Introduction
Nigeria, like other countries in the developing world, continues to seek avenues to sustainable growth in the face of persistent developmental crises. The trade partnering option – to engage with other countries in the region and beyond to make trade relations, cooperation and integration feasible – is seen to be very important and can potentially drive sustainable development across African, Caribbean and Pacific (ACP) regional groupings (Langan and Price 2018). It is against this backdrop that there is the idealistic philosophy of an ACP regional grouping going into partnership with the European Union (EU) as the foremost global economic and political regional body. Such a partnership is seen as a way forward to sustainable development.
In the particular context of Nigeria, the EU’s EPA with ECOWAS is relevant.1 Following several years of painstaking negotiations, the current EPA draft was eventually concluded and signed in 2014 by 13 of the 15 member countries and Mauritania, which left ECOWAS in 2000. It promises access to European markets and a better integration into the world economy for African states, most of whose major exports are primary produce (EU 2014; Langan and Price 2015). It is also said to offer the opportunity to improve sanitary and phytosanitary standards of products from West Africa (Arrion 2017). The EPA as it concerns ECOWAS was formulated on the basis of the Cotonou Agreement of June 2000 concluded between the EU and the ACP. This agreement outlines a model that will gradually phase out trade barriers and other hindrances that are seen as impediments to free trade and the full integration of the global economy. It was designed also as a successor to the erstwhile non-reciprocal trade preferences which the EU had previously given to ACP countries (EU 2014). As will be discussed below, critics of the EPAs have some reservations about EPA repercussions, pointing to the relative weakness of West African economies vis-à-vis their European counterparts, especially as they may struggle to meet quality assurance and other terms of the partnership.
Nigeria has so far refused to ratify the EPA on the grounds that it is thereby protecting small businesses, especially small-scale manufacturers within the local economy. This economic nationalist position, which seems to be pan-Nigerian, is arguably one move among others to pre-empt a negative backlash from Nigerian manufacturers, civil society organisations and foreign trade experts within the country who will criticise the government for adopting a policy that may threaten the economic livelihood of a significant section of citizens. At the 49th session of ECOWAS in Dakar, Senegal in June 2016, President Muhammadu Buhari was evasive on the subject, and referred to the need for wider consultation with Nigerians (especially small enterprises and trade unions) before taking any decision on the EPA that was negotiated (Isaac and Bellon-Okafor 2016; Onyekwena, Weylandt, and Akanonu 2017). Buhari also reiterated this position in April 2018, while receiving a Letter of Credence from the Head of Delegation of the European Union to Nigeria, Ketil Iversen Karlsen, at State House, Abuja (Premium Times 2018). The fear here, on the part of government, is that it will incur the wrath of influential EPA sceptics within the country. For example, EPA issues of product standardisation and sanitary conditions may not favour small businesses in particular and the economy in general (Boyo 2017; Onyekwena, Weylandt, and Akanonu 2017). Non-state actors such as civil society organisations, which often have considerable influence over the EPA negotiations, especially on the African sides, are not comfortable with this scenario (Heron and Siles-Brügge 2012; Trommer 2014); they envisage a future of manufacturers struggling to meet sanitary requirements.
Meanwhile Nigeria has acceded to the African Continental Free Trade Area (AfCFTA). In July 2019 President Buhari, while signing the agreement, stated that trade should be conducted fairly (Ameh 2019; Olawoyin 2019). It is believed by some domestic analysts that Nigeria signed the AfCFTA because it favours industrial exports which will help diversify its largely monocultural economy in a region with a combined GDP of US$2.5 trillion, and where the country has relative competitive strength (Olawoyin 2019). Unlike the EU agenda concerning the EPAs, which was becoming increasingly subordinated to the commercial necessities of individual EU states (Siles-Brügge 2014) and which has recently received analytical attention from experts on development in Africa/the global South (Langan 2020; Langan and Price 2020a, 2020b), the AfCFTA appears abidingly an industrial-cum-developmental framework. AfCFTA seems to be advancing industrial policies that aim to diversify African economies and create jobs for the continent’s teeming youthful population, via creating a continental market with ability to unlock manufacturing potential and boost future ability to negotiate at the international level (Cofelice 2018). However, the long-term ramifications of the AfCFTA proposals still remain in the realm of speculation. Furthermore, Nigeria may sign the EU–EPA anytime soon as new realities open up in the African region. These new realities are discussed later in this analysis.
