Boosting US-Nigeria Trade Relations

Observers say that Nigeria-United States bilateral relations have come a long way and some of them note that the relations witnessed a dramatic boost in 1999 with the restoration of Nigeria’s democracy.

Economists note that Nigeria’s main export to the U.S. is crude oil, while its imports from the U.S. include machineries and engineering equipment.

In 2008, for example, Nigeria, which currently stands as the 14th largest trading partner of the U.S., had a volume of trade valued at $42.2 billion (about N6.3 trillion) with the U.S.

Statistics showed that Nigerian goods exported to the U.S. that year amounted to $4.1 billion (about N615 billion), while imports from the U.S. totalled $38.1 billion (about N5.7 trillion).

The goods imported from the U.S. in 2008 include vehicles — $974 million  (about N146 billion), wheat — $930 million (about N139.5 billion), mineral fuel (oil) — $416 million (about N62.4 billion) and electrical equipment — $202 million (about N30.3 billion).

Nigerian exports to the U.S. in 2008 totalled $38.1 billion  (about N5.7 trillion), reflecting a 16.2 per cent increase of $5.3 billion  (about N795 billion) over the 2007 figure.

However, economists note that Nigeria’s export to the U.S. is predominantly crude oil, as its non-oil exports are somewhat insignificant.

As part of efforts to address this mono-product export and exploit fully other areas of the existing bilateral trade relations, the Trade and Investment Framework Agreement (TIFA) was signed between Nigeria and the U.S. in 2000.

The agreement is part of a comprehensive U.S. strategy to support the Federal Government’s efforts to advance trade and economic development in Nigeria. 

In March 2009, at the 6th TIFA meeting in Washington, both countries agreed to hold an investment forum in the U.S.

The major objective of the forum is to create a platform for American and Nigerian entrepreneurs to interact and strike profitable business deals.

It is also designed to provide a platform for the presentation of existing investment opportunities in Nigeria to U.S. corporate leaders and senior policy makers for consideration.

 The forum tagged: “1st U.S.A-Nigeria Business Forum’’, was organised between April 12 and 20 in three U.S. cities – Atlanta, Houston and Chicago — by the Federal Ministry of Commerce and Industry, in collaboration with the U.S. Department of Trade and the U.S Embassy in Nigeria.

The forum was organised to fast-track action in efforts to enhance trade and investment relations between Nigeria and the U.S.

Chief Jubril Martins-Kuye, the minister of commerce and industry, who led the Nigerian delegation to the forum, urged Nigerian and American businessmen to take advantage of the abundant investment opportunities existing in Nigeria.

Martins-Kuye pledged the Federal Government’s determination to improve the business environment and investment climate of Nigeria.

He said that the government had initiated some reforms in various sectors of the economy, particularly the power sector, to make the business environment more conducive to investors.

“The various economic reforms initiated by the Federal Government, the anti-graft measures, transparency and the rule of law in place are meant to facilitate trade,’’ he said.

The minister expressed the hope that the business forum would engender a quantum leap in trade and investments between the two countries.

“The Federal Government believes that the forum will boost U.S. investments in Nigeria and stimulate value-added non-oil exports from Nigeria,’’ he said.

Martins-Kuye said that investments in the non-oil sector, especially through the Africa Growth and Opportunity Act (AGOA), which Nigeria had not fully taken advantage of since 2000 when it came into force, were imperative.

“It is very unfortunate that some countries with less potential are taking advantage of AGOA and Nigeria is still seriously lagging behind,’’ he lamented.

Observers, nonetheless, express the happiness that the forum was able to X-ray and market the investment opportunities existing in the various sectors of the Nigerian economy.

The sectors presented to the U.S. market include tourism/hospitality, power/energy, solid minerals/mining, ICT/telecommunications, aviation/transport, SME Development, banking and finance.

Others are infrastructure/construction, agriculture/agri-business, health/pharmaceuticals, oil/gas, marine/port development, environment and insurance.

The forum also gave some public agencies such as the Nigerian Export Processing Zone Authority (NEPZA), Nigerian Export Promotion Council (NEPC) and the Nigerian Investment Promotion Commission (NIPC) the chance to make presentations on existing investment opportunities.

