy Measures for 1991.

9. New Comprehensive Import Supervision Scheme (CISS) - TransitionaArrangements - 111.

Federal Ministry of Budget and Pl.nning

1. Federal Republic of Nigeria Budget, 1986.

2. Federal Republic of Nigeria Consolidation Budget, 1987.

3. Federal Republic of Nigeria Statement on the 1988 Fiscal Budgetby Dr. Chu. S. P. Okongwu.

4. Federal Republic of Nigeria Budget, 1989.

5. Federal Republic of Nigeria Budget, 1990.

6. Federal Republic of Nigeria Budget, 1991.

7. Statement on the 1989 Budget by Alhaji Abubakar Alhaji,Honourable Minister of State for Budget and Planning and SpecialAssistant to the President.

8. 1988 Budget Address by General Ibrahim Babangida, President,Commander-in-Chief of the Nigerian Armed Forces, of the FederalRepublic of Nigeria.

C/RM/G/15Page 73

9. Press Briefing on the National Rolling Plan 1990-92 and the 1990Budget by Alhaji Abubakar Alhaji, Honourable Minister of Budgetand Planning.

10. Press Briefing on the 1991 Budget and the National Rolling Plan(1991-1993) by Chu. S. P. Okongwu.

11. Information and Basic Data to the Government of Nigeria for theTrade Policy Review Report GATT.

Federal Ministry of External Affairs

1. Inputs on Regulations Concerning Imports of DomesticallyProhibited Products and any Information on Actual Imports ofthese Products into Nigeria.

Federal Ministry of Health

1. Decree No. 35.

Federal Ministry of Internal Affairs, Department of Customs and Excise

1. Pre-Shipment Inspection of Imports Decree, 1978 - Decree No. 36.

2. Customs, Excise Tariff, etc. (Consolidation)(Amendment)Decree 1990, Decree No. 7.

3. Customs and Excise Tariff, etc. (Consolidation) Decree 1988,No. 1.

4. Customs Duties (Dumped and Subsidized Goods) No. 9 of 1958.

Federal Ministry of Justice

1. Finance (Miscellaneous Taxation Provisions) Decree 1987,Decree No. 12.

2. Nigerian Enterprises Promotion Decree 1989, Decree No, 54.

3. Finance (Miscellaneous Taxation Provisions) Decree 1989,Decree No. 31.

4. Petroleum Profit Tax (Amendment) Decree 1973, Decree No. 15.

5. Finance (Miscellaneous Taxation Provisions) Decree 1975,Decree No. 4.

6. Petroleum Profits Tax, Decree No. 15 of 1959.

C/RM/G/15Page 74

7. Customs, Excise Tariff, erc. (Consolidation)(Amendment)Decree 1990, Decree No. 7.

8. Import (Prohibition) Decree 1989, Decree No. 36.

9. Merchandise Marks (Colony and Protectorate) CAP. 131.

Federal Ministry of Trade and Tourism

1. Information on Domestic Procedures, Including Domestic LegalBases for Anti-Dumping and Countervailing for Duty Actions, andSafeguard Action under GATT Article XIX.

2. Merchandise Marks Ordinance.

3. Regulations Concerning Imports of Domestically ProhibitedProducts.

4. Re-Request for Information and Basic Data to the Government ofNigeria for the Trade Policy Report.

5. Information on State Trading Enterprises, in Particular theirFunctioning and Privileges with Statistical Data on Imports,Exports and Domestic Production of Products Concerned.

Federal Board of Inland Revenue

1. 1976-77 Budget Notes for Guidance on Companies Income Tax - May,1976.

