FG turns down $8.94bn regional trade agreement over weak industrial sector

Owing to the weakness and uncompetitive nature of Nigeria’s industrial sector, the Federal Government of Nigeria has refused to sign the $8.94 billion (6.5bn Euros) Economic Partnership Agreement (EPA) between the Economic Community of West African States (ECOWAS) and the European Union.

Nigeria is a leading member of the 15-member ECOWAS, which concluded technical negotiations for the trade agreement with the EU on March 28, 2014, under which the West African countries would have full access to European markets. The agreement also gave Mauritania, a non-ECOWAS member state, full access to all markets within the EU.

In return, ECOWAS will open up 75 percent of its markets to Europe over a 20-year period. The EU provided $8.94 billion package over the next five years to help ECOWAS cushion the effects and costs of integrating into the global economy.

“The agreement 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,’’ said Olusegun Aganga, minister of industry, trade and investment, during a working lunch in honour of the Li Yong, director-general, United Nations Industrial Development Organisation (UNIDO), recently.

The manufacturing sector is key to industrialisation and a fulcrum for the quest for non-oil exports expansion. With the rebased $510 billion Nigeria’s gross domestic product (GDP), the sector’s revised contribution has risen from 4 percent to 7 percent. But key areas within the sector such as textile, salt, solid minerals/raw materials, ceramics, automobile, among others, are either at low ebb or wobbling.

Incidentally, the country’s non-oil exports in 2013 were worth $2.97 billion, comprising majorly cocoa and cocoa preparations, sheep, goat skin and rubber, sesame, among others, according to the Nigerian Export Promotion Council (NEPC). Finished manufactured products such as aluminium, leather, tobacco products, cotton yarn and woven fabrics made up an insignificant percentage.

Cobalt’s January to June 2013 non-oil exports data revealed that, of $1.52 billion non-oil exports within the period, manufacturing recorded only $0.285 billion, while other commodity exports picked a whopping $1.23 billion. Manufacturing’s share represents just 19 percent of the total exports.

Following this trend, Aganga said with Nigeria’s current condition as an import-dependent economy, it would be counter-productive to completely open doors for imports without first of all developing the industrial sector to compete globally, especially in those sectors where the country had comparative and competitive advantage as provided in the Nigeria Industrial Revolution Plan recently launched by President Goodluck Jonathan.

A committee from Nigeria, Cote D’Ivoire, Ghana and Senegal has been set up to look at the issues raised by member states, particularly Nigeria, and come up with a proposal.

“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. What this means is that from 2025-2026, 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,” Aganga said.

ODINAKA ANUDU