Operating businesses in Nigeria has become very difficult and challenging.
Ms. Catriona Laing, the British high commissioner in Nigeria, said in an interview on Saturday that the UK government has concerns about some of Nigeria’s policies, including a recent prohibition on the import of certain products. The United Kingdom has therefore urged that the Nigerian government implement adjustments to these regulations, which are seen as a factor inhibiting the country’s economic growth and development. It said this was essential for increased output and greater exports in the country.
The consequences of such a prohibition are mixed. By taking a close look at the prohibition, Ms. Laing asserts that outweighing the adverse effects has made it difficult to operate a business in Nigeria. She argues that the prohibition on importation in the nation would have a significant impact on Nigerians involved in exporting due to the high cost of transportation and energy, which in turn affects the production rate. It has been argued that the structure of Nigeria’s policy formulation process is counterproductive and that it should be restructured so that the country’s exports are less restricted.
UK to support Nigeria in producing standard products.
Furtherly, she attributed the challenges faced in operating business in the country and the reduction seen in the UK’s export to Nigeria to the poor market environment and policies in Nigeria. Thus, she urged for investment in mutual ways that will also enable the UK government to access Nigeria’s market with trade investment. Also, the Nigerian government has been advised to enhance its product standard so as to enable the country to reach a peak export rate where almost all of its goods will be exported to the UK duty-free by 2023.
Months ago, the UK government announced the Developing Countries Trading Scheme (DCTS), where 99 percent of Nigerian goods will be granted free authorized entry into the UK duty-free by 2023. Ms. Laing said producing standard products for export would enable Nigeria to achieve amply from the UK’s new trade scheme in 2023, enabling the country to balance its trade with the European country. As Nigeria’s strategic partner, she said the UK will render its support to Nigeria in its quest to improve the standards of its commodities for export.
Nigeria to benefit 99 percent duty-free on its exports to the UK.
Similarly, in a post-Brexit era, the UK is keen to ensure access to its market is available as it is set to launch the developing country trading scheme by 2023, which is said to as well impact Nigeria with 99 percent duty-free on its exports to the UK. For instance, cocoa butter, which will have had to pay £180,000 in tariffs, will be free. For Nigeria to boost its product standard and reach non-tariff barriers, there is a need for sanitary and phytosanitary standards if the country is exporting agricultural products.
Ms. Laing assures that the United Kingdom government would continue pushing for Nigeria to meet the product standards. FDI flows from the UK to Nigeria were £5 billion, whereas FDI flows from Nigeria to the UK totaled merely £780 million. Recent data released by the UK government shows that British exports to Nigeria reached £3.3 billion in Q2 2022, an increase of £856 million, or 35.4%, over the four quarters ending in Q2 2021.
Country is recorded as the UK’s 42nd most significant trading partner.
While Nigerian imports amounted to £2.2 billion, rising 101.4% or £1.1 billion over the four quarters to the end of Q2 2021. In the four quarters to the end of Q2 2022, Nigeria was the UK’s 42nd biggest trading partner, contributing 0.4% of total UK trade. The UK’s outward stock of foreign direct investment (FDI) in Nigeria was £5.1 billion in 2020, representing 0.3% of the overall UK outward FDI stock. While the total inbound stock of foreign direct investment (FDI) from Nigeria into the UK was £780 million.
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