Nigeria, Trade And Economic Diversification
Abubakar M. Sambo
Nigeria is the most populous country in Africa, and the black most populous in the world. It has its foot prints almost all over the world; culturally, politically, socially and in many respects. The country records with regards to peace enforcement in global peacekeeping operations are almost the highest from within the continent. Under the auspices of the United Nations, her contributions is non comparable with any other in the African continent. It has tremendously contributed to issues of peace keeping globally, decolonization in the African continent, particularly in the southern African region, apartheid, peace missions in the Congo, the Chad, the Sudan, Liberia and Sierra-Leone, Darfur and currently mobilizing to move to restore constitutional democracy in Somalia.
The country is blessed with enormous resources, and a lot of untapped economic potentials; these economic resources are either developed, in the process of developing and many are unattended to. The simple reason to that is evident; the petro-dollars Nigeria is making daily from the sales of its crude oil and crude related resources.
The global political cum economic relations are assuming a very distinct dimension. Politically, spheres of political influence are emerging day in day out, the political power relations between the east, west and the south are being re-defined on almost a daily basis. The so-called ‘third world’ and less developed nations are beginning to command the global economy and the economies of the so-called developed societies are being trapped in the web of exchanges fairly put forward by the market-forces, so much so that, ‘bail-out’ is the only short term solutions despites their advancement and refinement in the economic field of trade, international trade manipulations and business relations.
The down turn in crude oil prices has affected the global economy, both in terms of production, distribution and exchange. The recent upsurge in the prices of crude oil in the global oil market had made other oil exporting nations witness a lot of trade surplus in the balance of trade, thereby giving them a host of opportunities to turn round their economy, for possible expansions in areas of developments or diversifications. Saudi Arabian government has made a daily increase in sales in excess of one billion ($1 billion) dollars as their excess crude sales. At the end, the decision to build six news cities was chosen as a matter of priority; the king Abdul-aziz Economic city (KAEC) is in advance stage now and progress is being achieved day in day out. While Nigeria in is still grappling with the issues of how to revamp its economy and particularly put back to life the ailing electric power sector in place we are yet to see a tangible programme the country is making towards utilising this ‘crude excess’ in addressing fundamental issues that requires a most dire attention.
Nigeria’s foreign policy is anchored on the premise on the concentric circle model. We ideally, suppose to control and ‘dictate’ the pattern of economic activity, not only in the sub-regional level, but also at the continental level, just as it marks its foot-print politically.
The country has maintained a relative dominance in the socio-economic and political relations in the whole continent of Africa, making her known as the giant of Africa. Nigeria has influence in her relations with other states in Africa, and to some extend in relations among other states’ in Africa.
The role Nigeria played in the formation of the Organization of African Unity (OAU), now African Union (AU) and the regional economic grouping; ECOWAS cannot be over emphasized. Therefore, the country pursues her foreign policy objectives taking with her, interest of other states, particularly in the sub-region. The tremendous steps Nigeria has made and is still making at the ECOWAS level, by trying to harmonise trade activities in the sub-regional level is a right step in the right direction. The West African monitory currency WAWU, the courts, legislatures and host of others are geared towards enhancing trade and trading relations at the sub-regional level, of which Nigeria has an advantage.
Although, with regards to policy of trade harmonization among member states, the challenges of physical movements of persons, goods and labour-services has met a lot of bureaucratic bottle-necks, particularly on the Lagos –Cotonou – Lome – Accra – Abidjan axis; problems of paper processes, extortions, illegal levies, intimidations and un-harmonised custom tariffs often constitute the trade problems for ECOWAS and thereby affecting the issues of non-trade barriers in west Africa sub-region. These are areas where the Nigerian state should flex her mussels to see that these obstacles are done with particularly with regards to non barriers in trade and investment, across the ECOWAS region possibly by introducing the ‘ECOWAS free-trade enforcement/observatory body in all the member states.
