Nigeria - Trade BarriersNigeria - Trade Barriers
Nigeria employs a combination of tariffs and quotas for the double purpose of taxing international trade for revenue generation and protecting local industries from highly competitive imports. The country’s tariffs are determined by the ECOWAS 2015 – 2019 CET Book. The tariff has five bands; zero duty on capital goods and essential drugs, 5% duty on raw materials, 10% on intermediate goods, 20% on finished goods and 35% on imports into strategic sectors. Nevertheless, effective rates tend to be higher since the Nigerian government may apply additional charges (levies, excise and VAT) on the imports. However, the total effective rate of each line item is not to exceed 70%. As mentioned above, there are over 80 tariff lines whose effective duty exceeds the limit set by the CET.
In a bid to protect its local industries and grow several strategic sectors chief of which is agriculture, the Government of Nigeria has continued to restrict or place bans on certain imports. Check a list of banned items.
Most goods destined to Nigeria, especially in the foods, drug and cosmetics categories, require some sort of inspection and/or certification from government authorities or their appointed third-party contractors. Because the Nigerian government lacks the capacity to undertake such painstaking inspections, testing and reviews, clearance of imports are typically delayed to the detriment of the importer.
Local content laws are emerging across sectors of the Nigerian economy. Originally introduced to ensure local participation in labor and across the value chain of the oil and gas sector, local content requirements have gradually begun to spread to other sectors such as Information and Communications Technology (ICT). In addition, the government has several import substitution policies which aim to increase local production over imports through subsidies, tariffs, quotas and other barriers to trade. Amongst these measures is a Federal Government directive which stipulates that preference be granted to domestic manufacturers, contractors and service providers in all government procurements. This directive, issued via an Executive Order in May 2017, also states that at least 40% of expenditure for the procurement of the following items shall be on locally manufactured goods:
- Uniforms and Footwear
- Food and Beverages
- Furniture and Fittings
- Motor Vehicles
- Construction Materials
- Information Technology
Furthermore, the Nigerian Senate has passed an amendment to the Public Procurement Act of 2007 which would, among other changes, compel Federal Government Ministries, Departments and Agencies to show preference for local goods and services. The amendment is awaiting scrutiny and passage by the House of Representatives as well as assent by the President prior to its enactment. As a result of the difficulties in implementing such local content and domestic preference policies as well as the government’s limited capacity to enforce these directives, the new Executive Order has tasked the Federal Ministry of Industry, Trade and Investment and the Bureau of Public Procurement (BPP) to prepare a report on specific recommendations to strengthen the implementation of local content policies.
Nigerian port practices continue to present major obstacles to trade. Importers report erratic application of customs regulations, lengthy clearance procedures, high berthing and unloading costs, and corruption. Due to lack of space at Lagos ports, ships reportedly queue up for days, and in some cases weeks and months, before being able to berth and discharge their contents. Due to delays caused by congestion and the poor condition of the port access roads, operations at Nigerian ports are among the most expensive in the world. However, there have been reported slow but steady improvements in the goods transit process. The Nigerian Port Authority (NPA), through public-private partnership arrangements, has undertaken rehabilitation of port terminals in Lagos and Port Harcourt, deepened water channels, upgraded common user facilities, and removed wrecks from water channels.
More information about non-tariff trade barriers in Nigeria.
For more information and help with trade barriers please contact:
- International Trade Administration
Nigeria Trade Barriers