Against such a background, this text is a contribution to the ongoing debate on the EPA. It explores some of the envisaged EPA benefits and threats for Nigeria. What could be the long-term consequence of signing the EPA? In the face of the current disjuncture between Nigeria and European states in the technological sphere, will signing the EPA be strategic to Nigeria’s economic prospects?
The Economic Partnership Agreement between the EU and West African countries
An EPA was concluded between the EU and ECOWAS member states in 2014, and this builds on the existing template of trade relations between both regional bodies. Thirteen ECOWAS states (with Côte d’Ivoire and Ghana signing interim EPAs) immediately signed the agreement, while the Gambia and non-ECOWAS member Mauritania later ratified it. So far, of the 15 current ECOWAS states, Nigeria is the only one not to have ratified the EPA (European Commission n.d.c). It has been suggested that this deal is particularly appealing to West African states that engage mainly in non-oil exports (Hassan and Qiao 2015), because it appears to favour states whose exports are agricultural products. The EPA with the EU also had a framework that established the West African EPA Development Programme (Ibid.). Officially, it is meant to help overhaul the current trade system in West Africa and help the region build a competitive economy that can confidently participate with its European counterpart and produce quality products to drive this competition (Ibid.). There are concerns as to the ability of West African states to produce goods and items that meet consumer standards in the EU countries (Hassan and Qiao 2015; Isaac and Bellon-Okafor 2016). This is one of the reasons some commentators have expressed concern about the deal (Langan 2014; Langan and Price 2015; Langan and Price 2020b).
A number of writers have contributed to the EPA debate. Hurt (2012), for example, emphasises the EU’s insistence on spreading neoliberalism in ACP regions while supporting open regionalism – with the accompanying threat to regional coherence, especially in Africa. Accordingly, by encouraging the free movement of goods, services, capital and labour across different regions in the global North and global South, the strength of regional bodies like ECOWAS is lessened. Open regionalism in this context distorts the original objectives of the regional body. This argument pushes forward the notion of Western capital moving its reach into the outlying territories where profits can be made more easily. Haastrup (2013) brings to the EPA debate an idealistic model which places the EU as a mentor to aspiring regional economic groupings for better international political and economic relations. This position suggests that by playing a leading role in the global economic efforts at reducing poverty and inequality in ACP regional groupings, the EU can create a win–win situation for all parties.
Further, Murray-Evans (2015) argues that the negotiating ability of African institutions – and matters of preferences and power politics – need to be analysed more to better understand the EPA process. More generally, decisions by political and socio-economic institutions and leaders must be put into proper contextual perspectives in order to get a clearer picture (Heron and Murray-Evans 2018). Other analyses have focused on the palpable contradiction between the avowed conscientious developmental schemes of the EU and the self-interest of individual European states seeking export-related advantage (Holden 2014; Langan 2014). Indeed, while the EU in theoretical postulations often waxes lyrical about ethical developmental schemes for ACP regions, it nevertheless falls short of expectations when it comes to the transformation of such lofty ambitions into reality.
Studies have also highlighted the envisaged losses that an unrestrained free market reform will bring to developing economies in ACP regions (Langan and Price 2015).2 Woolfrey and Bilal (2017) found that the EPA as negotiated with Kenya and Namibia did not significantly alter market access value relevant to manufacturers and service providers. Instead, there were job losses in the manufacturing industries coupled with a general decline in social/welfare services arising from tremendous reductions in revenue income from tariffs, due to the ‘free-trade’ agreement that reduces states’ ability to impose tariffs on goods and services. When economic borders are thrown open, the influx of more competitive goods and products reduces the market share of local industries, and the ramification of this in the long run might be the loss of economic livelihood for many people.
