Protecting Nigerians From The Purveyors of Poverty

Thomas Sowell likes to say that you cannot know whether a policy is a success or failure without knowing what the person behind the policy set out to do in the first place. So a policy ‘merely’ being a failure might be a success from the point of view of a devious person who designed it to be so.

Today’s papers are full of stories about how Nigeria is refusing to sign the Economic Partnership Agreement [EPA] between the European Union and the 15 ECOWAS countries. According to our friend, the most popular government minister on this blog, Olusegun Aganga, Nigeria raised ’10 Questions’ which have not been answered. These questions, according to him, centre around the protection of the Nigerian economy from the marauding Europeans, hell bent on a second colonisation [Ok he didn’t say that, I made it up].

Take it away The Guardian:

The Federal Government has declined to sign the trade liberalisation agreement being pushed forward by the European Union, under the  Economic Partnership Agreement (EPA) with Economic Community Of West African States(ECOWAS),after due consideration of its impact on the economy.

The government had earlier expressed reservations over the pact,due to vital clauses in it that could be harmful to the nation’s economy.

Aganga, defender of the Nigerian economy, went on:

The EPA agreement was not even ready for endorsement by the Heads of State and Government. During the meeting last week, Nigeria raised 10 objections to what was presented to us and the Summit of Heads of State ratified it.

Consequently, a committee from Nigeria, Cote D’Ivoire , Ghana and Senegal looked at the issues raised by member states, particularly Nigeria, and came up with a proposal. When we went into the meeting, the whole idea was to endorse it, but of course, we had various reservations concerning the agreement based on our model and the feedback we got from our private sector.”

He added: “One major reservation was that the way the agreement was done, which of course they expected us to sign, would not be in the overall interest of the Nigerian economy over the long term. For instance, in the area of market access, the EU wants us to open our market by 75 per cent over a 20-year period.

This appears harmless because over the first five years, there will be no major impact because they will open all their doors for us to export to Europe. However, the problem here is that currently, we are not exporting much to Europe and so the benefit will not be significant.

I will come back to the section highlighted above but one more thing he said:

The minister explained that, given Nigeria’s current condition as an import-dependent economy, it would be counter-productive to completely open its doors [Me: You can see the clever code switch here – opening your doors gradually up to 75% over 20 years has been ‘transformed’ by Aganga into ‘completely’for imports without first of all developing its industrial sector to compete globally, especially in those sectors where the country has comparative and competitive advantage as provided in the Nigeria Industrial Revolution Plan recently launched by President Goodluck Jonathan.

Another major point we raised was that those items that were in Category D, and excluded in the 25 per cent, should include those areas and sectors that we want to develop in line with the Nigerian Industrial Revolution Plan. Some of those areas are already under Category C and D, meaning that they are the sectors that the EU wants us to liberalise imports. If we do that, it will have a very negative impact on the NIRP.

Nigeria is the biggest country in the ECOWAS and we are already producing some of those goods that they want us to liberalise their importation. Also, what this means is that, not now, but from 2025 to 2026, based on the items that have been included and excluded, there will be significant loss of revenue to the government. There will be loss of jobs, investment and loss of even the ECOWAS market,”he said.

Aganga, however, stressed that it was important to remain as one unit in the ECOWAS region, saying that “even if they import those items into our neighbouring countries, they will end up in Nigeria and this will have negative impact on the Nigerian economy. So, it is important for us to work together as ECOWAS members and not to allow EPA to divide us.

 

It’s important to quote him at length for context and also because these are the people in charge of the Nigerian economy, presumably working hard to deliver a better life for Nigerians.

Here are some points about the EPA in question:

1. Negotiations on this agreement have been going on for 14 years starting with the Cotonou Agreement. If people have been arguing over this matter for 14 years, then it’s not unreasonable to conclude that the negotiations have been tough. Nevertheless, on 24th January 2014, both sides announced that a ‘major breakthrough’ had been reached and they were now ready to sign the agreement.

2. In terms of value and rules and regulations, the EU is the largest single market in the world – there are 500 million people in it. In 2010, the EU imported €2trn worth of goods and services from across the world and exported €1.8trn worth of stuff.

