Gradual Reform

Nigeria has made progress toward establishing a market-based economy. In recent years, it privatized the only government-owned petrochemical company and sold its interest in eight oil service companies. The Yar'Adua administration has paid especially close attention to due process by overturning or reviewing a number of suspect contracts awarded by its predecessor. Nigeria's implementation of non-tariff barriers has been arbitrary and uneven and continues to violate WTO prohibitions against trade bans. However, Nigeria has made some progress in its implementation of the Economic Community of West African States (ECOWAS) Common External Tariff by removing some textile items from its list of prohibited imports in 2006. In a September 2008 breakthrough, Nigeria decreased the number of banned import categories from 44 to 26 items, reduced a number of tariffs, and reiterated its commitment to harmonizing its tariff regime with its neighbors.

Enforcement of criminal penalties against intellectual property rights (IPR) violations is weak, and firms that are successfully countering IPR piracy have generally done so through civil court cases. The government has created an intellectual property commission. Rules concerning sanitary and phytosanitary standards, testing, and labeling are well defined, but bureaucratic hurdles slow trade opportunities. The government is generally supportive of biotechnology cooperation, although legislation governing biosafety is sparse at best.

A co-member of the International Advisory Group of the Extractive Industries Transparency Initiative (EITI) initiated by the G8, Nigeria's federal government is playing an important role in having volunteered to pilot the new disclosure and validation methodologies. It has completed a comprehensive audit of oil sector payments and government revenues from 1999-2004. The federal government has passed implementing legislation on public procurement and fiscal transparency, but now it must ensure that Nigeria's 36 states pass and implement similar bills. It is perceived that government contracting remains rife with corruption and kickbacks, and that many state and local officials continue to steal public monies outright.

Nigeria's economic team had enjoyed an excellent reputation in the international community. It produced an encouraging body of work, notably budgets described as "prudent and responsible" by the IMF and a detailed economic reform blueprint, the National Economic Empowerment and Development Strategy (NEEDS). Other positive developments included: (1) government efforts to deregulate fuel prices; (2) Nigeria's participation in the EITI and commitment to the G8 Anticorruption/Transparency Initiative; (3) creation of what had been an effective Economic and Financial Crimes Commission (EFCC), which until 2008 had earned 150 convictions and recovered over $5 billion in mishandled funds; and (4) development of several governmental offices to better monitor official revenues and expenditures.

Nigeria is not on track to meet its Millennium Development Goals because of a lack of policy coordination between the federal, state, and local governments, a lack of funding commitments at the state and local levels; and a lack of available staff to implement and monitor projects on health, poverty, and education.