2. A Guide to Pretoleum Taxation in Nigeria - April, 1983.

Federal Environmental Protection Agency

1. Harmful Waste (Special Criminal Provisions, etc.) Decree 1988,Decree No. 42.

Federal Office of Statistics

1. Facts and Figures about Nigeria, 1989.

2. Annual Abstract of Statistics, 1987 Edition.

3. Digest of Statistics, June 1987.

4. Economic and Social Statistics Bulletin, 1988 Edition.

5. Nigeria Trade Summary, June 1988.

6. Nigeria Trade Summary, December 1987.

C/RM/G/15Page 75

7. Review of External Trade 1984-1988.

8. Distribution Survey of Nigeria, 1978.

9. Economic and Social Statistics Bulletin, 1986 Edition.

10. The Consumer Price Index, October-December, 1988.

11. Statistical News, 15 May 1990.

12. Statistical News, 20 November 1990.

13. Statistical News, 30 January 1991.

14. Statistical News, 19 February 1991.

15. Economic and Social Statistics Bulletin, 1988 Edition.

16. Retail Prices of Selected Items - July-December, 1988.

17. Review of External Trade 1984-1988.

National Maritime Authority

1. The National Shipping Policy Decree 10 of 1987.

2. Review of the Nigerian Trade Policy: Inputs by the NationalMaritime Authority (NMA).

Manufacturers Association of Nigeria

1. M.A.N. Half-Yearly Economic Review, January-June, 1988.

2. M.A.N. Half-Yearly Economic Review, July-December, 1988.

3. M.A.N. Half-Yearly Economic Review, July-December, 1989.

4, M.A.N. Half-Yearly Economic Review, January-June, 1990.

Nigerian Industrial Development Bank

1. Nigerian Industrial Development Bank Ltd., Annual Report andAccounts, 1988.

2. Nigerian Industrial Development Bank Annual Report and Accounts,1989.

Nigerian Export Promotion Council

1. Nigerian Exporters Directory, 1988-89.

C/RM/G/15Page 76

Nigerian National Petroleum Corporation

1. Crude Oil Statistics for the Past Five Years.

Nigerian Shippers' Council

1. Nigerian Shippers' Council Act, 1978.

APPENDIX

I

Production

inVolume

from

1970-1990

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

Thsd.

Tonn

es30

5"

358

257

426

241

105

"1,

581

1,38

11,350

"315

307

270

"48

8500

460

Aerated

water

Mill

ion

(Soft

drin

ks)

Litr

es

Beerin

clud

ing""

stou

t

215 85

214

481

878

1,946

231

310

430

485

216

313

449

295

500

181

294

459

295

525

193

157

151

269

211

125

153

174

156

140

140

7748

39120

108

567

801

507

674

530

427

396

591

284

281

280

279

294

310

279

340

528

530

650

650

530

500

500

550

160

114

621

360

615

100

100

640

350

650

105 80 696

353

680

230

194

686

545

700

256

185

815

600

700

--

60.1

101.6

87.0

141.5

202.

719

1.0

332.3

158.6

496.

751

5.1

633.

154

9.5

580.

049

4.3

352.0

629.

561

1.9

641.3

131.4

164.9

214.

723

6.0

247.7

293.

7314.4

305.

4285.2

500.3

746.8

818.5

837.

642

8.4

n.a.

805.

21,

016.

066

9.5

916.7

685.

2

Thsd

.To

nnes

664.

01,

137.

01,222.0

1,22

6.0

1,199.8

1,27

5.9

1,27

3.4

1,291.9

1,139.6

1,653.0

1,91

4.0

2,566.0

3,00

9.0

1155

.0n.e.

3,35

2.0

3,624.0

3,085.0

4,017.0

4,157.0

Ml.Sq.Mtrs.

275.

1271.5

191.3

295.0

274.1

334.2

367.

8398.9

167.1

297.

3562.5

491.

259

6.9

337.

7n.

e.26

7.8

101.6

323.

233

1.1

335.8

Footwear

Ml.

Pair

s

Paints

and

MI.

Ltrs.

11.

alli

edproducts

Roof

ing

shee

tsThsd.

Tonnes

Soap

and

detergents

Sugar

PRINCIPAL

MINE

RALS

-19.2

.313

.113.1

n.e.

16.8

22.0

24.2

21.7

24.4

119.

3-

32.6

14.4

6.3

10.6

n.e.

8.3

15.1

14.1

18.8

20.8

25.8

34.6

30.4

51.3

58.4

58.7

25.4

n.e.

21.0

6.5

4.6

6.1

4.0

17.3

19.5

21.C

19.9

96.2

91.3

70.1

110.3

128.

9171.7

191.7

139.8

150.0

118.

819

4.7

92.1

n.e.

228.

042

0.7

124.6

155.

7161.4

44.9

69.1

75.2

76.2

97.7

140.7

362.

513

9.5

162.5

201.6

200.2

239.

4n.e.

157.

777.7

213.7

206.

620

9.0

n.a.

13.1

16.1

14.8

16.6

28.3

31.4

35.9

40.3

42.7

56.2

47.9

33.8

n.a.