3. When negotiations on the EPA started, the EU wanted ECOWAS to open up 80% of their market over a period of 15 years. After plenty of back and forth, this was compromised to 75% of the market (the most sensitive 25% of the economy can be excluded) over a period of 20 years. Normally, based on WTO rules, there shouldn’t be any sectors exempted from a free trade agreement but special consideration was given to the economic development of West Africa thus allowing the exemption of some sectors.

4. The EU, under a programme called EPA Development Programme, will also provide around €6.5bn from 2015 – 2019 to help boost the capacity of African countries to take advantage of the EPA.

5. In January, before the agreement was reached, the EU also agreed to stop all export subsidies to companies exporting goods to West Africa. This is especially in the area of agriculture.

6. On the other side of point 3 above – ECOWAS countries get full and immediate access to the EU market i.e. no quotas, no tariffs, no duties for goods produced in West Africa to enter any of the EU countries. I am almost certain that rather than provide support for companies that want to export to the EU, the Nigerian government levies export tariffs on them instead.

7. Finally, the EU has EPAs in place with practically every region in the world. It is not just an ECOWAS thing. There is also a huge one called the Transatlantic Trade and Investment Partnership being negotiated between the EU and the USA.

 

Now it’s fine to disagree with the terms above but surely no reasonable person can say steps have not been taken to protect the weaker party in this agreement. Also, one should not focus on the potential dangers to the detriment of the positive aspects of the agreement – the EU is a rich market and getting free access to it should undoubtedly create opportunities. Other parts of Africa that already have EPAs in place can point to real results that have been achieved. Based on the SADC-EU EPA for example, all export quotas on Botswanan beef have removed meaning that local cattle rearers can export as much beef as they want to the EU. The real issue should be government policies that boost the capacity of African companies to take advantage of these opportunities.

From Aganga’s comments above, he claims Nigeria is refusing to sign the agreement to protect the Nigerian economy and its people. Nigerians should no longer take these statements at face value. They ought to be examined whether they are genuine or no more than a pile of hot piffle. On my part, I can tell you who needs to be protected from who. Oh yes, I can.

The Nigerian people need to be protected from the Enemies of Enterprise, nominally known as the Nigerian government. Just yesterday the Communications Minister. Mobola Johnson revealed the following:

Speaking on claims by data service providers on the deployment of 4G LTE, she said the claims by Smile Communications Nigeria Limited and others are accurate.

She urged Nigerians not to be sceptical about their promises to deliver true 4G LTE technology services, adding that a worrisome trend in the industry currently is the fact that out of every kobo spent on the rollout of infrastructure by the operators, 70 per cent goes to taxes and levies

You can slice or dice it however you want, but the reason why internet penetration and quality phone access remains a headache today in Nigeria, is because the Nigerian government has willed it to be so. The same people who conspired to destroy education are now standing in the way of internet and mobile phone access that can change people’s daily lives for the better.

The Nigerian people need to be protected from the Purveyors of Poverty who have conspired to give us a cement ‘policy’ that cannot be described as anything other than picking the pockets of Nigerians at gunpoint. This cement policy has given us Dangote whose founder is now the richest black man in the world worth $25bn via a policy that aggressively transfers wealth from Nigerians to a handful of people by restricting choice in the market. Nigerians buy cement at 3 times what it can be obtained for elsewhere while Dangote has the biggest profit margins of any cement producer in the world – double the margins of Chinese producers who are the most efficient on the planet. All of this has produced an earth shattering 20,000 jobs which you will agree with me is what is stopping the Nigerian economy from totally imploding. Oh, this same company is still enjoying ‘pioneer status’ and has billions of Naira in tax credits yet to claim.

These are the people who Aganga is protecting not the Nigerian people. This is the ‘feedback from the private sector’ that he is referring to because free trade will expose who has been scamming who in the Nigerian economy.

I ask you to carry out a simple experiment when next you leave your houses for work or you are moving around anywhere in Nigeria. Take a note of all uncompleted buildings you see. Count how many you see in a day be they uncompleted houses or offices. Ignore the ones where work is going on and just focus on the ones that have obviously been abandoned for a long time. Report your findings in the comments below.