NAFDAC, the Securities and Exchange Commission (SEC), the Nigerian Export-Import Bank (NEXIM) and the Raw Materials and Development Research Council (RMRDC), among others, also made presentations. 

NEPZA’s Managing Director, Mr Sina Agboluaje, invited the U.S. business community to invest in the 25 free trade zones in Nigeria, assuring them that they would have the opportunity to repatriate their profits.

“The law governing the free trade zones in Nigeria allows investors to repatriate their profits, dividends and capital appreciation across the border,’’ he said.

Agboluaje cited the benefits of investing in free trade zones as the reduction of initial capital outlay since infrastructural facilities like power, water and telecommunications were already in place in the zones.

He said that the fiscal incentives’ regime in the free trade zones also enabled approved enterprises to produce cheaply with duty deferral on articles of trade.

“Our clarion call is for American investors to invest in the free zones in Nigeria.

“The Nigerian government is making efforts in several directions to improve the trade environment in Nigeria, with the free zones functioning as centres of excellence for doing business,’’ he said.

Agboluaje pledged that investors would be given the freedom to sell any proportion of their products in Nigeria even when the items were prohibited.

“They will be allowed for sale in Nigeria once it has up to 35 per cent value addition,’’ he said

However, the NEPC Chief Executive, Mr David Adulugba, decried Nigeria’s low non-oil exports to the U.S., which were estimated at $1.8 billion (about N 270 billion) in 2008.

He bemoaned the neglect of the non-oil sector, which, he recalled, made 97.4 per cent contribution to the national economy in 1960, adding that the sector contributed as low as five per cent to the economy in 2008.

Adulugba said that Nigeria, blessed with rich natural resources, ought to use its natural endowment through exports to create employment.

“It is time for us to use our natural endowment to create wealth and employment,’’ he said.

Adulugba, however, noted that the greatest problem confronting non-oil exports was that of products’ packaging, since most products, regardless of how good they were, lacked proper presentation.

“A product must be able to sell itself on the shelf through proper packaging,’’ he said.

The NEPC chief said that virtually all the 36 states of the country were blessed with one commodity and solid mineral deposit or the other.

“All of these resources are lying fallow, begging for exploitation by investors,’’ he said.

Adulugba argued that Nigeria had the finest varieties of coffee and tea in the world, adding that the two crops were grown in commercial quantities on the Mambilla Plateau in Adamawa.

He stressed that Nigeria had enormous investment opportunities in agro-allied industry, textiles, forest-based industry, leather, stone and mineral-based industries.

One of the major constraints of exports to the U.S. has been identified as the lack of access to cheap finance for exporters.

“The constraints to Nigerian exporters include limited access to credit, infrastructure deficiencies, weak access to primary products, among others,’’ he said.

A representative of the Nigerian Export Import Bank (NEXIM), Mrs Saratu Umar, called on Nigerian investors to avail themselves of the export finance opportunities offered by the bank.

She said that NEXIM was set up to provide credit risk to exporters through lending to exporters in local and foreign currencies.

Umar said that exporters were also being assisted with NEXIM’s facilities to stock their commodities when they were off-season, so as to enable them sell the goods during favourable seasons.    

She said that Nigeria, being one of the notable importers of U.S. goods, should be able to do business with U.S. importers if good financial assistance outlets were available.

For  Nigeria’s Ambassador to the U.S., Prof. Ade Adefuye, the forum would afford American entrepreneurs the opportunity to understand the major economic reforms initiated by the Federal Government.

The ambassador, who was represented by Miss Lara Butto, an official of the Nigerian Embassy in Washington, stressed that the reforms were hinged on the government’s determination to create a market-driven economy.

“For those of you who know little about Nigeria’s economy, I am very optimistic that at the end of this forum, you will be able to understand our economic terrain.

“You will also be able to appreciate our abundant human and natural resources, while resolving to partner with us in harnessing these resources.

“Indeed, it has been proven that whichever form of investment is made in Nigeria, the returns have been very profitable,’’ Adefuye said.

The general viewpoint on the U.S. side, however, was that apart from the forum, there has been scanty publicity on Nigerian investment opportunities.

To be continued

Yussuf writes for News Agency of Nigeria (NAN)

Grace Yussuf