Nigeria’s exports to Economic Community of West African States (ECOWAS) member-countries have been increasing yearly, according to the International Monetary Fund (IMF) Article IV Consultation Staff Report.
They increased from $1 billion in 1990 to about $6 billion in 2013, IMF said.
The report said the implementation in January 2015 of the Common External Tariffs (CET) for ECOWAS member-countries is expected to reduce incentives for informal trade and simplify customs procedures, potentially increasing recorded trade volumes.
“Moreover, the slowdown in Nigeria will adversely affect informal exports to Nigeria. Anecdotal evidence indicates that goods that are subject to import restrictions in Nigeria have become key export goods for neighboring countries. Those informal exports to Nigeria are important sources of income for some neighboring countries and outward spillovers may be nontrivial,” it said.
It said growing cross-border activity of Nigerian-based banks has increased the scope for spillovers through financial channels, along with regulatory and supervisory challenges.
It said the depreciation of the exchange rate would add to inflation, reflecting the pass-through of higher domestic prices for imports, but the effect is likely to be contained, in part due to lower food prices from increased local production of staple food crops.
The IMF said the outlook was compromised by low fiscal and external buffers, which have reduced the capacity to absorb shocks relative to the experience of the 2008-09 financial crisis.
The lender said the government expressed its determination to implement appropriate measures to manage risks.
“They agreed that the oil price shock is significant and, at least in part, permanent, but saw a smaller effect on economic activity than staff, owing to measures targeted at sectors critical for growth (agriculture, power, small enterprises) and the impact of remittances. They noted that rising food self-sufficiency would limit the pass-through to inflation and activity in housing construction would continue,” it said.
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