We have a deficit of 17 million homes in Nigeria today. Let us even forget the homes that need to be built from scratch – just consider the jobs and boost to the economy if some of those uncompleted buildings can be finished. Yet we celebrate ‘Made in Nigeria’ cement that is directly contributing to this mess we find ourselves in. How many buildings will suddenly become viable for completion if Nigerians are able to buy cement at the same price that people in Asia can buy it? You tell me.

The Nigerian people also need to be protected from the Traducers of Trade who speak from both sides of their mouth. Just last night I saw this tweet from the Finance Minister, Ngozi Okonjo-Iweala:

In January, everyone in the Nigerian government from the President to his ministers and aides gathered together to launch the Nigeria Mortgage Refinance Company [NMRC] scheme. Plenty of noise was made about this programme as a flagship policy that will, wait for it, ‘transform’ Nigeria. I wrote an explainer about it at the time. It’s a useful policy that can do good for us, ceteris paribus.

But have a look at this World Bank document. From design to funding, the World Bank almost singlehandedly produced that policy for the Nigerian government. The government barely put any funding into it (they are too busy making money disappear). So when the Finance Minister makes such a statement above, who exactly is she talking to and what is she saying?

This is not some benign thing – it is how capitalism and trade have become a slur in Africa over the decades. Leaders have systematically drawn up a false equivalent that trade and capitalism is something people (usually white) do to Africans to take over their wealth and resources. A minister who is happy to take the credit for World Bank work on one hand and then deliver an ‘ominous warning’ about the same people in the next breath is but a variant of the Champagne Socialist – champagne for me, socialism for you.

It is very important to protect Nigerians from the Injurer of Industry who send out one policy that is doomed to fail in the morning and are shocked, shocked I tell you, when it fails in the evening. They ban things in the morning and are full of righteous indignation when smuggling increases in the evening. They slap punitive tariffs on rice which cost the government at least N300bn in lost revenues – money that is then borrowed via bonds and left for the next generation to worry about. This policy, according to the Nigerian Customs, has also cost 19 lives of customs officers.

Does it matter that the rice tariff policy has failed? Does it matter that they have now abandoned the Cassava policy? Does this stop them from doing the same damn thing elsewhere? Of course not – that is why they want to replicate the foolishness on cars.

Most of all, the Nigerian people need to be protected from the First Born Sons of Satan who have no qualms about profiting from the mess of unemployment they have created. In other countries with high unemployment, the governments are frightened of any kind of gathering of jobless young people. Not so in Nigeria – our government is bold enough to gather thousands of unemployed youths in stadiums around the country to try their luck for jobs that have probably been distributed among Very Important People already.

It has the gall to kill 16 of these young people while the President adds insult to injury by chastising the minister responsible with no more than a finger wag.

 

What is the worst that will happen if the Nigerian government signs the EPA? Nigerians will have access to cheaper and better quality goods from Europe. No doubt this – voluntary exchange – is a terrible thing indeed.

But this piece is not about calling on the government to sign the agreement – they will have to as some ECOWAS countries are already breaking ranks to sign it. If the goods get to Ghana, then all bets are off as they will surely find their way into our ‘protected economy’.

It is about asking questions about the judgement of the people who claim to be making decisions on our behalf. Nigerians need to ask how exactly it is that these people claim to be acting in our best interests. Aganga claims that the EPA is not compatible with his National Industrial Revolution Plan [NIRP]. Where is the NIRP? It is in the same place that the automobile policy is – on his laptop. Only one copy. This is why no one has seen it. But as Dr Nonso Obikili showed recently, the only thing revolutionary about this NIRP is that it has ‘revolution’ in its name.

The government should tell us who exactly they are protecting us from, what the risks of exposure to these persons are and what alternative plans they have in place to ensure we are not being given Made in Nigeria cement in place of bread.

