European trade agreement seen crippling Nigeria’s manufacturing
The Economic Partnership Agreement (EPA) being proposed by the European Union for Africa, Caribbean and Pacific (ACP) will most likely stifle Nigeria’s struggling manufacturing sector, Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), has said.
The EPA is targeted at creating a free trade area between Europe and ACP countries. With the scheme, duties on goods traded will be reduced and eventually removed.
Despite the possible benefits, Nigeria has several limitations that reduce its chances of benefitting from the arrangement.
“Nigeria has very limited capability to produce and export industrial goods,” Jacobs said, at the international conference on the EPA held in Abuja.
“Most of the industries in the country are undeveloped and are plagued by lack of supportive infrastructure. EPA, therefore, may appear a good course in the document proposal but may be catastrophic if implemented, as it will stifle the slowly recovering manufacturing sector in the country,” he said.
According to the helmsman of manufacturers in Nigeria, EPA will confine the country’s economy to a mere market extension of the EU, since Africa’s largest economy cannot compete with Europe on all fronts.
“Nigerian manufacturers are not averse to free trade cooperation but such should be better done in a situation of equal economic development. Any attempt to coerce the country into a free trade arrangement will only succeed in killing the fledgling manufacturing sector which has just started to recover from a long period of comatose,” he stressed.
He emphasised that given the challenges faced by local manufacturers, ranging from infrastructure and cost to environment, EPA will only destroy companies that have invested in intermediate products manufacturing.
“Nigeria, indeed ECOWAS, will perpetually continue to be exporters of unprocessed raw materials and importers of processed goods. No country that depends on exportation of unprocessed raw materials can be considered as developed. The rationale for the establishment of the Raw Materials Research and Development Council (RMRDC) will be questioned as it will be more fashionable to import from the EU than to develop raw materials locally,” he added.
He said the scheme will render the recently launched National Industrial Revolution Plan (NIRP) useless, hamper economic diversification and exacerbating unemployment.
“Current efforts by Nigerian manufacturers to export non-oil manufactured products to the ECOWAS region and beyond will be greatly hampered. The recent surge in the exportation of non-oil manufactured products, which grew from $600 million in 2006 to $2 billion in 2012, will be affected negatively,” he warned.
He pointed out that almost all developed countries practised one form of protection or the other while targeting industrialisation.
“To be more specific, Britain at a point protected its textile industry from Indian and Chinese trade incursions until the industry was developed enough to compete effectively. In line with these it is not out of place for Nigeria to continue to protect its growing industries,” he observed.
He said government should take urgent steps to improve the business environment, especially on factors that impact on supply constraints and competitiveness.