26.0

18.6

35.3

19.7

21.0

Petroleum

mill

ion

395.9

568.9

665.3

750.4

823.3

651.3

757.6

765.7

698.

084

1.6

753.5

753.6

470.7

451.

0508.0

547.1

534.2

483.

3529.6

625.9

(cru

de)

Barr

els

Cassiterits

Thsd

.Tonnes

10.8

9.9

9.1

7.9

7.4

6.3

5.0

4.4

4.1

3.8

3.5

3.2

2.4

2.1

1.9

1.1

0.2

0.2

0.2

0.4

Coal

60.9

193.

034

1.2

327.

130

4.0

248.8

298.8

267.

1221.9

171.

817

6.0

153.7

56.0

53.6

76.1

139.7

144.

4114.6

82.5

81.0

C/RM/

Page83

AGRICULTURE

Coco

a

Cotton

(See

dcotton)

Grou

ndnut

Palm

kern

el

Palm

oil

INDU

STRY

1988

1989

Cement

Cott

onte

xtil

les

APPE

NDIX

I(cont'd)

C/IV

C)Page78

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

194

1985

1986

1987

1988

1909

ELEC

TRIC

TY

Capa

cityHega

Watt

s80

4.7

8047

8047

786.7

670.

6721.0

926.

21,125.2

1,793.7

2,230.6

2,16

9.0

2,43

0.0

2,90

2.1

2,92

1.0

3,178.0

3,69

5.5

4,016.0

4,548.0

4,54

8.0

4,54

8.0

Tota

l141

.Kw.

Hr.

1,28

4.0

1,541.0

1,887.3

2,23

7.2

2,625.2

3,04

8.5

3,46

3.5

4,106.2

5,03

7.1

6,52

1.1

5,30

0.1

7,776.6

8,531.7

8,71

3.0

8,983.6

10,221.1

10,7

65.7

11,2

65.3

11,6

53.2

12,712.1

generation

INDU

STRI

AL&

COMMERCIAL

Cons

umpt

ion

6.

.68

7.0

801.0

1,00

6.4

1,12

0.5

1,280.1

1,42

9.2

1,755.6

1,87

9.6

2,19

9.9

2,086.1

2,41

1.1

2,89

7.8

2,94

1.3

2,970.7

2,617.6

3,026.1

3,200.0

3,366.3

3,380.8

3.80

5.9

Residential

..

.34

8.0

467.1

573.

2632.9

752.1

896.1

1,024.8

1,35

3.6

2,200.1

2,079.7

3,573.5

2,723.6

3,018.2

3,13

5.7

2,860.9

3,258.9

4,17

4.7

4,10

5.1

4,483.5

5,047.7

consumption

Othe

r.

..

249.

04.

76.

45.

56.

25.8

11.2

6.2

10.1

cons

umpt

ion

Source:

Cent

ral

Bank

ofNigeria,

Prin

cipa

lEc

onom

ican

dFi

nanc

ial

Indi

cati

ons

1970

-1990

C/RM/G15

Page78

C/RM/G/15Page 79

APPENDIX 2a

Absolute Import Prohibition List of Nigeria, 1991

1. Air pistols.

2. Airmail photographic printing paper.

3. Base or counterfeit coin of any country.

4. Beads composed of inflammable celluloid or other similar substances.

5. Blank invoices.

6. Coupons for foreign football pools or other betting arrangements.

7. Cowries.

8. Exhausted tea or tea mixed with other substances. For the purpose ofthis item, "exhausted tea" means any tea which has been deprived ofits proper quality, strength or virtue by steeping, infusion,decoction or other means.

9. Implements appertaining to the reloading of cartridges.

10. Indecent or obscene prints, paintings, books, cards, engravings or anyindecent or obscene articles.

11. Manillas.

12. Matches made with white phosphorus.

13. Materials of any description with a design which, considering thepurpose for which any such material is intended to be used, is likelyin the opinion of the President to create a breach of the peace or tooffend the religious views of any class of persons in Nigeria.

14. Meat, vegetable or other provisions declared by a health officer to beunfit for human consumption.

15. Piece goods and all other textiles including wearing apparel, hardwareof all kinds of crockery and china or earthenware goods bearinginscriptions (whether in Roman or Arabic characters) from the Koran orfrom the traditions and commentaries on the Koran.