If a 20 year period is not enough to gradually open 75% of your market and you are already worried about the government losing revenues in 2026 on account of trade, then the Nigerian people need to be protected from the poverty you are planning for them. The only danger ahead is the utter lack of vision with which you are boldly marching into the future. Is the future so zero sum to them that they are already resigned to the idea Nigerian companies will not be able to take advantage of opportunities presented to them by untrammelled access to the European market? We cannot afford to be led by people who think this way.

During the auto debate, I made the point several times that the Mexican car industry manufactures 3 million cars a year while employing 500,000 people. None of those cars are ‘Mexican cars’. They are the Toyotas and VWs and so on. Today Mexico is also the world’s largest exporter of flat screen televisions. These things have been made possible by the North American Free Trade Agreement [NAFTA] that was signed in 1994, when Bill Clinton was President. At the time it was signed, Mexican officials were dreaming and hoping that they could reach $10bn in exports per month. Today, Mexico exports goods worth on average $1bn per day made possible by a trade agreement with its richer neighbours.

Enough of policies that trap us in poverty in the name of protecting us from marauding traders. It was trade that made the Magnificent Tang Dynasty. It was trade that made the 8th Century Arabs. It is trade that continues to make America – including the trade in culture. If the Nigerian government has stumbled on a new model of broad-based wealth creation, it should tell us so we know where we are going.

 

My current obsession these days is trying to find out what happened to Africa and Nigeria in the late 70s in terms of economic direction. I am trying to understand how, when Britain under Thatcher, America under Reagan and even China under Deng started to move towards market economies, Nigeria and other African countries were fooling around with nationalisation of oil and other companies. We are now at a stage where the Nigerian Labour Congress, in 2014, is threatening fire and brimstone if the government privatises a company that provides catering services to airlines. It is important to ask how the government came to own such a company in the first place.

We need to understand how it all happened because here we are again – nationalisation being replaced by insularity. Things are being banned, tariffs are being raised, free trade is being warded off, the economy is being ‘protected’. Self sufficiency – the surest path to poverty – is what is on the lips of every government official.

Who wants to wait another 30 years to look back ruefully and wonder why we didn’t do things differently? Not me.

FF

 

 

 

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17 thoughts on “Protecting Nigerians From The Purveyors of Poverty

    1. Not sure where you got that from. AGOA is working. The problem that has been identified is that Chinese companies are gaming it by setting up in Africa and then exporting to America with made in Africa labels.
      That kind of ‘problem’ is a different one because if the Chinese can do it in Africa, we need to figure out why we cant.

      Obama has even given his word that he will extend it beyond 2015 based on requests from African countries
      http://blogs.ft.com/beyond-brics/2013/08/09/guest-post-expanding-agoa-should-be-a-priority-for-africa-and-the-us/#axzz2xemk8k2s

  1. Aganga has a point here–but yes, he has no credibility to back it up. Not with the government he represents.
    We cannot out-compete the EU, not at the stage our local industries are in. In the long run, these agreements benefit them, not us. So called ‘free-market’ economics is a zero sum game. We’re either at an advantage or not. Africa is nowhere ready, in my opinion–not when, for example, Francophone African countries have no say over their monetary systems ( check out terms of CEFA Franc monetary unions, for example, pathetic.) South Korea & Japan had strong protectionist measures in place before they opened up (check out articles by Ha-Joon Chang, who, mind you,is not exactly a state socialist. ) Same goes for the US/UK ( 1700s .) Deng’s China integrated into the world economy on their own terms and at their own pace. Today, their banking/monetary system remains firmly under government control. We’d be well served by remembering the lessons of NAFTA–a ‘free trade’ bonanza that was supposed to revive Mexico’s economy. Instead, it wiped out millions of farming jobs and forced once self sufficient class of workers to run for the US border. The EU is dying to get itself out the economic rut that they and other free market ideologues created— and capturing foreign ‘markets’ is the prize. Voices in the US opposing a highly secretive trans-pacific trade ‘partnership’–are steadily growing ( involving the US and 11 pacific area countries. And most alarmingly, their multinational corporations.)

    I must admit I am flabbergasted at NOI’s double-speak here. It is symptomatic of Nigeria’s schizoid policy making ( wasn’t she the one kow-towing to the IMF during the subsidy saga ?) And yes, I totally understand your skepticism. We need to clean up Abuja.

