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EPA as impediment to Nigeria’s devt strategy

This Day (Lagos)


May 16, 2006

EPA As Impediment to Nigeria’s Devt Strategy

By Ken Ukaoha


For the first time in the history of Nigeria, the country was able to develop a compass-like document - the National Economic and Development Strategy - NEEDS (as the nation’s poverty reduction strategy paper (PRSP)) to show a clear direction into the global economic space through which it has been struggling for survival since independence.

Although the nation had at one time or the other produced some kind of socio-economic policy documents such as the ’Vision 2010’, these were all under a military regime having the tendency of being waved aside by any in-coming coup plotter for a continuation of ’business as usual’ just as they always set aside the supreme and sacrosanct Constitution of the country.

But whether this document is home-grown as being claimed and countered by many quarters is a separate debate for another day. Against the fact that the lifespan of NEEDS will expire by 2007, the Federal government is preparing a Medium Term Sector Strategy (MTSS) for an in-coming administration to last from 2007 to 2009.

This is highly commendable as it shows a government that is committed to addressing continuity in policies and strategies which is what Nigeria needs. NEEDS and its MTSS extension should not be distracted or distorted by any side policy incongruent with its objectives and trust as this would ruin the progress sought to be achieved in a coherent and predictable manner.

Unfortunately, one of the external policies that have serious capabilities of providing this dreaded distortion is the Economic Partnership Agreement (EPA) between the European Union (EU) on one hand and the African, Caribbean and Pacific Countries on the other hand.

Nigeria is one of the fundamental countries of repute both politically and economically involved in this agreement negotiation. Below is an x-ray and analysis of how this distortion is made possible courtesy of the EPA and capable of throwing to oblivion the development dimensions and objectives of the NEEDS.

By all standards, the EPA is having a trust conflicting with, parallel to, contradicting, incompatible with and differing from that of NEEDS, and ironically, this same concept (EPA) is being pushed by the EU. Whereas the European Union has been at the forefront of facilitating the Millennium Development Goals (MDGs) of reducing poverty by half by 2015; and whereas the NEEDS has a trust promise of meeting up with these goals.

However, with result of the EPA Impact Assessment study on Nigeria, which has implicated the EPA of making Nigeria to lose about $478million by end of 2008 (after being signed for implementation by the end of 2007), while the EU gains about $709million during the same interval/period, one is only left with a wonder on how EPA would bring the needed poverty reduction and development to Nigerians as expressed by NEEDS.

The objective of sustainable development and poverty reduction is strongly professed by the NEEDS as well as the EPA. In fact, the development objectives of EPA seem to have a consensus understanding on paper and principle. Cooperation shall thus provide a coherent enabling framework of support to the ACP’s own development strategies, ensuring complementality and interaction between the various elements.

However, it is absolutely ridiculous to see that upon examination of the way and manner first phase of EPA negotiations has ended, no strategy whatsoever has been put in place as a supportive mechanism to our locally owned development strategy illustrated by NEEDS. Rather, the continued lopsidedness in the EPA negotiations could be deemed a banana pill on which NEEDS and the Nigerian negotiators and implementers can step and derail, thereby hurting the economic framework and discipline the present administration has demonstrated in their commitment to get Nigeria moving on the track to sustainable development and poverty reduction.

The question is, for instance, is the interpretation given by the EU, of Article 24 of the General Agreement on Tariff and Trade (GATT) to mean the opening up of at least 90% of the economy a ’smooth and gradual integration of ACP states into the world economy’? Absolutely not. Such an opening or liberalisation can neither be smooth nor gradual.

This is the kind of opening that only could lead to a sudden crash and abrupt death of an economy especially, for countries like Nigeria among the ACP states, which has promised and followed the path in the development strategy an industrialisation trust and agenda. Furthermore, such implied opening would endanger the local industries that will become unprotected and therefore strip the economy of employment opportunities for the teeming youth graduates. For Nigeria, this is not the plan of NEEDS.

NEEDS-EPA relationship should also be examined along the lines of the statement of Peter Mandelson, the EU Trade Commissioner who asserted in 2005 that ’EPAs should no longer be conceived as trade agreements in the conventional sense where both sides are seeking mutual advantage. The EU is not pursuing an equal bargain in relation to our EPA partners. The purpose of EPAs is to promote regional integration and economic development’.

This statement is commendable, given that the NEEDS framework also projects regional integration as one of its objectives. However, with an evaluation of the EPA negotiations so far, one would be rightly tempted to ask why our EU partners did not deem it significant to assist Nigeria and her regional brothers to integrate first before moving outside, after all, charity they say begins at home.