Conflict or cooperation?
Embedded in global trade agreements is a huge amount of conflict, as regional bodies deploy sustainable development and pro-poor growth rhetoric to entrench liberal market expansion (Price and Nunn 2017). Liberal market expansion across the globe may result in the asphyxiation of the less sophisticated business in the developing countries. This is due to the fact that they often are not able to compete with the more powerful industries of the global North that usually have more supportive technological and resource environments. Thus, the wholesale opening up of the borders may be injurious to the industries and manufacturing concerns of developing countries. Notably, during their growth period in the eighteenth and nineteenth centuries, countries like the USA or Germany embraced protectionism at various points. As Chang (2002) aptly put it, this can be gleaned from the writings of Alexander Hamilton and Friedrich List. Indeed, herein lie the contradictions, as some form of protection is needed for the growth of local businesses. Thus, there is conflict in development practice here. The EPA is ultimately against any form of protectionism that would help infant industries in developing countries.
Conflict, according to Coser (1956, 22), involves a process of ‘struggle over values and claims to scarce status, power and resources in which the aims of the opponents are to neutralise, injure or eliminate their rivals’. Conflict theory can be used to assess the discourse on development, integration and competition for resources as it relates to the EPA between the EU and West African states. While states may officially pursue a cooperative framework in the name of uplifting the socio-economic conditions of their citizens, they nevertheless attempt to bring this into reality in a world dominated by competition and the struggle for scarce resources. In the context of the present discourse, the EU is in competition and struggle with the USA and China for the resources in Africa. Arguably, this has shaped the EU’s determination to persist in pressing the regional groupings in the continent and elsewhere to sign new trade agreements with it.
Conflict theory assumes that competition (not consensus) pervades and is inherent in all human and social interactions, and as such is the key to understanding society and social change. It further assumes that there is structural inequality, and that the global firmament does not distribute sanctions, and rewards equally. Thus, those who benefit from present global structures struggle to maintain them while those who are marginalised strive to change them. From this perspective, rather than pursuing an auto-centred development on behalf of developing states, the EU–ACP relationship drives a dependent development which is overwhelmingly in favour of the affluent economies of the northern hemisphere (Price and Nunn 2017). The endgame is arguably not about policy convergence conducive to a win–win situation for all, but one with dire consequences for the lesser partner. The EPA between the EU and ECOWAS states then is essentially one of contradictory objectives. Beneath the veneer of cooperation is strong competition which will ultimately be determined by the structural inequality embedded in the current global economic context. Given current power structures (economic, political etc.), states and firms in the EU seem to hold a longer part of the stick, as they enjoy a more favourable financial and infrastructural regime, and will be better able to compete with their African counterparts.
The EPA: prospects for diversification and economic development in Nigeria
The EU is the second biggest trading partner with Sub-Saharan Africa, ahead of the USA but just behind China. Table 1 captures recent trade in goods between the EU and West African regional groupings.
EU–West Africa trade in goods, 2014–2019 (all figures in billions of euro).
| Year | EU imports | EU exports | Balance |
|---|---|---|---|
| 2014 | 33.6 | 28.1 | –5.4 |
| 2015 | 26.0 | 26.7 | 0.7 |
| 2016 | 18.7 | 22.7 | 4.0 |
| 2017 | 22.8 | 25.6 | 2.8 |
| 2018 | 29.7 | 28.4 | –1.3 |
| 2019 | 31.3 | 28.9 | –2.4 |
Source: European Commission (2020, 3).
A number of grounds can be used to support Nigeria’s ratification of the EPA. The EPA is said to encourage West African businesses to improve the quality of their products. This is because at present most products from the region do not meet the EU’s sanitary and phytosanitary (SPS) standards (European Commission n.d.b). According to some observers, a well negotiated EPA has the potential to transform emergent economies of the southern hemisphere because it will improve the quality of goods and services which emanate from the region (see, for example, Murray-Evans 2019).
