- April 1, 2014
- Posted by: IGBAJI UGABI
- Category: Instructional Materials
Industrial Policies In Nigeria
INDUSTRIAL POLICIES IN NIGERIA
- Trade and Agriculture
The linkage between trade and agricultural policy is too obvious to need too much elaboration. In fact at the international scene, trade in agriculture forms one of the major pillars of the WTO regime with a separate agreement known as the Agreement on Agriculture (AoA). It is only logical that agricultural policy be aligned with trade/industrial policy as this would serve to ensure that agricultural production feed into trade and industrial development. One of the acclaimed banes of agricultural development in Nigeria is the lack of processing capacity to absorb surpluses at the time of harvest or to transform primary products to finished goods, thereby adding value. Poor integration of value chain in agriculture can therefore, be addressed with the instrument of trade/industrial policy. Apart from the local policy and infrastructural demands, another important role a country’s trade policy can play in agricultural development is by seeking high income markets, through multilateral and bilateral agreements, for the country’s agricultural produce whether at the primary or processed stages. An agricultural policy well aligned to the trade/industrial policy would ensure effective backward and forward integration within the economy and has great potentials for poverty alleviation at the grassroots.
- Trade and Fiscal Policy
The FMF is in charge of fiscal policy in Nigeria. Due to the close relationship between tariffs and fiscal policy, the responsibility for setting the country’s tariff policy lies with the FMF. One has noticed on several occasions where the FMF and the FMC&I are involved in the same or similar trade policy processes at the ECOWAS level with little or no coordination at home. One glaring example was the process leading to the finalisation of the ECOWAS common external tariff (CET). At a time when the Ministry of Commerce and other stakeholders were busy pushing for a fifth band of 50%, a really difficult demand on other countries of ECOWAs especially those on the UEMOA (French acronym for the West African Monetary Zone made up of 8 francophone West African Countries) bloc; the FMF was busy writing the 2008-2012 tariff book for Nigeria (which was supposed to reflect the CET to the extent it had been agreed upon at the moment) but obviously without the effective participation of the FMC&I.
The result of this lack of coordination was that the tariff book was released just before the stakeholders (this included organised private sector represented by MAN and NACIMA, the small scale industrialists represented by NASSI, traders represented by NANTS, farmers groups, labour, academia, MDAs like Customs, NEPC, NPC, and even the FMF, etc) had the final meeting to reach a decision to be forwarded to the Honourable Minister of Commerce for approval and transmission to the Committee of Ministers of ECOWAS member states. Even though the stakeholders were already tending towards a fifth band of 35% following studies that had been conducted, the FMF already had 35% in the tariff book. The implication was that had the stakeholders arrived at a different position or if the country had decided to use, say 40% as an initial negotiating position (which is usually the practice), the purpose would have been defeated because the other countries would just refer us to our current tariff book which already reflected 35%. This is just one example where lack of coordination in the home front causes the country embarrassment at the regional or international level. The most unfortunate thing sometimes is that there are existing frameworks for consultation and cooperation on these issues, like the inter-ministerial committees, but they are rarely effective for so many reasons ranging from lack of funds for regular meetings to disagreements among participating MDAs.
Indeed, the practice here in Nigeria where the FMF is in charge of tariff policy has been challenged by stakeholders in different fora. Tariffs play the double role of trade facilitation and revenue generation. Some countries place more emphasis on one than the other. Where the emphasis is on the revenue generating role as it is in Nigeria at the moment, the administering agency which is the Customs is usually under the Finance Ministry. On the other hand, in countries where the emphasis is on the trade facilitating role, the Customs is usually under the Ministry of trade/commerce. It has been argued by some experts that countries including Nigeria should move away from over reliance on tariffs as a source of government revenue but rather to tow the line of tariff liberalisation as a means of facilitating trade flows. Whether Nigeria is ripe for this is arguable but the point need to be made that global trend is in favour of the latter position and with the spate of bilateral and multilateral trade negotiations, it is only a matter of time before tariffs finally lose their importance as revenue source for the government.
- Trade and Foreign Policy
The role of trade as an instrument of foreign policy is one that dates back to antiquity. In principle, a nation is free to choose the kind of economic (trade) relationship it wishes to maintain with any particular country or group of countries. This includes the decisions as to where to sell the country’s products, where to buy the country’s needs and on what conditions (pecuniary and otherwise) the country is willing to enter into the transaction. Therefore, trade is an instrument a county can use in enforcing or reinforcing its positions in international arena. The ‘discovery’ of Africa by the Europeans, the scramble for raw materials and slaves and the subsequent partitioning of the Continent among the European countries, were all motivated by economic interests. Wars have been and are still fought today across the world for economic reasons. This only goes to reflect how powerful a tool of international diplomacy trade could be.
This connection has made it practically impossible for a country to detach its trade policy from its foreign policy. Perhaps, the economically advanced countries understand this more than the developing countries. In fact, under the recently restructured European Union following the coming into effect of the Lisbon Treaty, trade has been explicitly stated to be a component of the EU’s foreign policy. Though this has always been the practice, the difference now is that of manner of coordination. For example, EU’s economic relationship with her former colonies in Africa, Caribbean and Pacific (ACP) group of states has been within the framework of the successive Lome Conventions and currently the Cotonou Agreement. These instruments also provide a comprehensive framework for cooperation across political, socio-cultural, and economic spheres. Hence it is primarily a foreign policy instrument. The United States of America has been in the forefront of using trade to promote its political interests all over the world. From the North American Free Trade Agreement (NAFTA) to the U.S’s trade embargo on Cuba or Iran, the story is same- trade in the service of political interest. In fact, we can not possibly fully explore this linkage between trade and foreign policy in this write up but suffice it to say that whether at the a bilateral or multilateral level, countries that know their worth in international politics would always use their perceived economic advantage to make their voices heard in the comity of nations.
Unfortunately, Nigeria as a country does not seem to have drawn this linkage between our foreign policy and our trade policy. Nigeria is party to numerous bilateral cooperation agreements most of which have ‘enriched’ the shelves rather than the nation; that is, those agreements that their copies can still be found. Usually these processes are led by the Ministry of Foreign Affairs with the participation of the Ministry of Commerce to cover the trade and investment components. However, the more commercial oriented agreements are driven by the Ministry of Commerce. What seems obvious, however, is that there is no comprehensive strategy for determining the appropriateness or otherwise of entering into agreements with particular countries or group of countries, the agreements rarely reflect anything the country stands for or against. We need to ask ourselves as a country: what are the strategic national interests we promote by our trade engagements? There is therefore, need for the new Minister to have this broad perspective of trade policy which would enable him to form a synergy with the Ministry of Foreign Affairs, which is primarily responsible for the country’s foreign policy.
The challenge for Nigeria is in different fronts- one, is the country’s position within the West African and Africa region; two, is the country’s bilateral engagements with other countries or group of countries around the world; and three, is the country’s engagement at the multilateral level under the WTO. We shall consider these under the item on multilateral and bilateral engagements and development cooperation.