An Evaluation of the Impact of Nigeria’s Trade and Investment Policy Reforms

Current efforts at reforming Nigeria’s economy cover all known approaches to trade and investment reforms. At unilateral level the National Economic Empowerment and Development Strategy (NEEDS) forms was adopted. Bilateral efforts manifests in the increasing number of bilateral investment treaties and bilateral trade agreements in the recent years. Efforts at regional level include intra-regional efforts under the auspices of the Economic Community of West African States (ECOWAS) and extra-regional efforts as exemplified by the on-going negotiations of an Economic Partnership Agreement (EPA) between West African countries and the European Union (EU). Multilateral efforts are not lacking as Nigeria is actively engaged in the negotiations of Doha Development Round (DDR) of the World Trade Organization (WTO). Efforts at liberalizing trade and investment regimes in the country are not new as the country attempted structural adjustment programme (SAP) was pivoted on trade, exchange rate and investment reforms, perhaps the dimension and the speed at which the current efforts are being conducted are the new elements in the current wave of trade and investment reforms. Against the background of various attempts at liberalizing trade and investment policy regimes in Nigeria since the mid-1980s and the current efforts at negotiating and/or designing new trade and investment policy at unilateral, bilateral, regional and multilateral levels this paper presents an evaluation of past efforts with a view to informing the current efforts. Trade and investment theories and the linkages between them provides evidence on potential impacts of reforms on economic growth and performances; lessons from the design, implementation, expectation and effects of the past reforms provided rich information on the limit to realizing these potential effects. Notwithstanding that the nature and form of agreements are currently under negotiations, different estimates of possible impacts of these agreements have pointed to opportunities and challenges. The emerging trend points to a relatively fixed costs of reforms that are invariant to approach (unilateral, bilateral, regional and multilateral) to trade and investment reforms. However, the benefits appear to be dependent on the approach with multilateral promising the greatest benefits of all. More importantly the realization of the benefits not automatic and it may not even be realized at all if the reforms are truncated. There is, therefore, the need to manage the trade and investment reforms in order to optimize the potential benefits. The paper suggested some practical steps forward in guiding commitments to be made at the different levels of negotiations which include (1) tying the rate (depth, height and width) of reforms to be committed to progress made at addressing supply response constraints. (2) Given the diverse interest of stakeholders and the country in general, there is a greater role for external agent of restraint hence unilateral trade and investment reforms may not offer the best option. However, for other approaches to be optimally beneficial to the country there is the need for mainstreaming trade in the adopted development strategies and also for prioritizing issues at regional as well as at multilateral level. (3) There is a greater need in Nigeria for coordinating and harmonizing institutions and policies for improved performance of the economy. For instance, trade and investment policy reforms process needs to balance interests of stakeholders at both the design and implementation stages. The realization of optimum benefits from trade and investment reforms is contingent on complementary policies that among other things guarantee macroeconomic stability, a necessary and almost sufficient condition for sustainable pro-poor growth that is the long-term goal of the Nigerian economy

An analysis of China-Nigeria investment relations

Purpose – The purpose of this paper is to analyze the economic relation between China and Nigeria in the area of foreign direct investment (FDI). Design/methodology/approach – The study employed the use of quantitative (descriptive analysis such as ratios, percentages and correlation as well as cross tabulations), qualitative (key informant interviews and surveys) and case studies – for example the railway transport project handled by the Chinese. The use of surveys assisted the study to generate firm-level data that allowed the analysis of China-Nigeria investment relations with respect to concerns such as the employment effects as well as the competitive and/or complementary effects of Chinese firms to local firms. The use of content analysis of relevant documents and reports obtained from various sources was equally involved to corroborate the results obtained from primary data. Findings – The findings reveal that the major characteristic of Chinese investment in Nigeria is its concentration in a few sectors that are of strategic interest to China, especially in the extractive industries which are carried out largely by state-owned enterprises or joint ventures. In addition, the analysis clearly shows that the engagement with China, just like any bilateral relationship, has some advantages and disadvantages and that optimal outcome of the engagement will depend on the policies and institutions that are put in place to maximize the complementary effects and to minimize the competing effects. However, there is need to ensure implementation of laws and regulations in Nigeria and to ensure compliance by the Chinese investors. Originality/value – This is the first study to carry out an empirical analysis of the China-Nigeria relation. The study was able to establish the sectors where the incoming FDI from China is directed and the extent at which Chinese FDI is bundled with inflows of aid. The study was also able to show that the incoming Chinese FDI are in resource seeking, and the output targeted at the external market. The study will be of value to academia and to policy makers who are interested in studying the China-Africa relation.China, Crude oil, Economic sectors, Extractive industries, FDI, Foreign direct investment, Infrastructure, International investments, Nigeria