16. Pistols disguised in any form.

17. Second-hand clothing.

18. Silver or metal alloy coins not being legal tender in Nigeria.

C/RM/G/15Page 80

19. Spirits:

(1) Other than: alcoholic bitters, liqueurs, cordials and mixturesadmitted as such in his discretion by the Director and which arenot deemed to be injurious spirits within the meaning of anyenactment or law relating to liquor or liquor licensing; brandy;drugs and medicinal spirits; rum; spirits imported for medicalor scientific purposes; spirits totally unfit for use as potablespirits; whisky.

(2) Containing more than forty-eight and one-half per centum of purealcohol by volume except denatured, medicated and perfumedspirits, and such other spirits which the Director, in hisdiscretion, may allow to be imported subject to such conditionsas he may see fit to impose.

20. Weapons of any description which, in the opinion of the Director, aredesigned for the discharge of noxious liquids, gas or other similarsubstance, and any ammunition containing or, in the opinion of theDirector, designed or adapted to contain any noxious liquid, gas or othersimilar substance.

1989 (addition)

1. Meat (whether frozen or not).

2. Chicken (whether frozen or not).

3. Fish (whether frozen or not, except those caught and landed by vesselslicensed and authorized by the appropriate Nigerian authority).

4. Expired food products (whether in cans or any other packages).

5. All imported foodstuff items (including fruit and vegetables) forwhich the Minister of Health or the Director and Chief Executive ofthe Federal Environmental Agency has issued a Certificate ofContamination with any toxic or nuclear substance or any other harmfulwaste as defined in the Harmful Waste (Special Criminal Provisions,etc.) Decree 1988.

Source: Nigerian Customs, Excise Tariff, etc. (Consolidation) Decree of1988, and Import (Prohibition) Decree of 1989.

C/RM/G/15Page 81

APPENDIX 2b

Conditional Import Prohibition List of Nigeria, 1991

1. Live or dead poultry, that is, fowl, ducks, geese, turkeys, fowlexcluding grandparent and foundation stocks for research andmultiplication purposes, eggs in the shell, including those forhatching.

2. Vegetable, including tomato puree and paste, roots and tubers, freshor dried, whole or sliced, cut or powdered, and sago pitch.

3. Processed wood, excluding wood in the rough, squared or half squaredbut not further manufactured, and particle board; furniture products,wooden cabinets for radio and television sets.

4. Fruit, fresh or preserved, and fruit juices.

5. Mosquito repellent coils (HS Code 3808.111).

6. Textile fabrics of all types and articles thereof excluding:

(a) Nylon tyre cord;(b) Multifilament nylon chafer fabric and tracing cloth;(c) Mattress tickings;(d) Narrow fabric, trimmings and linings;(e) Made-up fishing nets, mosquito netting materials;(f) Gloves for industrial use;(g) Canvas fabric for the manufacture of belts;(h) Moulding cups and lycra, elastic bands and motifs;(iU) :xtile products and articles for technical uses;(i) Transmission or conveyor belts or belting of textile material;(k) Polypropylene primary backing material;(1) Fibre rope products (ES Code 56.07).

7. Domestic articles and wares made of plastic materials includingbabies' feeding bottles.

8. Evian and similar waters, soft drinks and beverages, beer and stout,malt and barley.

9. Maize and maize products.

10. Wheat and wheat products.

11. All sparkling wines including champagne.

12. Vegetable oils excluding linseed and castor oil, used as industrialmaterials.

C/RM/G/15Page 82

13. Aluminium sulphate including alum.

14. Retreaded and used tyres.

15. Branched alkyl benzene, bentonite and barytes.

Source: Central Bank of Nigeria.

C/RM/G/15Page 83

APPENDIX 3

Export Incentive Schemes in Ngeria. 1991

Incentive Scheme

1. Refinancing and RediscountingFacility - RRFForeign Input Facility

2. Currency Retention Schema

3. Tax relief on exports earned bybanks on export credit

Operating agent

CBN

CBN

CBN and the banks

Banks and Federal Board ofInland Revenue

Objective

To provide liquidity to banksin support of their exportfinance business

To enable exporters to holdexport proceeds in banks

To encourage banks to financeexports by reducing their taxburden

4. Export Credit Guarantee andInsurance Scheme

CBN To hear the risks in exportbusiness and therebyfacilitate export finance

5. Duty Drawback Scheme

6. Export Expansion Grant

7. Export price adjustment

8. Subsidy scheme for use of localraw materials in export production

9. Export Davelopment Fund

10. Abolition of export licensing

11. Supplementary allowance in favourof pioneer companies

12. Accelerated depreciation andcapital allowance

Custom Department:Standards Organization ofNigezia, NEPC.Banks and CBN

NEPC

NEPC

NEPC

NEPC

Federal Ministry of Trade

FEPC, FBIR and exporters

FBIR and exporters

To reimburse customs dutypaid by exporters on importedinput used for exportproduction

