Economists said Africa’s largest economy lost at least $1.8 billion annually between 2010 and 2019 as a result of the federal government’s protectionist policies, warning that such policy is counterproductive.
Nigerian government develops this policy to protect local industries against foreign competition by means of tariffs, subsidies, import quotas, or other restrictions on the imports of foreign competitors.
Since the inception of President Muhammadu Buhari’s administration in 2015, protectionist policies have generated unintended outcomes, including high levels of tariff evasion accounting for the loss of $1.8 billion annually in public revenue.
These protectionist policies have been central to the country’s limited success in diversifying the economy and furthering the growth of the manufacturing sector, the Washington-based global financial institution said.
The import restrictions are pushing millions of Nigerians into poverty as “distortionary trade policies can decrease overall purchasing power and, in turn, increase poverty.”
The World Bank advised that specific government policies may therefore be needed if the gains of trade liberalization are to be reaped in Nigeria.
In Nigeria, many policies limit trade; the country is not unique in this regard, as protectionist policies have been on the rise the world over and the ongoing war in Ukraine could intensify this.
Jonathan Lain and Jakob Engel, World Bank economists, said this in a recent blog post.
“Throughout the past two decades, import bans, tariffs, and foreign exchange restrictions have all curbed the flow of goods into Nigeria.
“These restrictive policies culminated in Nigeria closing its land border for more than a year in August 2019. Nigeria is also currently negotiating the terms of its participation in the African Continental Free Trade Agreement (AfCFTA); therefore, discussions of trade policy are very topical.