Bridging the technical gap between African states and their European counterparts, it is argued, will potentially place these states (including Nigeria) in line with East Asian states, like Singapore, that learned and assimilated technology from the West. Due to the obvious difference in technological and economic levels, the EPA negotiations arrived at a situation in which the EU will grant West African states full and free access to its market immediately, while West Africa will only gradually open up its market to the EU over a 20-year transitionary period (European Commission n.d.a). This adjustment period also comes with the concession that West African economies will have only opened up 75% of their market at the end of the 20-year transitionary period (Hassan and Qiao 2015).
Thus, even after the 20-year period, West African states will maintain full control over 25% of tariff on commodities traded between the two regions. This situation applies to all ACP Least Developed Countries (LDCs). And this provision – so the argument runs – gives West African states the opportunity to evaluate the impact of the EPA on their economies with a view to continuing the deal. Most West African economies are monocultural and depend solely on one item or commodity. With the EPA, and the financial and technical support alongside it, these economies are said to be moving away from this situation and spreading their export base (Arrion 2017). African economies are thus encouraged to move away from ‘developmental poverty’ and expand their economic vistas (Langan 2018).
Nigeria could effectively use the support mechanism brought in by the EPA to help West African states to become more competitive in their trading with other states in the context of existing global political and economic relations. Finally, access to the largest single market in the world is perhaps too enticing for Nigeria to ignore. The EU has a market population of over 500 million people (Malmström 2015). The EPA could give the country the opportunity to export non-oil commodities.
The EPA: inherent contradictions
Despite the above considerations, the EU–EPA proposals come with a potentially huge liability. First, it is expected that there will be a significant reduction in the revenues which normally accrue to Nigeria from the tariffs imposed on imports that come from other countries that are members of ECOWAS. It could also reduce the income from import duties on goods and services from the EU (Langan and Price 2015). Nigeria is home to the largest market in Africa, and the huge revenue from tariffs on imports would be a big loss for an economy that has been experiencing crises in recent years. The envisaged benefits that could come from the potential partnership may not be big enough to offset these losses. As such it may not be in the best interests of Africa’s commercial nerve centre to overhaul existing arrangements in favour of a proposed partnership whose consequences remain murky at best.
This development would be likely to undermine the progress of those states that rely mainly on tariffs as their major revenue base. Lagos State will be perhaps the most unfortunate in this envisaged reduction in tariff revenue, because the state is home to the two biggest ports (air and sea) that mainly receive imports and dispatch exports. The multiplier effect that will follow this loss in revenue will shrink the volume of socio-economic activities and probably bring in its wake unemployment and poverty for many people in the areas involved. Even if the removal of tariff is phased, Nigeria might lose over 80% of her tariff revenue in the first 10 years following the signing of the agreement (Isaac and Bellon-Okafor 2016). The EPA will probably limit policy space for tariff politics – with negative implications for sovereignty (Onyekwena, Weylandt, and Akanonu 2017).
It is apparently assumed by some of those who argue for the EPA – for example, actors such as those West African states that have already signed it, foreign capital within Nigeria and some Nigerian policy makers – that the partnership will be one of relative equality which will ensure that there is fair trade between two parties that have mutual objectives, and also that the framework for the partnership has been set out, with the opportunities and threats to both spheres having been sufficiently scrutinised to ensure that the partnership is a fair contest among unequal Regional Economic Communities. In contradiction to this, the EPA may undermine the socio-economic progress of Nigeria.
There is arguably a deep-rooted self-interest on the part of European states when it comes to competitive global resource and power struggles (Holden 2014; Langan 2014). The arrangement is apparently skewed in favour of European states because it pits a horde of weak and insolvent states against a gamut of technologically sophisticated and industrial states with strong manufacturing bases. The likely consequence of this is that European firms that are more efficient in the industrial and manufacturing sectors will probably be the ultimate winners in this unequal economic alliance (Murray-Evans 2018). The very fact that the apex body of manufacturing concerns in Nigeria, the Manufacturing Association of Nigeria, has been at the forefront of the quest to prevent the Federal Government of Nigeria from endorsing the EPA shows that all aspects of manufacturing – from plastic industries through textile mills to leather industries – are likely to feel some pains, especially in the early stages (Isaac and Bellon-Okafor 2016).
