Thomas Sowell likes to say that you cannot know whether a policy is a success or failure without knowing what the person behind the policy set out to do in the first place. So a policy ‘merely’ being a failure might be a success from the point of view of a devious person who designed it to be so.
Today’s papers are full of stories about how Nigeria is refusing to sign the Economic Partnership Agreement [EPA] between the European Union and the 15 ECOWAS countries. According to our friend, the most popular government minister on this blog, Olusegun Aganga, Nigeria raised ’10 Questions’ which have not been answered. These questions, according to him, centre around the protection of the Nigerian economy from the marauding Europeans, hell bent on a second colonisation [Ok he didn’t say that, I made it up].
Take it away The Guardian:
The Federal Government has declined to sign the trade liberalisation agreement being pushed forward by the European Union, under the Economic Partnership Agreement (EPA) with Economic Community Of West African States(ECOWAS),after due consideration of its impact on the economy.
The government had earlier expressed reservations over the pact,due to vital clauses in it that could be harmful to the nation’s economy.
Aganga, defender of the Nigerian economy, went on:
The EPA agreement was not even ready for endorsement by the Heads of State and Government. During the meeting last week, Nigeria raised 10 objections to what was presented to us and the Summit of Heads of State ratified it.
Consequently, a committee from Nigeria, Cote D’Ivoire , Ghana and Senegal looked at the issues raised by member states, particularly Nigeria, and came up with a proposal. When we went into the meeting, the whole idea was to endorse it, but of course, we had various reservations concerning the agreement based on our model and the feedback we got from our private sector.”
He added: “One major reservation was that the way the agreement was done, which of course they expected us to sign, would not be in the overall interest of the Nigerian economy over the long term. For instance, in the area of market access, the EU wants us to open our market by 75 per cent over a 20-year period.
This appears harmless because over the first five years, there will be no major impact because they will open all their doors for us to export to Europe. However, the problem here is that currently, we are not exporting much to Europe and so the benefit will not be significant.
I will come back to the section highlighted above but one more thing he said:
The minister explained that, given Nigeria’s current condition as an import-dependent economy, it would be counter-productive to completely open its doors [Me: You can see the clever code switch here – opening your doors gradually up to 75% over 20 years has been ‘transformed’ by Aganga into ‘completely’] for imports without first of all developing its industrial sector to compete globally, especially in those sectors where the country has comparative and competitive advantage as provided in the Nigeria Industrial Revolution Plan recently launched by President Goodluck Jonathan.
Another major point we raised was that those items that were in Category D, and excluded in the 25 per cent, should include those areas and sectors that we want to develop in line with the Nigerian Industrial Revolution Plan. Some of those areas are already under Category C and D, meaning that they are the sectors that the EU wants us to liberalise imports. If we do that, it will have a very negative impact on the NIRP.
Nigeria is the biggest country in the ECOWAS and we are already producing some of those goods that they want us to liberalise their importation. Also, what this means is that, not now, but from 2025 to 2026, based on the items that have been included and excluded, there will be significant loss of revenue to the government. There will be loss of jobs, investment and loss of even the ECOWAS market,”he said.
Aganga, however, stressed that it was important to remain as one unit in the ECOWAS region, saying that “even if they import those items into our neighbouring countries, they will end up in Nigeria and this will have negative impact on the Nigerian economy. So, it is important for us to work together as ECOWAS members and not to allow EPA to divide us.
It’s important to quote him at length for context and also because these are the people in charge of the Nigerian economy, presumably working hard to deliver a better life for Nigerians.
Here are some points about the EPA in question:
1. Negotiations on this agreement have been going on for 14 years starting with the Cotonou Agreement. If people have been arguing over this matter for 14 years, then it’s not unreasonable to conclude that the negotiations have been tough. Nevertheless, on 24th January 2014, both sides announced that a ‘major breakthrough’ had been reached and they were now ready to sign the agreement.
2. In terms of value and rules and regulations, the EU is the largest single market in the world – there are 500 million people in it. In 2010, the EU imported €2trn worth of goods and services from across the world and exported €1.8trn worth of stuff.
