Strengthening U.S – Nigeria Trade Relations

Observers say that Nigeria-U.S. 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 dollars (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 dollars (about N615 billion), while imports from the U.S. totalled 38.1 billion dollars (about N5.7 trillion).

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

Nigerian exports to the U.S. in 2008 totalled 38.1 billion U.S. dollars (about N5.7 trillion), reflecting a 16.2 per cent increase of 5.3 billion dollars (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 dollars (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 Prof. Ade Adefuye, Nigeria’s Ambassador to the U.S., 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.

It is pertinent to note that many entrepreneurs, including members of the Houston Citizens Chamber of Commerce in Houston and the Continental Africa Chamber of Commerce in Chicago, attended the forum.

Besides, officials of the U.S. Trade Department, the Illinois Department of Commerce and Economic Opportunity and the Corporate Council on Africa (CCA), among others, also participated in the forum.

Mr Kenny Efunpo, a Nigerian and a board member of Houston Citizens Chamber of Commerce, said that Nigerians in Houston should be encouraged to invest in Nigeria. He put their remittances in 2009 at about four million U.S. dollars (about N600 million).

Efunpo, who was the first African President of the African-American Chamber of Commerce from 2004 to 2005, said that some 250,000 Nigerians were living in Houston, adding that 25 per cent of the people were professionals. Efunpo, who is into oil and gas, said that the remittance figure was extracted from a Western Union report. “You will agree with me that it is a lot of revenue for Nigeria,’’ he said.

He said that in the past, the 75-year-old Chamber had been trying to organise a trade mission to Nigeria to explore the investment opportunities in the country.

“It is very good that Nigeria has taken the initiative to come and see how we can improve the economic, industrial and political situation in the country.

“But the programme was not much publicised in the U.S., especially in Houston. If it was well publicised, more business people would have attended,’’ he said. Efunpo said that in the next two months, the chamber would be leading a delegation of investors to Nigeria to explore investment opportunities in the construction, housing and real estate sectors.

He noted that the discussions between Nigerian and American businessmen at the forum were “meaningful’’, adding that the forum would foster improved trade and investment relations between the two countries. 

However, some of the forum’s participants attributed the low level of U.S. investments in Nigeria to the bad external image of Nigeria, promoted by the foreign press.

They, therefore, called on the Federal Government to embark on an aggressive image-laundering activity to change the erroneous public perception of Nigeria in the U.S.

For Mr Ademola Dada, the President of the Continental Africa Chamber of Commerce in Illinois, U.S., the forum would help to counter the negative perception of Nigeria created by the foreign media.

“We have to promote many face-to-face meetings like this continually since we cannot influence bad press about Nigeria,’’ he said.

Dr Wale Ajifolokun, Managing Director of Air Cargo and Travel Agency in Chicago, said that Nigeria should strive to “boost its own ego and write its own story its own way.

“If you wait for people to write it for you, they will do that from their own perspectives, which may be wrong,’’ he said.

Ajifolokun said that apart from the challenges of inadequate power supply, bad transportation and insecurity, Nigeria’s bad image had been scaring away potential investors from the country.

Dr Adetunji Oyedele, an exporter, particularly called on the government to address the problems of insecurity and kidnapping in the country.

“The Ministry of Information needs to constantly sell the country to the outside world; a country needs to be sold to the whole world.

“Ironically, the only time they get to know about Nigeria is only when something bad has happened,’’ he said.

For Chief David Olupitan, an international business consultant and co-founder of the 35-year-old Continental Africa Chamber of Commerce, the organisation of such a forum was long overdue. “It will go a long way in addressing some wrong perceptions about Nigeria,’’ he said.

Olupitan, therefore, called on Nigerian entrepreneurs to promote their products in the U.S. through direct adverts or via such forum.

“Nobody can speak well of you than yourself; we need to start talking and shouting about ourselves and what we are doing,’’ he said.

The U.S. policy makers, however, made some pledges which reflect the prospects of increasing trade and investment with Nigeria. Ms Julie Carducci, the Deputy Director, U.S. Department of Commerce, said that the department would intensify efforts to assist U.S. companies in finding new markets in Nigeria.

She said that the department supported U.S. companies’ exports to Nigeria, while matchmaking the companies with their Nigerian counterparts.

She, therefore, urged Nigerian companies to work with their U.S. counterparts in efforts to export goods with the required American qualities to the U.S.

Carducci urged Nigerian companies to participate in the trade shows organised in the U.S. to further strengthen their investment opportunities.

The trade shows will take place in Houston, La Vegas, Dallas and New Orleans in August.

“We have in the past supported trade missions to Nigeria. We hope to organise more of such missions to further explore the investment opportunities in the country,’’ she said.

Mary Roberts, the Deputy Director, Office of Trade and Investments in Chicago, welcomed the Nigerian delegation to Chicago, saying: “It is the largest city and centre of commerce for the entire world.

Roberts said that Illinois ranked 5th among the U.S. states concerning exports to Africa, while Nigeria ranked 4th among African countries getting Illinois exports.

Dr Cynthia Fontenet, an American businesswoman, said that the forum was timely, as both countries had a lot to benefit from each other.

She said that the U.S., with its high technology and industrial capacity, could benefit immensely from Nigeria with its enormous human and natural resources.

“This is bridging the gap and this connection with each other in commerce and industry is definitely the key to success,’’ she said.

The U.S.-Nigeria Forum is the outcome of the Trade and Investment Agreement (TIFA), whose objective also include providing a platform for deliberating on how trade opportunities can be explored, while a balance of trade is achieved.

Gov Godswill Akpabio of Akwa Ibom, who was represented by the Commissioner for Commerce and Industry, Dr Emem Wills, said that the government had done a lot in making the state an investors’ haven.

“In the last three years, the state has concentrated on the development of state’s infrastructure, We constructed roads, our Independent Power Supply Project has been completed, we are liaising with the PHCN for distribution,’’ Akpabio said.

The high point of the forum was the signing of a Memorandum of Understanding (MOU), between the Federal Government and the International Trade Centre, Houston, and the Continental Africa Chamber of Commerce, Chicago.  

One of the objectives of the agreement is to improve trade between Nigeria and the U.S., while enhancing value added oil and non-oil exports from Nigeria to the U.S.

The organisations will collaborate with Nigeria in promoting exportable products from Nigeria, under the Africa Growth and Opportunity Act (AGOA), to attract Foreign Direct Investment (FDI) into Nigeria from the U.S.  

All the same, industry operators have consistently harped on the need to improve the country’s infrastructure, especially power, so as to create conducive environment for investors.

However, Mr David Adejuwon, the Acting Director of Trade, Ministry of Commerce and Industry, emphasized that potential investors should not wait for everything to be put in place before deciding to invest.

“If you have to wait for all challenges to go away, the investment space may not be available again,’’ he said. (NANFeatures)

 

 

Grace Yusuf