In the same vein, there is considerable evidence to back the claim that European states hide under the guise of an insistence on standardisation and quality to deny access to their markets (Isaac and Bellon-Okafor 2016). They do this by claiming that manufactured goods from African countries do not meet international standards, and as a result such products are prevented from entering the European Union as a whole. In the context of the EPA that the EU signed with ECOWAS states and Mauritania, this access arguably persists as there are specific criteria that produce must meet before it can be admitted into the EU (Boyo 2017). It will be difficult for Nigeria and her industries to meet these conditions in most sectors of the economy because they do not have the credit finance and infrastructural support that is available to their European counterparts. In fact, with the fresh legal powers occasioned by the EPA, the disadvantage for Nigeria would probably be in a more accentuated form as competing blocs struggle on grimly to benefit from global political economy.
Indeed, in June 2015 the EU placed a temporary ban on imports of dried beans from Nigeria because they were considered to contain dangerous pesticides harmful for human consumption (Isaac and Bellon-Okafor 2016). There are concerns that measures of this nature may be due to the fact that Nigeria has so far refused sign up to the EPA as negotiated between the EU and ECOWAS in 2014 (Boyo 2017). In the event that the nation adopts the EPA framework, the EU’s power to reject Nigerian products will be strengthened due to the legal component of the partnership which makes it mandatory that those products which in the view of the EU do not meet SPS standards are not admitted into the Eurozone. At this point it becomes imperative for Nigeria to carefully assess the options before it and continue to hold out until such time that it is strong enough to compete. Indeed, free trade is never free.
It is important for the emerging economies in West Africa, like Nigeria, to properly scrutinise policies so as to maximise benefits from the global economy (Murray-Evans 2019). Nigeria’s major export is crude oil, and this commodity does not enjoy the advantages that agricultural products benefit from within the EPA as negotiated with the EU, as it clearly favours non-oil exports (Hassan and Qiao 2015; Rowden 2017). At present, Nigeria is one of a number of countries that supply the energy needs of many countries in the EU, and crude oil/natural gas do not face customs barriers when entering the EU (Krapohl and Van Huut 2020).3 This has huge significance, considering the centrality of oil to the Nigerian economy, and as such it will perhaps not be profitable to align with the proposal at present, until such time as the country has sufficiently diversified her economy that a substantial amount of revenue comes from agricultural produce and manufacturing industries. Besides, the negotiations are not sufficiently advanced to reduce genuine fears of Nigerians, as there has largely been a paucity of assurance from key stakeholders in Brussels. At least two members of the European Parliament have seen reason to understand why countries like Nigeria and Tanzania have continued to hold out against their Regional Economic Communities in the EPA project: Maria Arena from Belgium and Julie Ward from Britain have argued for more understanding from the EU about the plight of some African countries. Yet, as Arena stated (quoted in Rowden 2017), ‘the EU is not responding to these concerns.’
Conclusion
The Nigerian state has acceded to the AfCFTA, which can aid the strengthening of the manufacturing and industrial capacity required to engage in the more sophisticated EPA with the EU. In the meantime, Nigeria should protect its citizens who operate in the manufacturing and industrial sector of the economy. The state must be able to support industrial development and the strengthening of national infrastructures. A consistent policy formulation regime geared towards sustainable development and the enhancing of the capacity of the nation’s manufacturing sector to meet global standards, coupled with a concerted effort to move beyond a monocultural economic framework, is a necessary prerequisite for engaging in economic partnerships with Regional Economic Communities which have strong economies. Nigeria has yet to reach that threshold. As a result, the nation should continue to maintain its present status, and develop its internal economic framework before engaging in such partnerships.