3. When negotiations on the EPA started, the EU wanted ECOWAS to open up 80% of their market over a period of 15 years. After plenty of back and forth, this was compromised to 75% of the market (the most sensitive 25% of the economy can be excluded) over a period of 20 years. Normally, based on WTO rules, there shouldn’t be any sectors exempted from a free trade agreement but special consideration was given to the economic development of West Africa thus allowing the exemption of some sectors.
4. The EU, under a programme called EPA Development Programme, will also provide around €6.5bn from 2015 – 2019 to help boost the capacity of African countries to take advantage of the EPA.
5. In January, before the agreement was reached, the EU also agreed to stop all export subsidies to companies exporting goods to West Africa. This is especially in the area of agriculture.
6. On the other side of point 3 above – ECOWAS countries get full and immediate access to the EU market i.e. no quotas, no tariffs, no duties for goods produced in West Africa to enter any of the EU countries. I am almost certain that rather than provide support for companies that want to export to the EU, the Nigerian government levies export tariffs on them instead.
7. Finally, the EU has EPAs in place with practically every region in the world. It is not just an ECOWAS thing. There is also a huge one called the Transatlantic Trade and Investment Partnership being negotiated between the EU and the USA.
Now it’s fine to disagree with the terms above but surely no reasonable person can say steps have not been taken to protect the weaker party in this agreement. Also, one should not focus on the potential dangers to the detriment of the positive aspects of the agreement – the EU is a rich market and getting free access to it should undoubtedly create opportunities. Other parts of Africa that already have EPAs in place can point to real results that have been achieved. Based on the SADC-EU EPA for example, all export quotas on Botswanan beef have removed meaning that local cattle rearers can export as much beef as they want to the EU. The real issue should be government policies that boost the capacity of African companies to take advantage of these opportunities.
From Aganga’s comments above, he claims Nigeria is refusing to sign the agreement to protect the Nigerian economy and its people. Nigerians should no longer take these statements at face value. They ought to be examined whether they are genuine or no more than a pile of hot piffle. On my part, I can tell you who needs to be protected from who. Oh yes, I can.
The Nigerian people need to be protected from the Enemies of Enterprise, nominally known as the Nigerian government. Just yesterday the Communications Minister. Mobola Johnson revealed the following:
Speaking on claims by data service providers on the deployment of 4G LTE, she said the claims by Smile Communications Nigeria Limited and others are accurate.
She urged Nigerians not to be sceptical about their promises to deliver true 4G LTE technology services, adding that a worrisome trend in the industry currently is the fact that out of every kobo spent on the rollout of infrastructure by the operators, 70 per cent goes to taxes and levies
You can slice or dice it however you want, but the reason why internet penetration and quality phone access remains a headache today in Nigeria, is because the Nigerian government has willed it to be so. The same people who conspired to destroy education are now standing in the way of internet and mobile phone access that can change people’s daily lives for the better.
The Nigerian people need to be protected from the Purveyors of Poverty who have conspired to give us a cement ‘policy’ that cannot be described as anything other than picking the pockets of Nigerians at gunpoint. This cement policy has given us Dangote whose founder is now the richest black man in the world worth$25bn via a policy that aggressively transfers wealth from Nigerians to a handful of people by restricting choice in the market. Nigerians buy cement at 3 times what it can be obtained for elsewhere while Dangote has the biggest profit margins of any cement producer in the world – double the margins of Chinese producers who are the most efficient on the planet. All of this has produced an earth shattering 20,000 jobs which you will agree with me is what is stopping the Nigerian economy from totally imploding. Oh, this same company is still enjoying ‘pioneer status’ and has billions of Naira in tax credits yet to claim.
These are the people who Aganga is protecting not the Nigerian people. This is the ‘feedback from the private sector’ that he is referring to because free trade will expose who has been scamming who in the Nigerian economy.
I ask you to carry out a simple experiment when next you leave your houses for work or you are moving around anywhere in Nigeria. Take a note of all uncompleted buildings you see. Count how many you see in a day be they uncompleted houses or offices. Ignore the ones where work is going on and just focus on the ones that have obviously been abandoned for a long time. Report your findings in the comments below.