The free trade experiments at the ECOWAS level will open up ways on how to approach the same issue at the continental level. The fortunes that will befall the Nigerian state through trading activities are enormous. It may even open-up ways for inter-African and inter-sub-regional joint venture trade relations between individuals across our national borders; where the potentials of boosting intermediate technology is high.
It will be recalled that, the east Africa and the southern African nations, held their first EAC–SADC–COMESA a tripartite submit in October this year, the East African Community EAC, the South African development Commission SADC, and the common markets for Eastern and Southern Africa, COMESA, in a bit to ‘harmonise’ certain practically-possible trade arrangements, so as to seek for ways to reduce the impact of the global economic crisis through trade. The Deputy Prime minister of Uhuru Kenyatta, appealed for the establishment of the African free trade zone, to also reduce the impact of the global crisis.
The recent slump down in the crude oil prices in the world market certainly will affect the economic stabilisation policies in Nigeria. The Nigerian economy is long over due to be diversified, living the culture of reliance on oil and (recently) gas, as the dominant commodity for export, or as the main foreign exchange earner for the country. Trade or perhaps, the diversification of trading activities with countries in the sub-region, the continent as well as the global community will certainly consolidate the economic gains for Nigeria. Free trade agreements should be established between Nigeria and other countries of the world.
Nigeria has a lot of items to sell out; we have a lot of commodities to trade in, which is of dire need by other countries in the world; ranging from food commodities, cola nuts, roots and herbs, salt, vegetables and fish, fresh Goat & Sheep meat, natural endowments; precious stones and metals etc. Just a little reformation in the economic policy direction can see Nigeria and Nigerians through. Just of recent, the baobab leaves, has been cleared in Europe by the European Economic Community to be exported to that part of the world, as a food resource. The baobab (miyan-kuka) is in abundance in almost all the nooks and crannies of the Nigerian state, West African down to the southern African suburb.
The government should seek business transactions with countries particularly in Europe and rest of the world; possibly free trade agreements, with countries like, Japan Ecuador, India, Seychelles, Venezuela, Cyprus, Sweden, and Africa countries like Equatorial Guinea, Madagascar, Ethiopia, Egypt, Liberia, morocco, Sao Tome & Principe. These countries are strategic to Nigeria’s economic interests. Where such trade agreement exists, they should be boosted through contemporary initiatives, so as to better our terms of trade and trade surpluses. Through this, diversification is imminent. The government should create an enabling environment for local and international business entrepreneurs; by reducing the bureaucratic processes in business transactions across the borders so as to increase the volume of legal transactions in other to diversify the economic base of the country.
Currently, the entire trade relationship between Nigeria and a country like Ecuador is not something to write home about. While there are lots more to do to enhance such a trade relations through bi-lateral trade agreements, other countries in Africa, particularly South Africa, have a dominant advantage in terms of Ecuador-Africa trade relations. The table below shows the levels of trade transactions by way of imports by Ecuador from three African countries; Algeria, Nigeria and South Africa.
IMPORTS (THOUSANDS OF DOLLARS)
Source: Central Bank of Ecuador; DGPEI,(2004)
The advantage of South Africa over Nigeria is in terms of industries. Most of these industries in South Africa engage in the production of finished goods for exports. They exports items like machines and equipments, Bonbons, caramels and candies, sardines, black tea, coconuts and foot wears to Ecuador, while Algeria exports sardines, Bananas, polyester, Roses, sanitary napkins, tampons and scopolamine.
For industries to be operational, and for smooth trade to be effective, the challenges of stable power supply alone, is the most fundamental issue. We have all it takes, all the potentials to export even more than the items exported by South Africa and Algeria to Ecuador and other parts of Europe, but we have a lot of domestic challenges.
Could the Yar’adua’s seven point agenda be capable of diversifying the countries economy through business and trade relations? Only time shall tell!
There is a dire need for Nigeria, to explore the trade options in tackling balance of payments issues in the economy.
Abubakar Mohammed Sambo, is a lecturer with the Department of Political Science and Administration, Adamawa State University Mubi