The International Monetary Fund (IMF) has stated that the challenge of import restrictions in Nigeria and other African countries complicates business operations.
The Fund stated this in its Regional Economic Outlook for Sub-Saharan Africa entitled, “A Tepid and Pricey Recovery,” where it explained that the twin challenges of import restrictions and foreign currency shortages could mar the post-pandemic recovery in terms of profitability of companies across the region.
High debt servicing restricting investments in critical sectors
Furthermore, the IMF noted that the post-pandemic recovery for the region comes during a time of global uncertainty and shocks, as rising interest rates push Sub-Saharan African (SSA) countries’ expenditure from critical capital investments towards debt servicing.
According to the IMF, such divestment results in low educational outcomes and rising food insecurity in the regions. It referenced a report that states that only 65% of school children complete their primary and secondary education in the SSA compared to the global average of 87%.
It also noted that food insecurity has become rife in the region, with Nigeria and D.R Congo a flash point.
It states, “The liquidity squeeze is imperiling the growth prospects of the region’s future generations, as funds are sorely lacking to address the vast development needs, intensified by the pandemic’s scarring effects. For instance, nearly 3 in 10 school-age children are not attending primary and secondary education. Of those who do enroll in primary school, only about 65 percent complete it, compared to the global average of 87 percent.”
“As of 2023, an estimated 140 million people across the region, including a significant number in the Democratic Republic of the Congo and Nigeria, are grappling with acute food insecurity, with policymakers facing constraints in their ability to respond effectively given limited fiscal space.”
What you should know
Nigeria implements certain trade policies to favour local production, self-sustenance, and job creation. In 2015, the Central Bank of Nigeria (CBN) announced a restriction on importers of 43 items to be barred from accessing foreign exchange on the official market. Chief among these items was rice which the President Buhari administration had promised to ensure self-sufficiency. However, this has been reversed by the new CBN Governor, Dr Yemi Cardoso.
- In October 2019, President Buhari ordered the closure of all land borders across the country in a move to discourage smuggling and boost local production of products where Nigeria has a competitive advantage. However, the policy contravenes the spirit of the African Continental Free Trade Agreement (AfCTA) which became operation under a year later in June 2020.