    1. We are not entering a trade agreement to *out compete* the EU. It is trade – voluntary exchange. If Nigeria and EU are trying to sell something to America or Saudi Arabia, then we are in competition. This is a free trade agreement between ECOWAS and EU to exchange goods and services – we sell to them, they sell to us. We buy from them, they buy from us.
      Rather than all this fear that we are going to be overrun, we should think about how to take advantage of a massive and diverse rich market.
      It is this attitude to trade that enables successive Nigerian govts to get away with silly policies over and over again.

      Mexico lost jobs? Who promised them that those jobs were going to be there forever? Do you know how many jobs the state of Alabama has lost as an example to Mexico in car manufacturing? Do you know how many jobs America has lost in bread making or cement manufacturing that have all gone to Mexico? America and Mexico have both lost jobs and gained as their economies adjust to the dynamics of a free trade zone. But nobody is cancelling NAFTA that’s for sure – 20 years later, they only seek to make it better not get rid of it.

      If we keep saying we are not ready, we will never be ready and we will continue to have policies that favour Dangote our ‘nascent’ cement manufacturer that will go straight into the FTSE 100 once its listed in London.

      As long as we the people continue to be afraid and susceptible to scare mongering about trade, our governments will continue to lead us up the garden path. Nothing can be worse than what we have now. I will always take my chances with trade.

  2. Thanks for the feedback. No way is this ‘voluntary’, in my opinion. Obviously you disagree. EU/Africa agreements haven’t worked that way. They’d prefer us as eternal consumers, I’d want us to be producers , with the infrastructure and industry to match ( China.) Only THEN can we talk of ‘exchange’. BTW I am with you on the need to take advantage of their markets.

    Good point bringing up corresponding job losses via NAFTA. It was promised that they would last forever–that is how Clinton sold it. Nobody is ‘cancelling it’ because it benefits the owners of America: corporations. American labor unions largely deride it, the bosses don’t. It’s still a very touchy issue and speaks to undue influence of money in Yankee politics. Do you think a failed states like Nigeria or those making up the ECOWAS can afford more free trade ‘dynamics’ ? I know we’ve suffered already. Perhaps we wouldn’t notice–and that is too bad.

    Nothing I’ve brought up is fear mongering. I know the idiots in Abuja use similar arguments as smoke-screens, but I’d say they are merely stating the facts. We’ve been ‘overrun’ already, in my opinion. With Africa’s obscene external debt, with our non-existent industries.

    I’ll keep an eye on this topic. Again I can relate to your desire to actually make something work.

  3. Pingback: Protecting Nigerians From The Purveyors of Poverty – Y! Opinion

  4. Conflation of issues and points here. The EPA is not as simple and un-dangerous as you make it out to be. If you read the terms of the agreement, you see that in the long run ECOWAS will lose.

    1. There is nothing like voluntary trade exchanges. NOTHING. The more an advanced economy is in a free trade agreement (FTA), the higher the benefits. And of, the eventual economic winner.

    2. This opening of market within 20 years is pure lie. Within 5 years of signing this agreement, many nascent sectors in Nigeria WILL shut down because of the influx of EU goods. The recently growing agricultural sectors, pharma sector, manufacturing etc will go down the drain. The EU is simply looking for market to off load that is cheese, milk, fruit and vegetable mountains.

    3. Before comparing the TTIP, consider who are the signatories: the US and the EU. Both are in somewhat similar economic capacities so negative fallout might not be that huge. Then compare the EU and ECOWAS, you will see that EU is economically far bigger than ECOWAS. What this means is that, ECOWAS, no matter how slow or quickly it opens up its economies, will come out the loser in this agreement.

