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Wednesday, 08 October 2014 11:06

Nigeria: As EU Pushes for Foothold in Nigeria's Economic Space

By Crusoe Osagie

ABUJA, Nigeria, October 08, 2014 (This Day) -- With EU-Nigeria trade volume rising and the third bilateral business forum successfully held last month, the European Union appears resolute to take its place as a key player in the Nigerian economy brimming with opportunities.

Various regions of the developed world appear now to be taking Nigeria more seriously. This was not always so, as smaller African nations such as South Africa, Ghana, Kenya among other, seemed to get the attention of the United States of America (US) and the European Union (EU) far before Nigeria. Not so any more.

Analysts have given various reasons for this seeming improvement of business relations between Nigeria and the most developed countries of the world. Some have said the recent rebasing of the economy, which placed it far above South Africa and all other countries in Africa has played a significant role, while others believe the sudden realisation of Nigeria's economic potential is the key.

Whatever the reasons, what is clear now is that Nigeria has become a darling of sorts to the US, EU who now seem to be playing catchup with China and India who recognised the opportunities in Nigeria much earlier and cashed in.

Better late than never, the EU has now put its best foot forward, determined to take the most advantage of the social, economic and political opportunity which Nigeria currently presents.

Pushing FDI to Nigeria Nigeria's reluctance to endorse the EU-Africa Economic Partnership Agreement (EPA) notwithstanding, EU-Nigeria trade grew to 40.4bn Euros (about N8.5trn) in 2013. The Head, EU Delegation to Nigeria, Ambassador Michel Arrion, at the third EU-Nigeria Business Forum in Lagos, last month said the Foreign Direct Investment (FDI) stock in Nigeria grew from 25.3bn (N5.3trn) in 2011 to 27.2bn (N5.7trn) in 2012. He added that the EU is Nigeria's most important trading partner in the region.

According to Arrion, the EU's current strategy and work plan for Nigeria would help in repositioning the giant West African nation as the leading destination for Foreign Direct Investment (FDI) in Africa. Arrion said it was illogical for Nigeria being the largest economy in Africa, to slide from the top position in terms of FDI flow in the continent.

He however noted that the integration of the West African subregion into one solid economic bloc, which is the principal objective of the Economic Partnership Agreement (EPA), has an essential role to play in helping Nigeria attract foreign investment.

The United Nations Conference on Trade and Development (UNCTAD) had recently stated that Nigeria has dropped from the top position in attracting FDIs in the African continent, a position which the EU says it is committed to help Nigeria fix.

Arrion said Nigeria lost the top spot as a result of the difficult operating business environment in the country, making the nation uncompetitive in the global market.

He stressed that other factors attributed to the decline, was the insurgency in the North-east and other security threats in the country. "We cannot deny the gravity of the current challenges but it is also important that we portray Nigeria's positive side, most of which lies in its thriving economic, social and cultural life," he said.

He pointed out that for Nigeria to regain the leadership position, it has to attract more investments into the country; implement broad based policies with a long term perspective.

"Through our development cooperation, the EU is working closely with the Nigerian authorities to improve its business environment and competitiveness; boosting its industrial revolution agenda through support of the reform of the electricity sector and accessing long term financing and tackling social issues like malnutrition," he said.

He stated that the EU is the most accomplished example of regional integration at work which has led to competitiveness within the union; removal of obstacles to free movement of goods, services and people.

He noted that Nigeria is the largest economy in Africa and the industrial hub of West Africa, urging Nigeria to take advantage of the West African market as an extension of its domestic economy.

"Nigeria stands to be the greatest beneficiary of an integrated West African market. This is what the Economic Partnership Agreement (EPA) seeks to achieve; consolidation of regional markets; promotion of regional trade; removal of barriers to trade while protecting sectors that are considered sensitive to the economies of the ECOWAS member states," he added.

The Ambassador commended the ECOWAS Heads of States for signing the treaty on the Lagos-Abidjan corridor, saying that about 70 per cent of the commercial traffic in the region takes places within the corridor.

"The signing of this treaty marks a significant milestone towards fostering true regional integration in West Africa," he stressed. He said EU FDIs stock in Nigeria grew from N5.3 trillion in 2011 to N5.7 trillion in 2012, also stating that the EU is Nigeria's most important trading partner.

In his words: "In 2013 alone, total EU-Nigeria trade stood at N8.5 trillion. EU imports from Nigeria were valued at N6 trillion while EU exports to Nigeria stood at N2.5 trillion."

"Though Nigeria maintains a positive trade balance with the EU and the EU remains the biggest market for both oil and non-oil exports, it is imperative to address the EU-Nigeria relationship towards a more diversified composition and a strengthened ECOWAS regional market," he said.

600 million Euros Grant In a clear display of care for the Nigerian polity and economy, the EU stated that it has concluded plans to spend about 600 million Euros in ‎Nigeria over the next five years, noting that most of the spending is targeted at helping Nigeria to attract private sector foreign investments.