To encourage companies toengage in export businessrather than domestic business

To compensate exporters ofproducts whose foreign pricesare relatively unattractive

To encourage exporters to uselocal raw materials in exportproduction

To assist exporters in partlypaying the costs ofparticipation in trade fairsand foreign market research

To removeobstaclessector as

administrativefrom the exportmuch as possible

To extend supplementaryincentives to pioneercompanies that export theirproducts

To extend supplementaryincentives to industrialorganizations enjoyingaccelerated depreciation andcapital allowances whichexport their products

Source: Central Bank of Nigeria

APPENDIX

4

External

Trad

e(N-Million)

Desc

ript

ion

1970

1971

1972

1973

1174

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

EXPO

RTS

Oil

sector

(crude

petr

oleu

m)

Non-

oil

sect

or

EXPORT

OFMA

JOR

COMMOOITIES

Coco

a

Grou

ndnu

t

Palm

kern

el

Rubber

(nat

ural

)

Timber

(log

ands

ame)

Tin

meta

l

Othe

rexports

885.

41,

293.

41,424.2

2,278.4

5,794.8

4,92

5.5

6,754.1

7,63

0.6

6,064.4

10,836.8

14,186.7

-11,

023.

38,206.4

7,502.5

9,088.0

11,720.8

8,92

0.5

30,350.6

31,192.9

510.0

953.0

1,176.2

1,98

3.5

5,365.7

4,563.1

6,321.6

7,07

2.8

5,653.6

10,166.8

13,632.3

10,680.5

8,008.2

7,20

1.2

8,840.6

11,223.7

8,38

6.5

28,208.6

28,435.4

375.

4340.4

258.

0384.9

429.

136

2.5

557.

8662.8

670.

055

4.4

133.

0143.2

102.1

112.

415

9.0

181.

831

1.1

314.1

384.

343

2.2

43.6

24.4

19.1

45.5

6.8

0.2

0.1

0.3

21.8

25.8

15.7

18.9

43.7

13.5

27.0

32.6

10.0

11.8

17.4

12.4

7.4

19.4

32.2

15.2

14.4

11.1

11.9

13.0

6.2

5.2

8.1

1.5

11.2

4.6

0.9

0.5

0.3

33.8

24.2

19.1

15.5

26.4

20.4

15.5

13.3

11.0

10.8

119.6

105.2

87.5

171.

7148.8

122.7

152.6

189.

1123.3

147.

2

342.8

208.

2301.3

301.3

247.

449

7.1

552.0

2,152.0

2,75

7.4

311.1

142.

7150.4

226.2

182.8

182.

1370.7

1,49

7.8

1,475.9

1.3

0.2

0.1

1.4

14.1

17.9

11.2

16.6

8.4

8.4

6.2

7.5

60.5

14.1

17.8

15.0

14.9

16.6

3.8

29.1

1.4

n.a.

14.2

26.8

141.

871

.2

n.a.

n.a.

n.a.

n.a.

4.1

1.3

30.2

9.7

89.2

471.

895

0.7

IMPO

RTS

Oil

sect

or

Non-oil

sect

or

IMPO

RTOF

PRINCIPAL

COMM

ODIT

IES

Beer

Cement

Clot

hing

Commercial

vehicles

Cott

onpiece

good

s

Flou

r

Gene

ral

machinery

Medi

cine

Passenger

cars

CSI

root

ing

shee

ts

856.

41,

079.

099

0.1

1,22

4.8

1,736.5

3,72

1.5

5,14

8.5

7,11

6.6

8,21

1.7

7,47

2.5

9,C9

5.5

12,719.8

10,770.5

8,903.7

7,178.3

7,062.6

5,983.6

17,8

61.7

21,445.7

52.2

50.6

45.2

41.0

52.4

118.0

95.0

102.

211

0.0

230.

022

7.4

199.8

225.

517

1.6

282.