    4. Have you considered the intellectual property (IP) clause of this EPA? It is in this area that ECOWAS would feel the pinch the most if the EPA is signed. Why? Because the IP clause in this EPA is of a higher standard than what is stipulated in Trade-Related Aspect of the Intellectual Property Rights (TRIPS Agreement). What this means is this: while TRIPS allows the use of certain flexibilities such as compulsory license, parallel importation, Bolar Exception etc; the EPA disallows it. Also, in an intelligent wording of particular clauses, the EPA only allows the use of certain flexibilities for limited illnesses while limiting what can be considered “health crisis”, which allows countries under TRIPS to decide when to invoke the use of the TRIPS flexibilities. The implications of the EPA on public health — and considering the ECOWAS is plagued with numerous health crises — is profound.

    I sometimes don’t agree with what this present government does but for once, I support their stand on the EPA. It will be a shame of other ECOWAS countries sign the EPA. It is technically a death warrant. Don’t be carried away with perceived economic gains. Look at the wordings of the agreement critically and then decide. I support what Aganga and co have done. You economists tend to base everything on monetary gains while ignoring the legal and socio-economic impacts.

    1. Sigh

      Everyone keeps talking about how Nigeria will ‘lose’ from free trade but no one ever really explains what this loss will mean.
      How exactly do you ‘lose’ from trade? I am seriously at a loss to understand this point.

      Ok even forget the EU – last week I was at a seminar where the President of Ghana was complaining about how Nigeria refuses to allow them trade with Nigeria in so many areas. But he said they would continue negotiating and appealing to the Nigerian authorities.
      If Nigeria is blocking trade with Ghana with a $40bn GDP on account of ‘competition’, then the problem is a psychological one of people just viscerally disliking trade.
      Calling trade ‘competition’ is the first sign that such people dont know what they are talking about really.

      In all the points you made above, you did not once mention the consumer and what might be good for them. You keep referring to ‘Nigeria’ in the abstract. So the EU will come and ‘dump’ their cheese and vegetables on the Nigerian market (something only rich Nigerians are currently able to enjoy) and horror of horrors, Nigerians will actually like these products and spend their money to buy them. Such evil! I mean, how dare they supply the things that Nigerians actually want to buy and make money in the process?

      I will concede your 4th point because I have no idea what those technical terms mean. But I do know that plenty of countries have engaged in free trade in the past without an army of lawyers poring over every line of the agreement.

      People who are defending the govt really should come up with an alternative because the forces of globalisation are irresistible so its only a matter of time. I actually pray the ECOWAS countries undermine Nigeria and sign the thing. If we like we can keep feeling like big boys protecting our ‘huge market’, the good will make their way through our porous borders anyway.

      When the Nigerian govt comes up with a serious programme that helps Nigerian businesses take advantage of the trade opportunities in other countries, I will know they are serious. But for now, they can keep posturing in the name of protecting ‘Nigerians’. Yeah right

      1. You asked for specifics, so here…

        1. Most members of ECOWAS are classified as least developed countries (LDCs), which means that automatically, they are currently eligible for duty-free, quota-free market access under the EU’s “Everything but Arms” scheme even sans the EPA getting signed.

        2. Non-LDCs such as Ghana and Ivory Coast currently have preferential access to the EU market. Nigeria, on the other hand, though does not have an agreement with the EU but currently benefits form the EU’s Generalized System of Preference (GSP). Thus, this EPA is just a wide door to expand EU access into various sectors that currently they do not have access to while limiting opportunities for individual ECOWAS member states the right to make decisions that reflect their current economic reality.

        3. Regarding the Most Favoured Nation clause, the EU insists that should ECOWAS sign any agreement with countries from the global south (say India, Brazil etc), it must be given the same treatment regardless of the EPA. Nigeria is insisting that various ECOWAS members should be left to decide that individually.

        4. Currently, Nigeria isn’t exporting much to Europe and there isn’t really a specific, tangible benefit attached to this EPA for Nigeria. EU on the other is poised to gain 150 million consumers. It’s not only cheese and milk. It is things like tomatoes, vegetables, the growing floral industry, the nascent auto industry, petroleum products like lubricants, services, etc. These sectors, though you think are minute, WILL collapse. They Nigerian agricultural sector cannot compete with subsidized agricultural products from EU. Agricultural sector is the highest employer in the country esp in the North. Now think of the various farmers that will be affected and also remember the average Nigerian’s love for buying foreign goods. You think within a new EPA context, local farmers can compete?