The EU said five per cent of the EU budget will be used to further develop African, Carribean and Pacific (ACP) group of states and one-third of the 600 million Euros will be spent on the electricity generation in Nigeria.

Meanwhile, the EU is also signing a migration agreement with Nigeria to help well-meaning Nigerians that are highly skilled to get employment opportunities in European ‎countries; provide opportunities for people to study abroad and boost Nigeria's cordial relationship with European countries. The agreement will checkmate illegal migration of unscrupulous people who intend to go abroad to engage in crime and other illegal activities.

According to the EU ambassador, "We are paging about 600 million Euros for the next five years in Nigeria. Nigeria is one of the top of recipient of development from the European Union, but the amount is nothing compared to the need because it is not 500 million Euros you need but about 50 billion Euros."

"EU represents 1 per cent of the need of the development of the country. The bulk of the financial resources for development have to come from investment from national investors, regional investors and international investors. We are facilitating a coherent platform between the development partners of Nigeria, the Nigerian government and investors from the national and international communities," he added.

According to him, with the development funds, EU can act in a catalytic ‎way to attract foreign investment and also stating EU's plan to invest its development aid programmes to support the government to improve the business climax by boosting the confidence of international investors to invest in Nigeria.

"Nigeria must use our group of European nations to really improve political and policy dialogues between Nigeria and European countries. We are really keen to engage with the Nigerian government in areas of political and policy dialogues both at the State and Federal levels," he said.

In his words, 'We are implementing development cooperation programmes in three main sectors such as electricity energy, food security, water and the basic social services.

We are also quite active in the field of governance, criminal justice and human right which are clearly linked to democracy." He added that discussions have started with the security apparatus of the State, stressing that Nigeria has to place address its current security challenges to develop.

We believe that there is no development without peace and security, if you want to address the root causes of under development ‎of some countries including Nigeria, security issues should be addressed.

He noted that Nigeria is no doubt central to the growth of the continent, adding that the economy has continued to grow at an average of 7 per cent over the last 10 years attributing the growth to be driven by the non-oil sector of the economy.

He said the recent GDP rebasing exercise has propelled Nigeria to become the largest economy in Africa, maintaining that the Nigeria Stock Exchange (NSE) outperformed most capital markets in 2013.

"Your banking sector has remained stable after the 2009 crisis, FDI flows and remittances from the diaspora remain significant. These positive indicators point to an increased global confidence in the Nigerian economy in response to ongoing reforms," the ambassador said.

He pointed out that the relationship of the European Union with Nigeria is broad and deep, saying that Nigeria being one of the biggest diaspora communities in Europe, is also one of the most frequent destinations of European investment and businessmen in Africa.

Imminent Food insecurity The European Union (EU) also recently warned Nigeria about ‎a possible future food insecurity challenge and insurgency due to the high demographic growth rate in the Northern part of the country, while committing part of the 600 million earmarked for Nigeria in the next five years to be used to enhance food security in the huge west African nation. The Head of Operations, EU Delegation to Nigeria, Mr. Brian O' Neil, explained that the demographic growth in the northern part of Nigeria has a growth rate of 3 per cent which doubles every 20 years, noting that if Nigeria may not be able to feed its teeming population now, with the situation likely to get much worse.

"The population of northern Nigeria doubles every 20 years. If we have a major food security issue today, it is going to get much worse. So we really need to concentrate on the multi-sector approach because a population growth at that level will damage us in a way that we do not understand and would drive insurgency," he said.

O' Neil sounded this warning during the 3rd EU-Nigeria business forum tagged "Time for Private Sector"‎ in Lagos He said: "The need for rapid action is required. We have to adopt a mulit-sector approach in health, nutrition, social production and family planning."

He added that the malnutrition rate and mortality rate are both abnormally high in northern Nigeria, stressing that UNICEF estimates that over 1 million children under two years of age are currently at high risk of acute malnutrition in northern Nigeria. "This need not be. This great and fertile land is more than capable of feeding its entire people adequately. Recent advances in understanding Nigeria has helped Nigeria to fortify and improve the nutrition quality of food, also leading to an increased production of higher value products," he said.

According to him, ‎farmers are becoming increasingly aware of the extra revenue that comes from better crops, stating that most of the essential ingredients such as micro nutrients ‎to fortify foods can be found in the country.

"The capacity to increase the production of food in the country is already here. The need for action is urgent. In spite of its resources and dynamic people, Nigeria is not on course to meet its Millennium Development Goals (MDGs). Industry and the health sector need to form partnership to work together to increase the production of nutritious food to treat malnutrition, in this, you will have the food support of the development partners such as the European Union," he said.

"We have worked together in this kind of partnership in other countries and we believe we can do it in Nigeria.‎ A good result from this ‎forum will be a firm commitment from the public and private sectors with the support of development partners to expand the production and availability of high nutritious value products because a healthy nation is a wealthy nation," he stressed.

‎He said the EU is also keen on strengthening global private sector and the civil society in achieving an inclusive and sustainable growth in Nigeria. (This article was originally published by This Day in Nigeria)



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