Implications of Import Tariff Changes on Household Welfare in Nigeria: A CGE Model Approach

Abstract

This study investigated the effects of import tariff changes on the household welfare in Nigeria. Methodologically, the study used a static CGE model to run simulations that indicate the nature of the static effects. In the simulations, the study identifies four different scenarios to investigate the impacts of the changes in the import tariff rates. Scenario 1 & 2 focus on tariff rates reductions, whiles scenarios 3 & 4 test the effects of the increase in import tariff rates on household welfare and compared to the base case scenario 2019 in which the benchmark equilibrium parameters are calibrated. The results show that household income and consumption volume have inverse relationships with import tariff changes. The findings obtained from the model suggest that import tariff increase will provide rise in general price level. But household welfare should be a priority of government complementary policy help, therefore social protection policy should put in place for any upward rise of tariff rate.