Overseas Market Profiles

Major Economic Indicators

Source: IMF, EIU
* IMF or EIU estimate

Recent Developments

• Rising oil prices, a stronger banking sector and a fast growing telecommunication market will continue to boost Nigeria’s economy. The IMF estimates that Nigeria’s real GDP will grow by 7.4% in 2011.
• Nigeria is Hong Kong’s 5th largest export market in Africa in the first eleven months in 2010. After a plunge in 2009, Hong Kong’s exports to Nigeria continue to drop in 2010.
• The presidential election is to be held in Nigeria in April 2011, and it is not entirely clear if political stability could swiftly return to the country even after the election.

Current Economic Situation

With over 150 million people, Nigeria is the most populous country in Africa and the 7th most populous country in the world. It is also one of the world’s fastest growing countries, with the IMF projecting growth of 7% in 2010 and 7.4% in 2011. However, per-capita income in Nigeria remains low (US$ 1,324 in 2010, which is about half the level of Egypt).

Nigeria is one of the Africa’s largest oil producers, with over 2 million barrels produced per day. Oil plays an important role in the Nigerian economy, accounting for about 20% of Nigeria’s GDP, 70% of government revenue, and 90% of exports earnings (thereby an important source of foreign exchanges).

The oil price plunge in 2009 led to a huge drop of Nigerian exports for the year. With oil prices recovering, Nigeria’s exports are expected to bounce back to the pre-crisis level. An ongoing amnesty for former militants in the oil-rich Niger River delta is seen as helping oil output. However, unless a fundamental resolution is in place, militancy and violence in the Niger Delta region will overshadow the oil output of Nigeria. A large oil producer notwithstanding, blackouts are a daily occurrence in Nigeria, where the demand for electricity is almost double the current average supply of 3,000 megawatts.

The presidential election is to be held in Nigeria in April 2011, and it is not entirely clear if political stability could swiftly return to the country even after the election. Nigeria's previous elections have been marred by violence and alleged fraud. It remains to be seen who will win the presidential election and whether there will be a more durable arrangement as to the amnesty to former militants in the oil-rich Niger River delta.

Manufacturing in Nigeria only accounted for about 4% of GDP in 2009. Poor infrastructure and political instability undermine Nigeria’s attractiveness as a production base. Indeed, manufacturing is regarded as a key driver of Nigeria to diversify its economy. In 2010, Nigeria embarked on a partnership project with China to build Africa’s largest free trade zone (FTZ) in Largos. The FTZ is expected to be 16,000 hectares, aiming to develop local manufacturing.

Service sector, which accounts for around 40% of Nigeria’s GDP, is also a major driver of Nigeria’s economic growth. Telecommunication sector is a major powerhouse. Nigeria liberalised its telecommunication sector in the late 1990s. The entry of foreign telecom operators speeds up the process of modernisation, particularly the mobile penetration. Connected mobile lines, for example, almost doubled from 55.2 million in 2007 to 110 million in 2010.
Nigeria’s imports amounted to US$30.3 billion in 2009, and China accounted for 15% of the total, followed by the US (8.6%), the Netherlands (7.9%) and South Korea (5.7%). Nigeria’s imports from China were tripled from 2004 to 2009, showing the increasing importance of Chinese imports to Nigeria.

Trade Policy

Nigeria adopts the Harmonised System (HS) of Customs Tariff and all duties are levied on an ad valorem basis.

There are five bands of import tariffs in Nigeria, ranging from 0% for necessities to 35% for finished goods which Nigeria produces.

As of May 2009, there were 26 categories of goods banned from entry. Nigeria’s government continues its commitment to reducing import barriers. On November 2010, the Nigerian government announced an import ban on some textiles, furniture and some other products. However, certain non-tariff trade barriers are still in force. For example, all unbanned textile materials must be imported through seaports in Lagos and Port Harcourt, and through airports in Lagos and Kano.

The Standards Organisation of Nigeria (SON) is responsible for inspecting the quality of imported goods. Normally, if customs documents are submitted on time, the goods should be cleared within 48 hours.

The National Agency for Food and Drug Administration and Control (NAFDAC) regulates the importation of food, drugs, cosmetics, medical devices, bottled water and chemicals. Importers of such goods should register with NAFDAC.

The Nigerian Communications Commission (NCC) regulates the import of telecommunications equipment for use in Nigeria by the licensed private telecom service providers. This is to ensure the quality of telecommunication equipments are up to standard.

Nigeria does not impose any quantitative restriction or quota to imports, and no prior deposit is needed.

Hong Kong's Trade with Nigeria^

Hong Kong's total exports to Nigeria fell by 12.3% year-on-year (YoY) to US$176 million in the first eleven months of 2010. Major export items included telecommunication equipment and parts (US$97 million, 55.3% of total, -26.6% YoY), computers (US$12 million, 7% of total, +315.7% YoY) and watches and clocks (US$9 million, 5.2% of total, -18.1% YoY).

On the other hand, Hong Kong's imports from Nigeria increased by 17.1% YoY to US$35 billion over the same period. Of the major imports, leather topped the list (US$17 million, 47.6% of total, -9.7% YoY), followed by telecommunication equipment and parts (US$14 million, 39.6% of total, +85.4% YoY) and ores and concentrates of base metal (US$2 million, 7.1% of total, -6.8% YoY).

Source: Census & Statistics Department, Hong Kong

^ Since offshore trade has not been recorded by ordinary trade figures, these numbers do not necessarily reflect the export business managed by Hong Kong companies.