451

.8913.9

3,170.1

3,90

3.1

704.2

1,028.4

944.9

1,18

3.8

1,684.1

3,60

3.5

5,06

3.5

7,014.4

8,10

1.7

7,242.5

8,868.2

1c,520.0

10,545.0

8,73

2.1

6,895.9

7,010.8

5,06

9.7

14,691.6

17,642.6

1.1

1.1

1.3

1.3

2.8

31.9

46.0

72.4

5.5

2.8

4.1

4.3

3.0

2.9

8.1

17.4

11.7

17.1

34.0

71.8

73.0

168.2

184.6

162.1

118.

820

7.6

220.

922

9.5

4.8

17.2

18.9

16.8

23.6

62.3

79.6

108.8

100.4

37.6

52.9

64.7

47.4

19.9

50.8

56.2

47.0

459.

461.4

229.

769

6.9

552.

6324.3

262.9

325.

1597.2

268.4

117.5

28.2

26.5

16.7

8.1

7.3

14.4

44.1

5.3

5.7

3.4

0.6

3.2

1.1

1.8

1.0

70.3

97.5

28.6

37.0

48.8

9.6

40.5

7.3

7.8

84.7

136.9

125.

2133.5

196.9

469.3

1,363.1

1,39

5.9

1,63

3.8

1,25

1.0

25.5

41.3

21.9

39.4

46.6

86.0

107.

1131.6

162.0

132.

9219.2

382.

9230.9

194.

2

13.5

29.5

54.4

76.6

97.0

220.

326

1.0

297.4

225.

624

6.4

114.

459

0.5

452.0

1.8

2.5

0.7

0.3

1.4

8.1

12.0

159.

3156.2

131.

0

3.9

65.6 7.3

104.

7

4.3

0.2

n.a.

n.a.

40.5

56.0

120.

6n.a.

3.8

n.e.

n.a.

n.e.

99.4

137.0

229.

6n.a.

7.1

2.1

11.7

1.6

n.a

122.2

151.

721

4.4

471.

6n.

a.

192.2

66.5

109.

526

1.2

374.

3

C/RM/G/1Page84

Appendix

4(cent'd)

Desc

ript

ion

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

Stockfish

2.0

1.0

1.6

3.8

2.1

24.3

39.6

13.9

19.5

34.2

35.0

123.

573.6

51.9

11.2

26.1

57.4

n.a.

Sugar

11.4

17.7

21.2

30.0

26.2

74.0

79.6

125.6

173.

817

5.0

214.4

490.

3319.1

191.3

126.4

97.5

132.

229

0.9

n.a.

Othe

rs47

1.4

677.

962

3.2

795.7

1,18

3.8

2,24

1.8

2,164.8

3,89

8.5

4,953.6

3,45

4.3

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

Sour

ces:

Fede

ral

Offi

ceof

Stat

isti

cs,

Annual

Abstract

ofSt

atis

tics

,Ce

ntra

lBa

nkof

Nigeria,

Annu

alReport

and

Statement

ofAc

coun

ts

C/RM/G

/15

Page83

C/RM/ Page 92

APPE

NDIX

5

Nige

ria'

sMerchandise

Imports

byProduct

Grou

p,1984

-1989

(per

cent)

S.I.

T.C.

sect

ions

Aspe

rcen

tage

ofto

tal

imports

1984

1989

0Fo

odand

live

animals

18.8

6.8

1Be

vera

ges

and

toba

cco

0.2

0.4

2Cr

ude

matC

4.2

3.5

3Mi

nera

lfu

els,

lubr

ican

tsand

rela

ted

materials

1.3

0.8

4Animal

and

vegetable

oils

and

fats

2.3

0.2

SChemicals

14.6

22.9

6Ma

nufa

ctur

edgoods

clas

sifi

edchiefly

byma

teri

als

18.9

21.2

APPN

DIX

6

Exports

and

Re-e

xpor

tsby

Regional

Groupings

(NMillion)

Year

Countribe

Eastern

Japa

nUnited

U.S.A.

ECOW

ASWester

Others

Tota

lcountries

Europe

Kingdom

Europe

1970

27.56

31.72

6.83

250.38

101.63

7.24

398.13

62.05

885.56

1971

29.82

44.35

17.62

278.83

223.53

26.8

3592.59

79.82

1,29

4.41

1972

28.69

25.54

55.1

730

0.98

299.57

29.84

606.67

67.8

41,434.21

1973

74.50

41.4

785

.86

438.

