Enterprise Issues With Siaka Momoh
STILL ON CHINA-AFRICA COOPERATION
This piece, by Siaka Momoh, was first published in Non-Oil Digest in April 2019. Siaka is publisher of Non-Oil Digest. It is in two slots. The first slot was published last weekThursday.
EU Delegation
Only recently, Filippo Amato, Trade Counsellor, Head of the Trade Economic Section, EU Delegation to Nigeria and ECOWAS, made a strong case for EU at a Manufacturers Association of Nigeria (MAN) Nigeria-China relations event in Kano. It was a Nigeria-China event but Amato found it auspicious to use the platform to sell EU. He was as straight forward as Cameron. No pretence whatsoever.
Hear him:
- I will not be able to directly contribute to the topic of the discussion today, however I would like to share with you some thoughts that might hopefully stimulate reflections and possibly lead MAN to soon organize another event with the title “Leveraging on EU-Nigeria relations to re-industrialize the Economy”
- Let me start with some figures about EU-Nigeria trade and economic relations:
- The EU remains Nigeria’s most important trading partner in exports and imports, representing about 40% of Nigeria’s total external trade (both in 2017 and 2018).
- The total volume of trade between Nigeria and the EU has been increasing over the years: about 20bn EUR in 2016, 26bn EUR in 2017, and 34.4bn in 2018
- An important point – contrasting the Chinese trade structure – is that Nigeria has always had positive trade balance with the EU: about 2bn EUR in 2016, 5bn EUR in 2017 and 10bn EUR in 2018!
- Another important point is that most of the products Nigeria imports from the EU are inputs or machinery (see table below):
- 44% of EU exports to Nigeria are represented by oil refined products
- 19% is machinery
- 12% are chemicals
- Only 9% is food and beverages
- Even less (about 8%) other manufactured goods
- Another important point is that most of the products Nigeria imports from the EU are inputs or machinery (see table below):
- A third important point is that about 95% of exports from Nigeria to the EU are Oil and Gas products
- A final important figure I would like to mention is that of EU Foreign Direct Investments. EU FDI stock in Nigeria stood at EUR 38.4bn in 2015 (source Eurostat), representing more than 50% of the overall FDI stock in Nigeria (Source UNCTAD). Even during the period of recession, in 2017, the stock of EU FDI in Nigeria stood at about 37bn EUR.
EU exports to Nigeria are complementary not competing with locally produced goods. This means not only that local manufacturers should not fear competition from EU companies, but also that there is scope for cooperation and synergy between EU companies and Nigerian manufacturers. It also means that local manufacturers should be interested in reducing the costs of input and machinery imported from the EU, for instance by lowering import duties on such products, a solution that a trade agreement, like the West Africa-EU Economic Partnership Agreement (EPA), could provide.
- Second, Nigeria is still a long way from diversifying its exports. It is not acceptable that only about 5% of Nigerian exports are non-oil exports, considering that the EU is the main non-oil export destination of Nigerian goods. Nigerian manufacturers should be interested in increasing non-oil exports to the EU. Again, this is something a trade and development agreement like the EPA could contribute to achieve, by removing all EU import duties on non-oil exports from Nigeria.
- Third, the stock of EU FDI in Nigeria shows that European companies have an interest to long term investments in the country, contributing to local growth and job creation. European companies do not come to Nigeria to make quick profit and leave. They do not content themselves with selling without investing in local production.
The EU delegation is currently preparing a study mapping the European businesses present in Nigeria: how many they are, the sectors in which they operate, and how much they contribute to the Nigerian economy. We are planning to present the results of the study in June or July, in an event organised with the EBO. We will be glad to have MAN among our guests
- The EU plays a key role in providing support to private sector development, business environment and trade facilitation in Nigeria and in the ECOWAS region. Under the 10th and 11th EDF the EU is funding a number of regional programmes covering: Economic Integration and Private Sector Development (10th EDF in cooperation with the World Bank Group, GIZ and UNIDO) and Trade Facilitation and Competitiveness (11th EDF).
- Under the WA Competitiveness Programme, the Nigeria component, implemented by GIZ, is an 11 million Euro project that seeks to improve competitiveness and exports through value chain development. The project is implemented in 7 states including Kano and it focuses on 4 value chains namely: tomato (including pepper and chilli), ginger, leather and garments. The project is targeted at improving the performance and growth of farmers and industry/processors, including contributions to regional and global exports in the selected value chains and improving the climate for businesses at national and regional levels.
Going by the revelations here, it is very clear that Nigeria is very important to the economy of the West. The West sees China as a competitor that must be given a straight fight.