Nigeria employs a combination of tariffs and quotas for the dual purposes of revenue generation and protecting local industries from highly competitive imports. The country’s tariffs are determined by the ECOWAS 2015 – 2019 Common External Tariff (CET). The tariff has five bands: 0% 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 (e.g., levies, excise, and VAT) on the imports. However, the total effective rate of each line item is not to exceed 70%. There are growing complaints from U.S. companies, including in the healthcare and processed foods sectors, regarding exorbitant registration fees and very long processing timelines with the National Agency for Foods and Drugs Administration and Control (NAFDAC). These issues are considered Technical Barriers to Trade (TBT) by the Office of Trade Agreements Negotiations and Compliance (TANC).
In a bid to protect local industries and grow several strategic sectors, especially agriculture, the Nigerian government has continued to restrict or place bans on certain imports. See section below on “Prohibited & Restricted Imports.”
Most goods destined for Nigeria, especially in the food, drug, and cosmetics, require inspection or certification from authorities or appointed third-party contractors. Because the government lacks the capacity to undertake inspections, testing, and reviews, clearance of imports is typically delayed to the detriment of the importer.
Local content laws are in place 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) and advertising. Section 78 of the Corporate and Allied Matters Act provides that a foreign company intending to carry on business in Nigeria is obligated to incorporate a separate entity in the country before participating in any such business. A foreign company may not participate in any business or have a place of business or an address for service until it has incorporated a separate entity in Nigeria. Addresses for the receipt of notices and other documents for the purposes of incorporating an entity in Nigeria are permissible.
The Nigerian government has several import substitution policies which aim to increase local production through subsidies, tariffs, quotas, and other barriers to trade. Among these measures is a 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
In December 2019, the Nigerian Senate passed an amendment to the Public Procurement Act of 2007 which would compel ministries, departments, and agencies to show preference for local goods and services. The amendment is awaiting passage by the House of Representatives as well as assent by the President prior to its enactment. This amendment will likely be passed due to the national emphasis on local content and support for local industries.
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 queue for days, and in some cases weeks or months, before being able to berth and unload. 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.
In April 2022, the government of Nigeria reopened four additional land borders. Four others opened in December 2020. The government had closed land borders with Benin and Niger in 2019 to curb smuggling and the proliferation of illegal importation of drugs, small arms, and agricultural products. The government stated that the border closure was based on the governments of both Benin and Niger failure to adhere to the tenets of the ECOWAS CET. For more information and help with trade barriers please contact:
International Trade Administration