Concerned Nigerians have continued to voice out against fiscal policies and economic activities of the government, which is believed to be self-sabotaging. From high import and export levies to infrastructural deficiencies, Nigeria has been bedeviled with unprogressive policies and poor infrastructure that have stymied its economic growth for years.
On Tuesday, the Director-General of the World Trade Organization (WTO), Dr. Ngozi Okonjo-Iweala, lamented that the cost of Nigeria’s trade is too high to attract foreign investors. This is besides calls by several other Nigerian experts demanding that the government take steps to address many of the pitfalls limiting Nigeria’s economic progress.
The former Minister of Finance and Coordinating Minister of Economy under the administration of former President Goodluck Jonathan stated this via a video link on day two of the Mid-term Ministerial Performance Review at the State House, Abuja.
Okonjo-Iweala, who was a strong advocate of ‘saving for the rainy days’ during her time as minister, also said the government needs to improve the nation’s security in order to attract foreign and domestic investments.
Apart from that, there is a huge vacuum in Nigeria’s infrastructural operations that the WTO DG said must be curtailed for the country to make progress. She said the country must cut down not only on trade cost but also infrastructure cost, linkage cost, regulatory cost, customs cost, and all costs associated with moving goods from the factory to the final consumer to complement investment facilitation.
To drive her point home, she said that Nigeria’s trade cost was equivalent to a 306 percent tariff, one and half times higher than the cost in high income countries. This, including congestion, capacity constraints and high costs at Nigerian ports, she said do not encourage investment as they make it difficult to build supply chain operations in the country.
“Improving security and lowering transaction cost for foreign investment, even for domestic investment, would be necessary. And Nigeria is part of a group of countries negotiating an agreement on investment facilitation at the WTO.
“Once this agreement is negotiated, ratified and is being implemented, it could be instrumental in attracting additional trade-oriented investment. To complement investment facilitation, Nigeria has to cut down on trade cost, infrastructure cost, linkage cost, regulatory cost, customs cost, basically, all costs associated with moving goods from tie factory or farm gate to the final consumer.
“Nigeria’s trade costs are too high. According to the World Bank-ESCAP trade costs for 2019, trade costs for African countries are on average equivalent of a 304% tariff and for Nigeria, it’s even slightly higher at 306%.
“These numbers are one and half times higher than trade cost in high income countries. Such high costs are not conducive to forming regional value chain. Congestion, capacity constraints and high costs in our ports make life difficult for anyone seeking to build supply chain operations in Nigeria and hence, expand trade from there,” she said.
Nigeria’s export has dipped from an average of $109 billion between 2010 and 2014 to just $35 billion in 2020, leaving a $74 billion gap. The dip is a result of high levies and high cost of operations in the country.
A recent report on Nigeria’s export growth revealed that Nigerian-bound cargo airlines are choosing to return back empty because it costs $35,000 in levies to move goods from Nigeria to other countries. Whereas in other Western African countries such as Ghana, cargo airlines only pay $4,000 in levies for outbound goods.