Manufacturers fear harmful impact of EPA on local industries

Nigerian manufacturers are anxious that the Economic Partnership Agreement (EPA), which has been decisively approved by the Economic Community of West African States (ECOWAS), of which Nigeria is a key member, could have negative impact on local industries. They argue that Nigeria may have consented to the EPA, fearing loss of markets to Europe should the regime finally begin.

EPA is an economic agreement between the European Union (EU) and the ECOWAS, plus the West African Economic and Monetary Union, known in French as UEMOA. The thrust of EPA is to open the EU market to West African products on a duty-free and quota-free basis. The West African market will also become partially open to the EU five years after EPA becomes operational.

Under the EPA agreement, 75 percent of West African market will be gradually liberalised in favour of the EU export products over the next 20 years. The EU is contributing up to 6.5 million Euros to support development programmes in West African countries during the first five years of EPA implementation.

The fear of manufacturers is that by directly or indirectly acceding to the EPA, Nigeria could reverse the little progress already made in the manufacturing sector. They say opening the door to European products will certainly stifle local products that cannot compare or compete with better packaged and higher quality European products. They add that the EPA remains an agreement between two unequal halves.

Frank Jacobs, president, Manufacturers Association of Nigeria (MAN), said implementation of EPA and the Common External Tariff (CET) could throw up fresh challenges that might further complicate the current lacklustre performance of the manufacturing sector.

According to Jacobs, the EPA regime would challenge the Nigerian economy, particularly the manufacturing sector, as local markets would be flooded with products made under favourable business environment at relatively lower prices.

“It has therefore become necessary for the association at all levels to continually keep this issue on the front burner until government fully comes to terms with our plights and officially allays our fears in the interest of the Nigerian economy,” Jacobs, who was represented by Remi Ogunmefun, director-general of the association said, during the 43rd annual general meeting of the MAN Apapa branch, held last Thursday in Lagos.

Babatunde Odunayo, chairman, MAN, Apapa branch, said the EPA could lead to revenue loss of $1.3 trillion to the Federal Government, while the country stood the risk of being flooded with European products. To Odunayo, if Nigeria intended to adopt the policy like other 15 West African countries, the government should find a way of imposing special levies on certain products to protect certain industries when the regime finally began.

“The advocacy by the national body in this area remains an unfinished business, and pressure continues to be mounted on the government to have about 196 tariff lines reclassified in the CET regime through appropriate intervention with other ECOWAS members,” Odunayo said.

On his part, Ademola Oyejide, guest speaker and chairman of the Centre for Trade and Development Initiatives (CTDI), said the current quandary could have been avoided had the Nigerian government and the Organised Private Sector done the needful since 1996, up to the current dispensation by developing the country’s negotiation agenda.

To Oyejide, there had been recent chances that provided ample opportunities for the country to reject the agreement, arguing that it would be difficult for Nigeria to opt out of it now as doing so would mean exiting the ECOWAS.

The liberalised EU access to the Nigerian market might place significant competitive pressure on local industries that produce similar EU products, he said, stressing that this would though be good for Nigerian consumers who could consume more of products at lower prices. He said though it might be assumed that the agro-allied sector, such as cocoa processing and fisheries, might show significant gain in the EPA regime, the figures of the likely gains were not easy to find.

“There is, no doubt, that a cost is to be borne by Nigeria’s manufacturing sector in terms of adjusting to the EPA-induced liberalisation,” he said, saying “but there are benefits as well, both to the consumers of EU imports and to domestic producers of increased exports to the EU.”
Odinaka Anudu