Policy Intervention Series 4: Recent export-unfriendly policies: implications for the Nigerian economy

Entry
Nigeria remains a government-led economy, which means that government policies have a direct and immediate impact on all sectors. Understanding the broader economic context is crucial.

● Ease of doing business: Nigeria ranks 131st out of 190 economies (World Bank, 2022).

● Value of the Naira: The Naira is appreciating in value ($1 = 1,265 yen), but the sustainability of this is uncertain.

● Economic structure: Nigeria is still highly dependent on oil (81% of exports).

Policy coherence and latest policy issues

1. Export Prohibition Act: Recently reintroduced by the Nigeria Customs Service affecting various sectors.

2. Export Licenses: Reinstatement of export licenses with renewal based on repatriation of export proceeds.

3. Naming exports in Naira: This is contrary to the definition of exports which should include transactions in foreign currencies.

Business Facilities Act (BFA), 2023
● Consolidates seven years of reforms led by PEBEC.

● Aims to improve ease of doing business and streamline business operations.

● Modifies 21 business regulations to eliminate bureaucratic hurdles.

Political implications

1. Export Prohibition Act:

● Some foods and raw materials were initially banned to encourage local processing and add value.

● Recent changes extend the ban to all food items to address food shortages.

2. Reintroduction of export permits:

● Export licenses now require proof of repatriation of previous year’s earnings for renewal.

3. Determination of exports in Naira:

● Exports should include foreign currency transactions to qualify as exports.

Export related policy: case studies

● The Export Prohibition Act restricts the export of certain goods, affecting various industries.

● Non-oil exports are crucial to the Nigerian economy and supportive policies are needed.

Final remarks

1. Ban Concerns: An export ban is undesirable and inconsistent with the WTO and may lead to retaliation by other countries.

2. Executive Order on Non-Oil Exports: Calls for prioritizing non-oil exports to increase foreign exchange earnings.

3. Research and policymaking:

● Emphasize research to improve product quality for international markets.

● Adopt an inclusive policy-making process that engages diverse stakeholders.

● Streamlining and coordinating policies across agencies to increase their effectiveness.

Application

Strategic and coherent policies are essential to Nigeria’s economic stability and growth. The Ease of Doing Business Act and other reforms aim to improve the business environment, but ongoing issues such as the export ban and denomination of exports in Naira need to be addressed. Effective cooperation and research are essential to develop policies that support non-oil exports and overall economic diversification.