Nigeria Summary

Introduction

The most populous country in Africa and the sixth largest exporter of oil in the world, Nigeria's most common description is as the African country with "incredible potential" - yet, its leadership has not yet been able to ever solve the problems that keep its over 100 million citizens living in poverty. The Nigerian economy is nearly entirely dependent on oil exports. Irrepressible corruption and fraud throughout the bloated civil service prevent the growth of other industries.

Though Nigeria has been a member of the WTO since its inception, some Nigerian government officials question the ability of its weak, oil-dependent economy to continue to participate in the organization's agenda for trade liberalization. National chairman of the Peoples Democratic Party (PDP) Audu Ogbeh has said that "membership of the WTO is not helping matters. Everything is being imported into the country," and has also convened meetings to call for reconsideration of Nigeria's WTO membership. [1]

On the other hand, supporters of Nigerian Minister of Finance Malam Adamu Ciroma maintain that opting out of participation in organizations like the WTO, IMF or World Bank would be detrimental to Nigerian development; the country must instead learn to protect its interests within the context of such modern necessities. Throughout the controversy, Nigeria has stayed active in global trade negotiations, participating in the 2003 WTO meeting in Cancun as an active member of the newly unified G20 negotiating block.

The G-20 Negotiating Group

At the WTO Cancun meeting, Nigeria became of member of the newly coalesced G20 trade block of articulate developing countries led by India, Brazil, China, South Africa. The group came together over their insistence that they could not consider further lowering their import tariffs until developed countries, particularly the US and EU, committed to significantly lowering their subsidies of domestic agriculture production and export. Reluctance to lower import tariffs is very strong in Nigeria, where the Manufacturers Association of Nigeria (MAN) has argued that maintaining tariffs are essential if stimulatory policies for small and medium business are to succeed. [2] The G20's rejection of the investment issues pushed in the negotiations by developed countries and its insistence on prioritizing agriculture instead has shifted the course of the Doha Development Round.

Oil and Gas

Ranking tenth in the world in oil and gas reserves, Nigeria is Africa's largest oil producer and the sixth biggest exporter in the world. Its daily output is about 2 million barrels, from which the country derives over 90 percent of its earnings.[3] The government, however, has set out a plan to increase daily production and reserves, encouraging new operations of private refineries. The goal of the policies is for Nigeria to begin to export refined oil with greater value-added and to stop importation of refined products, which has hampered plans to eliminate government subsidy in the sector. Nigeria maintains OPEC membership, and it agreed to a regional gas project in early 2003 that will enable the piping of natural gas to five cities in Ghana, Togo and Benin.

Restoring a Tarnished Image

Despite prolonged efforts by both government and private sector to lure tourists to the country, Nigeria remains a destination limited almost only to business travelers linked with oil, gas, and consulting services in other sectors. Some trace the paucity of international and domestic tourist activity to over-priced, poor-quality hotel rooms and the high cost of living in the country, which earned Lagos a ranking on the list of the 10 most expensive cities in the world.[4]

Addressing another problem of ill repute - the high levels of production and sale of counterfeit drugs - Nigeria's National Agency for Food and Drug Administration and Control (NAFDAC) received accolades for its recent program that required all drugs sold in the country to be registered by December 2003 and that prosecutes sellers of unregistered drugs. [5] Counterfeit, expired and substandard drugs on the Nigerian market have poisoned buyers, ruined legitimate manufacturers and distributors, and further tarnished the country's image as drugs originated in or merely passing through its territory have been intermittently banned in some West African nations.

The widespread circulation of spam email messages from fictitious Nigerians in search of international partners willing to provide startup money in exchange for a cut of the profits from multi-million dollar money laundering schemes propagates Nigeria's reputation as a hotspot of financial advance-fee frauds. Rampant bribery demands among the civil service also deter the interest of would-be international investors in Nigeria. In an unlucky exposé that highlights the extent of the problem, the Economist recently published a report from its Nigerian correspondent after she was deported from the country for failing to pay a bribe to information ministry officials. [6]

Regionalism

As of March 2004, the Economic Community of West African States (ECOWAS) plans to achieve a single customs union by 2007 to promote trade and commerce among the 16 states in the sub-region under a West African Monetary Union. The International Monetary Fund (IMF) has advised the other nations against cooperating with Nigeria in this project, citing government problems with corruption and uncontrolled spending. However, the EU has pledged to support this integration effort with up to $10 million euros in loans. A significant level of trade already occurs in the sub-region, and addressing current transport and immigration problems in a unified manner would likely increase business activity.

Nigeria and NEPAD

Nigerian President Olusegun Obasanjo has made the New Partnership for Africa's Development's (NEPAD) continent-wide millennial development plan a priority of his administration, including by pursuing policies that will make Nigeria business-friendly and facilitating domestic production and its competitiveness against imports. Nigeria is responsible for specific aspects of the NEPAD including economic governance, the banking sector and financial institutions, debt relief for Africa, ODA (Official Development Assistance), as well as corruption and money laundering on the continent. Though the President has paid much attention to NEPAD in speeches, significant policy changes regarding business facilitation have yet to be accomplished.

Conclusion

Over the last two years, despite debate over what level of participation Nigeria should maintain in both regional integration and WTO matters, the country has developed political relationships with G20 partners, and increased economic ties with neighbors, including Uganda and the Gambia, with whom Nigeria signed trade agreements in 2003. It seems likely that Nigeria will remain fully engaged in both global and regional trade deals, with a priority of gaining credibility in the international system.

It must be acknowledged that before any significant benefits from world trade can be gained, the domestic economy of Nigeria will have to diversify away from over-dependence on oil exports. In order for economic growth to happen in other industries, physical infrastructure must be greatly ameliorated, and corruption, financial fraud, regulatory barriers, and the threat of violent crime must be checked. There is potential for progress in the efforts of President Olusegun Obasanjo, who tried to cut domestic gas subsidies in October in an attempt to free up the market and reduce corruption generated by the huge subsidy program. He also has plans to reduce the size of the civil service, speed up privatization, and invest in agriculture and infrastructure. [7] However, the entrenched corruption and inefficiencies of the state, as well as the strength of the money laundering industry, are immense obstacles to be overcome before any more of Nigeria's great potential can be realized.

Last updated April 2004

Statistics

• World Bank Country Profile

Links

• Economic Community of West African States (ECOWAS)

• Nigeria and the IMF

• US State Department Country Report on Economic Policy and Trade Practices

• WTO Trade Policy Reviews:

• 1998