The West African Coast (ECOWAS) has been tied under a Trade Liberalisation Scheme (ETLS) with a protocol signed since 1975. After about 30 years, the region is still crawling and finding it difficult to operate the ETLS in practical terms. Nigeria has spent huge sums of money facilitating this and even trying to fast-track the scheme with just a little success.

The serious impediment apart from the needed political will is that the infrastructure to facilitate trade is not available. There is hardly any railway linking the West African countries to one another. The linking marine/cabotage links are just not there. There is no available regional airline except the advent of private airlines from Nigeria (courtesy of privatisation/commercialisation) in recent time traversing parts of the region.

Beautiful as policies could be, if there are no infrastructure to implement them, they cannot be translated into reality. Therefore, if the EU is not seeking mutual advantage courtesy of EPA, but truly rooting for promotion regional integration and economic development as claimed by Mandelson, then frameworks like NEEDS require the assistance of the EU to wit; providing infrastructure that would bring the objective of NEEDS (regional integration and economic development) to realisation.

If Nigeria should go on and eventually sign up the EPA without the foregoing being addressed, the implication is that the non availability of the requisite infrastructure would frustrate any gains the country could have made through regional integration, and therefore, the fundamental elements of NEEDS would have failed because the EU would through her vigorous technology and competent private sector take all the benefits of trade within the region.

Similarly, against the backdrop of the foregoing, all parties recognise that the new ACP-EU trade arrangements will not promote development unless the capacity of the ACP countries is substantially enhanced: capacity to prepare and implement EPAs but especially capacity to produce and trade. Without adequate policies and resources to adjust to and foster the necessary economic transformation and to produce and market their goods competitively, ACP countries like Nigeria are unlikely to fully benefit from a free trade agreement with the EU.

Again according to Mandelson in 2005, growth will only result if the opportunity to trade is combined with the necessary capacities to participate in trade. By this, the capacity constraints which NEEDS seeks to address should win the attention of the EU especially, if Mandelson’s assertion that growth will only result if the opportunity to trade is combined with the necessary capacities to participate in trade. The capacity of the Nigerian private sector (especially manufacturing, agriculture and services) to withstand competition from EU compatriots who have robust infrastructure and subsidy should be first improved.

Generally, there should be a demonstration that both in principle and practice, development is the objective for NEEDS and EPA. EPA must understand that NEEDS is the nearest framework and hope to lift up the Nigerian poor who ab-initio, were part of the process of formulation. If the EU and all parties have this consensus understanding on the development objective of the EPA, one then begins to wonder why there is a divide in the practical route to realising this objective.

Three years after the start of the negotiations (in September 2002), one would have expected an emerging consensus between the parties on the practical way forward to integrate the development dimension into EPAs. Yet, at the eve of substantive negotiations on the content of EPAs, sharp differences prevail on the approach to development in the context of the negotiations, creating tensions and frustrations among the parties.

During the first phase of negotiation, the gap between the two parties’ understanding of the EPAs objective also seems to have widened as the discussions progressed. While the EC is negotiating a purely commercial EPA and believes, on the one hand, that the issue of development is dealt with elsewhere in the Cotonou Accord and on the other, using dogmatic arguments, stating that a simple policy change will necessarily result in growth and development; West Africa posits that the EPA covers the two aspects, development and trade. Nothing can be truer than this which is Nigeria’s position even illustrated in NEEDS.

The way in which some fundamental questions such as development issues, the consolidation of regional integration, the choice of joint thematic groups as well as ACP-EC cooperation in international bodies, are dealt with perfectly illustrates this dichotomy, the European Commission’s unstable language and the liberal free-market orientation which prevails in the ongoing discussions. The whole scenario therefore makes it difficult for one to find any place for NEEDS in the entire process.

For Nigerian bureaucracy and negotiators, it is important to remember that the policy thrust of NEEDS expressed within the ambits of its trade component is to grow a broad-based private sector economy that would create employment and by so doing reduce poverty.

The urgent need therefore is to guarantee consistency in the expressed consultative process embarked upon during the drafting of the NEEDS, build on the instituted processes and provide a framework for the integration of the views of Non Governmental Organisations (NGOs) and Community Based Organisations (CBOs), especially women organisations on trade in the EPA dialogue.

The saliency of stakeholders’ participation in the process should be enhanced and is imperative for the attainment of authentic development. The raison d’etre is that participatory development planning and administration by the people in the institutions and systems, which govern their lives, is a basic human right and also essential for the realignment of political power in favour of disadvantaged groups and for social and economic development. Nigeria must not compromise her NEEDS.

Ukaoha, President, National Association of Nigerian Traders (NANTS), wrote in from Abuja