2951

2.15

35.68

805.55

136.09

2,22

6.61

1974

126.06

105.80

238.04

978.12

1,58

9.89

81.7

02,010.92

664.21

5,79

4.76

1975

64.7

786

.40

165.

9964

6.52

1,257.56

62.0

11,

648.

233.

173,928.69

1976

34.9

614.24

191.

13814.28

2,00

1.54

94.59

1,83

4.94

714.

425,

760.

1319

7776

0.90

18.4

07.

70615.50

3,016.00

178.90

1,689.50

1,343.90

7,63

0.80

1978

254.

6021.00

3.50

405.20

2,667.10

155.20

2,215.60

602.

606,324.80

1979

740.50

19.80

11.9

063

2.00

4,57

9.20

174.

303,724.50

436.10

10,3

18.3

01980

1981

872.60

198.80

160.

20135.80

3,928.60

299.

504,

235.

301,

203.

0011,033.80

1982

414.

9051

.20

4.90

211.

502,983.20

230.40

3,369.40

1,930.40

9,19

6.40

1983

133.

9047

.40

5.90

319.

801,802.30

144.30

3,23

2.60

2,065.40

7,75

1.80

1984

577.

8037.90

6.10

422.

701,212.90

300.00

6,116.10

465.30

9,13

8.80

1985

702.

3033.00

*.60

538.

602,

116.

30387.90

7,217.40

717.70

11,7

20.8

01986

387.

8020

.60

13.8

0512.60

3,163.30

345.

704,305.10

379.30

9,128.80

1987

854.30

8.20

22.9

0530.30

13,8

97.8

01,635.50

11,851.80

777.30

29,5

78.0

019

88937.60

60.60

37.3

0591.00

14,337.60

1,736.00

12,0

42.8

01,

667.

3031

,192

.80

1989

508.

1060.90

133.70

1,04

8.90

31,984.90

3,312.40

20,6

12.0

02,324.60

59,9

85.5

0

Source:

Central

Bank

ofNi

geri

a:Economic

and

Fina

ncia

lReview,

vari

ous

issues

C/RM/G/15 Page87

APPE

NDIX

7

Valu

eof

majo

rex

port

s(#

Mill

ion)

Cott

onGr

ound

-Gr

ound

-Gr

ound

-Hides

Pal.

Palm

Petr

oleu

mRubber

Timb

erTi

nTotal

Othe

rGr

and

Year

Cocoa

raw

nuts

nuts

nut

and

kernels

oil

crud

enatural

logs

meta

lma

jor

como

-total

cake

oil

skin

san

dcommo

dities

sawn

diti

es

1970

133.07

13.1

343

.54

11.03

13.21

5.68

21.7

31.

1350

9.62

17.4

06.19

33.8

1819.60

67.1

41,

885.

75

1971

143.11

11.0

924

.40

6.73

12.5

44.

8425.99

3.13

953.03

12.40

5.38

24.2

21,

156.

9166

.49

1,293.41

1972

101.

130.

6019.13

5.78

10.5

66.60

15.53

0.24

1,15

2.56

6.86

6.09

18.8

01,343.92

67.9

51,

411.

87

1973

112.

384.

7045.50

17.96

23.64

12.5

018.86

0.09

1,89

3.54

19.3

911.77

15.4

52,175.72

101.71

2,27

7.44

1974

158.

976.

824.84

11.3

710

.55

43.72

0.01

5,36

5.72

33.1

53.18

26.4

75,

664.

85129.90

5,794.76

1975

180.

950.

620.

166.

7118.43

4,62

9.60

15.1

04.77

17.21

4,873.58

110.38

4,983.97

1976

217.80

3.41

5.71

25.85

6,19

6.18

14.00

1.13

14.6

46,478.78

114.

246,623.02

1977

298.

459.

930.

925.

7428

.91

7,08

0.83

10.06

0.43

9.90

7,44

4.73

184.77

7,62

9.60

1978

405.30

5.40

2.60

18.5

05,683.30

14.50

17.8

06,139.40

169.

406,

313.

80

1979

244.

1020

.50

2.00

13.5

09,

706.

2018

.70

9.30

9,962.20

185.30

10,189.60

1980

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

1981

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

n.a.

-No

tav

aila

ble

Source:

Cent

ral

Bank

ofNigeria,

Economic

and

Financial

Review,

various

issues./fs

C/RM/G

/15Page

85