Issues that surround trade in Nigeria
According to an analysis by the CIA, oil-rich Nigeria has been hobbled by political instability, corruption, inadequate infrastructure, and poor macroeconomic management but in 2008 began pursuing economic reforms. Nigeria’s former military rulers failed to diversify the economy away from its overdependence on the capital-intensive oil sector, which provides 95% of foreign exchange earnings and about 80% of budgetary revenues. Since 2008 the government has begun to show the political will to implement the market-oriented reforms urged by the IMF, such as modernizing the banking system, curbing inflation by blocking excessive wage demands, and resolving regional disputes over the distribution of earnings from the oil industry. GDP rose strongly in 2007-10 because of increased oil exports and high global crude prices in 2010. President JONATHAN has pledged to continue the economic reforms of his predecessor with emphasis on infrastructure improvements. Infrastructure is the main impediment to growth and in August 2010 JONATHAN unveiled a power sector blueprint that includes privatization of the state-run electricity generation and distribution facilities. The government also is working toward developing stronger public-private partnerships for roads. Nigeria’s financial sector was hurt by the global financial and economic crises and the Central Bank governor has taken measures to strengthen that sector.
Nigeria’s main industries are crude oil, coal, tin, columbite; rubber products, wood; hides and skins, textiles, cement and other construction materials, food products, footwear, chemicals, fertilizer, printing, ceramics, and steel. While its major export markets are the US 37.4%, India 10.5%, Brazil 7.8%, Spain 6.9%. The markets that Nigeria imports the most from are China 15.4%, Netherlands 9.7%, US 9.3%, France 4.8%, UK 4.2%. In the World Bank’s annual Ease of Doing Business Survey, Nigeria ranks at a relatively low 133 for the year 2012. It also received relatively poor rankings of 149 for Trading Across Borders, 97 for Enforcing Contracts, and 65 for Protecting Investors. According to the World Bank, Nigeria is classified as a lower middle income country.
Overall, Nigeria is a mixed bag in terms of investment or doing business in. While the risks are definitely higher for businesses, their are also much greater rewards for those who are willing to take risks. Nigeria has a poor record for fostering the most business friendly environment. However, the market is huge with more than a 150 million people, with the economy growing at a really explosive rate. Nigeria’s demographics are also quite favorable, since it is projected to be among the biggest countries in 2050. So the market is clearly poised for growth, and the Nigerian government has tried hard to increase the business friendly atmosphere. It’s up to businesses and investors to see just how friendly that market really is.