        5. Ghana and Ivory Coast are clamoring to have this EPA signed. Why? Because they are poised to benefit from it the most. Currently, they are the highest exporters of Cocoa to the EU but the EPA will allow them to export more into the EU. Also, for the EPA to be signed, ECOWAS must harmonize their internal trading rules. This will give Ghana and Ivory Coast access to the Nigerian market that they currently don’t have. Again, another benefit. See, I’m not against sub-regional integration but you need to understand the motives of certain ECOWAS countries. In all of this, the question still remains: what is Nigeria benefitting?

        6. If we already have access to the EU market through the GSP, why do we need this EPA? The EU knows Africa is the next frontier – with booming populations, which means more consumers and growing economies – so they are trying to cash in. This agreement has been going on now for 10 years? Why the sudden push to finalize by October 1, 2014? Again, it is all politics. They are looking for markets. Why can’t the EU make do with current “Everything but Arms” scheme and GSP, which ALL ECOWAS members are currently tied into?

        7. The alternative? Leave the “Everything but Arms” scheme and the GSP the way they are. If Ivory Coast or Ghana wants to enter into an FTA with EU, they should do individually. Why drag the rest?

        8. Oh, one more thing. With regards to recent EBOLA outbreak in Guinea. If it enters Nigeria after EPA is signed (if the EPA is goining to be signed), Nigeria cannot bulk purchase cheap, generic EBOLA vaccines or medications outside. Why? Because the EPA prohibits such. It infringes of IP right of EU pharma companies that have patents on it. This means they must buy expensive, patented versions form EU companies.

        I hope I have answered your questions.

  5. Ok thanks for the clarification(s).

    1. This is understood
    2. I still dont understand how widening the GSP to EPA will only benefit the EU? Wont it also increase the access Nigeria has into the EU? You can argue that Nigeria maybe doesnt have much to sell to the EU at the moment (I doubt this) but that is not to say the opportunities to sell wont increase with moving from GSP to EPA.
    3. Hmm…if this is a Nigerian complaint, then it is valid. Although I can see where the EU are coming from – countries that dont have agreements with the EU might then set up in Nigeria, produce their goods, slap a ‘made in Nigeria’ label on it and then export to the EU under the EPA. That will be to Nigeria’s benefit as more jobs will be created locally but the EU obviously wont like it especially if its countries that have refused to sign deals with them. To me it seems like a way of preventing a backdoor access to their market…understandable but I support the Nigerian position.
    4. This is way too deterministic for me. We CAN compete. It will involve a lot of hardwork but we can. I remember when Obasanjo had a programme to support cassava exports many years ago. He missed a trick by not actually boosting local production so the effect was that when the programme kicked off, price of garri in Nigeria shot up. Why? Because farmers were amazed at the much better prices they could get from exporting as opposed to selling in the local market and were diverting all their produce abroad. However shortlived that was, farmers did get rich but till today we are barely producing enough cassava for local consumption even though we are the world’s largest producer. Same thing with yams. Here in London I know that much of the ‘Nigerian food’ we buy comes from Brazil because govt in Nigeria does not understand export led growth…all they keep making noise about is ‘our market’.
    Yes there are 170m Nigerians but many many of them are poor and cant afford anything.
    The Chinese are already in Nigeria so unless the EU can compete on price with those ones (almost impossible) they are in for a rude shock. Wonderful for the consumer I say.
    5. Agreed. But perhaps the Nigerian govt should come out and tell us what they want to benefit from any trade arrangement. No one is going to answer that question for us.
    6. Depending on who you ask – Asia or Latin America is the next frontier. Also, Africa. If we have been negotiating for 10 years, I assume the purpose of that was to have something signed at some point? Maybe the EU are tired of talking and want to get down to business.
    Again, what use have we made of the GSP? Saying we want to stay with the GSP and not move to EPA is a valid point though. But again, they have to tell us what is going to be done with it not just some agreement that sits there doing nothing.
    7. Fair point. ECOWAS is an economic zone in a name only anyway.
    8. I take your word on this. No clue on how these things work.

