Nigeria to scrap visa-on-arrival policy + eighteen months of fuel subsidy removal
The Federal Government has announced plans to discontinue its visa-on-arrival policy, citing security risks and sustainability concerns. The Minister of Interior, Olubunmi Tunji-Ojo, revealed that the policy will be replaced with a stricter entry regulation requiring pre-arrival clearance from Interpol, criminal record systems, and other background-check agencies in real time.
In addition, the government plans to deploy an Advance Passenger Information (API) system at land borders to enhance security screening. The reforms, set to take effect between March 1 and April 1, 2025, aim to protect Nigerians and fulfil international security obligations.
Nigeria introduced the visa-on-arrival policy in 2020 to attract foreign investors, particularly from other African nations, by easing entry processes. However, the federal government now argues that the system has been exploited by criminal elements, making it unsustainable.
The replacement policy featuring entry and exit cards alongside pre-arrival clearance could enhance security but may also raise concerns about the ease of doing business and investor confidence which in turn might make or mar the volume of Nigeria’s foreign direct investment.
Nigeria’s current visa policy categorizes travellers into two broad groups; Visa-Free/Exemption and Visa-Mandatory.
How does Nigeria's Policy compare continentally?
Visa policies are common among African nations seeking to boost economic integration. As of 2024, the Henley Openness Index shows that over 25 African countries have an openness score of more than 50%, meaning they allow at least half of the world’s countries to enter visa-free.
Data from the African Development Bank suggests that countries with more open visa policies attract 30% more business-related visitors than those with restrictive policies.
In line with this, Nigeria has frequently shifted its visa policies in response to security and economic concerns. The most recent change occurred in 2020 when Nigeria introduced a simplified business visa process to attract investors. However, instead of an increase in foreign direct investment (FDI), Nigeria saw a 63% decline in FDI inflows.
The Nigeria Visa Policy 2020 (NVP 2020) was designed to support the Federal Government’s Economic Recovery and Growth Plan (ERGP), emphasizing Security, Economy, and Transparency (SET). The policy aimed to enhance Nigeria’s ease of doing business, boost tourism, address immigration-related challenges, and expand bilateral and multilateral relations.
However, according to data from the National Bureau of Statistics (NBS), foreign direct investment (FDI) inflows into Nigeria decreased by 63% from $1.03 billion in 2020 to $377.38 million in 2023. This raises concerns about whether stringent regulations may further discourage investors, as it appears that lowering visa requirements by itself did not spur investment development in Nigeria.
Notwithstanding Nigeria's visa-on-arrival policy, the drop in foreign direct investment (FDI) indicates that visa liberalisation is not a sufficient requirement for luring investment. Although lowering entry barriers can facilitate investor access, FDI inflows are more heavily influenced by other structural and economic factors.
One Year On: The Aftermath of Fuel Subsidy Removal
The removal of the fuel subsidy marked a significant turning point in the transportation sector, reshaping economic activities and mobility patterns across the country. More than a year after this pivotal policy shift, its impact on road transport, the primary consumer of fuel, has been profound.
The 2023 GDP report highlighted a staggering 56% decline in the productivity of the sector (2022/2023), reflecting the immediate shock and adjustments within the industry. However, by 2024, policy responses and market adaptations contributed to a notable 9% rebound, suggesting a gradual stabilization and potential pathways for recovery.
This could suggest that a sizable number of motorists operating commercial and private vehicles ceased operations in 2023, leading to an overall decrease in the value produced by this sector.
Also, the rebound in the sector in 2024 might imply that motorists have found a way to cope with the higher prices of fuel such as shifting the additional costs of operation to passengers, leading to an increase in the GDP of road transport.
The sharp decline in road transport productivity between 2022 and 2023 highlights the impact of the fuel subsidy removal on road transport users. In 2023, road transport productivity was even lower than during the COVID-19 period in 2020, when motorist movement was significantly restricted.
This decline had a significant impact on the overall productivity of the transport sector. The sector saw an overall decline of 43% within that period.
However, a deeper analysis of the broader transport industry shows that the removal of fuel subsidy did not negatively impact other modes of transport during the same period, except for rail and pipelines which declined by 2% within that period.
Conversely, policy measures such as refined fuel production by the Dangote refinery and other government interventions have contributed positively to the sector, mitigating some of the adverse effects of subsidy removal.
Road transport productivity increased by 9% between 2023 and 2024, indicating a positive growth trend in this sector.
Similarly, all other modes of transport experienced growth, except for air transport, which saw an 8% decline in productivity during the same period.
The decline in air transport productivity may be attributed to the rise in airfare prices, which increased by over 57% in 2024. Some attribute this surge to higher aviation fuel costs, while others point to exchange rate volatility as a key factor.
The observed 9% improvement in road transport productivity could be a sign of gradual economic adjustment, where businesses and individuals have started finding ways to cope with higher fuel prices such as an increase in road transportation costs.
However, the increase in transportation costs may have broader inflationary effects, influencing the cost of goods and services that depend on road logistics.
As the federal government navigates these economic changes, investments in alternative transportation solutions such as rail expansion and electric vehicles may serve as long-term buffers against fuel price volatility. Meanwhile, continued monitoring of transport sector trends will be crucial in assessing how effectively the sector will recover in the coming years.
Thanks for reading this edition of Marina and Maitama. It was written by Adijat Kareem and Lucy Okonkwo, and edited by Joachim MacEbong.
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