    And yes thank you for the points you made. I have been educated

  6. I am struggling to agree with your premises on the EU deal. It’s about terms of trade. The best starting point is to ask ourselves how we will benefit. Trade will be of benefit to us when it expands the market for what we produce, or it improves the terms at which we get what we buy. Let’s talk about expanding the market for what we produce. I have a direct knowledge of EU’s product quality standards. In 2005, I tried importing Nigerian rubber slippers to Italy. The quality standards and regulations are quite daunting. And even if your product passes through quality restrictions, you’re still competing with the Chinese on the low end of the price scale. Simply put, our key manufactured products are clones of foreign products. Star is a variant of Heineken. Guiness is Guinness. Bournvita is of no interest to Europeans. Ditto Milo, etc etc etc. We are simply not competitive enough in the manufactured product space. For commodities, we could be competitive, as we are. We might get slightly better terms for our commodities. For agricultural produce, we have no chance. The European market is heavily subsidised. EU health and product standards are very high. Most African produce will not get through.

    Here comes the part where I use your point to undermine your argument. I simply don’t see access to EU markets being beneficial to West African goods until West Africa has rational, workable and working economic and industrial policy that actually improves productivity and competitiveness. It is naive to think Heineken wants to import Star to Holland to compete with Heineken, or that Unilever will import Lifebouy to the UK.

    Long term, I would support this agreement. At this moment, it is very unlikely to deliver any serious value to Africa. All it does is make EU products cheaper than Chinese products. If that’s the goal, we’re better off having an auction- let EU and China fight for space.

    I conclude on points where we agree. Most of all, the problem with this deal is the people negotiating for Africa. Trust me, and verify what I say; the guys negotiating on our behalf simply are not good enough. I have been at fora in Brussels where the EU guys talk down, promising to help us, and the African guys beg for investment, complain and come up with laundry lists. The EU guys bribe our negotiators with consultancies, financing and token grants and recognition.

    ECOWAS should have a wider consultation and present the details of the agreement to the wider West African business community. Then this agreement would be seen to be beneficial.

    1. Aha! Now we are talking.

      1. The broader point I am trying to make is that the govt needs to learn how to provide institutional support for businesses that try to take advantage of the trade agreements it signs. Signing the deal by no means the work has been finished.
      Here in the UK we have UKTI http://www.ukti.gov.uk/home.html?guid=none . Their work is to help UK companies export more. While you struggle with meeting standards, European companies struggle with understanding culture and competing with the Chinese who are already in most markets.
      The point here is that we need to move away from the Dangote Model where these companies are permanently on the govt feeding bottle and cant eat solids.

      You should not have struggling on your own to get your slippers into Italy. If you were German, the institutional support that would have been at your disposal is phenomenal. That is the REAL advantage they have not just that their products are better. We can compete. But our govt spends all its energy fighting trade and nothing providing support to companies that need to export.
      Do you know how much pork China needs? They have 500m pigs in that country and it cannot satisfy their demand. Does our govt have any pig export support programme? Exporting pigs to China can feed thousands of Nigerian farmers.

      2. I live here in the EU and trust me, we have low quality products easily available as well. It is not as daunting as you make it seem. What a lot of these products do to break into the market is to compete on price. They then take that feedback and improve their quality.
      The best example is when Kia broke into the UK market with the Kia Ceed around 8 years ago. They launched with a 7 year warranty. It was impossible to ignore as the best available on the market at the time was maybe 3 or 4 year warranty. Today Kia Sportage is roughly around the same price as an Mercedes ML and those ‘bonanza’ warranties have disappeared.

      But you have to be in the game to be able to do any of that. The EU is not standing still either so no matter how long we wait to get to a certain point when we are ‘ready’ we still wont be ready in reality as things would have moved on.

      All this government braggadocio is not really helping us.

      3. Finally, the way Mexico has been able to benefit from NAFTA is by foreign companies setting up there to take advantage of their cheap and highly skilled labour. That can happen with us too. It doesnt have to be Nigerian companies growing to the point where they can compete. We can catch up by becoming a conducive environment where people can establish manufacturing to take advantage of the EU market.

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