We have a deficit of 17 million homes in Nigeria today. Let us even forget the homes that need to be built from scratch – just consider the jobs and boost to the economy if some of those uncompleted buildings can be finished. Yet we celebrate ‘Made in Nigeria’ cement that is directly contributing to this mess we find ourselves in. How many buildings will suddenly become viable for completion if Nigerians are able to buy cement at the same price that people in Asia can buy it? You tell me.
The Nigerian people also need to be protected from the Traducers of Trade who speak from both sides of their mouth. Just last night I saw this tweet from the Finance Minister, Ngozi Okonjo-Iweala:
Africa’s continued reliance on external partners will not help Africa develop. – NOI
— Ngozi Okonjo-Iweala (@NOIweala) March 31, 2014
In January, everyone in the Nigerian government from the President to his ministers and aides gathered together to launch the Nigeria Mortgage Refinance Company [NMRC] scheme. Plenty of noise was made about this programme as a flagship policy that will, wait for it, ‘transform’ Nigeria. I wrote an explainer about it at the time. It’s a useful policy that can do good for us, ceteris paribus.
But have a look at this World Bank document. From design to funding, the World Bank almost singlehandedly produced that policy for the Nigerian government. The government barely put any funding into it (they are too busy making money disappear). So when the Finance Minister makes such a statement above, who exactly is she talking to and what is she saying?
This is not some benign thing – it is how capitalism and trade have become a slur in Africa over the decades. Leaders have systematically drawn up a false equivalent that trade and capitalism is something people (usually white) do to Africans to take over their wealth and resources. A minister who is happy to take the credit for World Bank work on one hand and then deliver an ‘ominous warning’ about the same people in the next breath is but a variant of theChampagne Socialist – champagne for me, socialism for you.
It is very important to protect Nigerians from the Injurer of Industry who send out one policy that is doomed to fail in the morning and are shocked, shocked I tell you, when it fails in the evening. They ban things in the morning and are full ofrighteous indignation when smuggling increases in the evening. They slap punitive tariffs on rice which cost the government at least N300bn in lost revenues – money that is then borrowed via bonds and left for the next generation to worry about. This policy, according to the Nigerian Customs, has also cost 19 lives of customs officers.
Does it matter that the rice tariff policy has failed? Does it matter that they have now abandoned the Cassava policy? Does this stop them from doing the same damn thing elsewhere? Of course not – that is why they want to replicate the foolishness on cars.
Most of all, the Nigerian people need to be protected from the First Born Sons of Satan who have no qualms about profiting from the mess of unemployment they have created. In other countries with high unemployment, the governments are frightened of any kind of gathering of jobless young people. Not so in Nigeria – our government is bold enough to gather thousands of unemployed youths in stadiums around the country to try their luck for jobs that have probably been distributed among Very Important People already.
It has the gall to kill 16 of these young people while the President adds insult to injury by chastising the minister responsible with no more than a finger wag.
What is the worst that will happen if the Nigerian government signs the EPA? Nigerians will have access to cheaper and better quality goods from Europe. No doubt this – voluntary exchange – is a terrible thing indeed.
But this piece is not about calling on the government to sign the agreement – they will have to as some ECOWAS countries are already breaking ranks to sign it. If the goods get to Ghana, then all bets are off as they will surely find their way into our ‘protected economy’.
It is about asking questions about the judgement of the people who claim to be making decisions on our behalf. Nigerians need to ask how exactly it is that these people claim to be acting in our best interests. Aganga claims that the EPA is not compatible with his National Industrial Revolution Plan [NIRP]. Where is the NIRP? It is in the same place that the automobile policy is – on his laptop. Only one copy. This is why no one has seen it. But as Dr Nonso Obikili showed recently, the only thing revolutionary about this NIRP is that it has ‘revolution’ in its name.
The government should tell us who exactly they are protecting us from, what the risks of exposure to these persons are and what alternative plans they have in place to ensure we are not being given Made in Nigeria cement in place of bread.
If a 20 year period is not enough to gradually open 75% of your market and you are already worried about the government losing revenues in 2026 on account of trade, then the Nigerian people need to be protected from the poverty you are planning for them. The only danger ahead is the utter lack of vision with which you are boldly marching into the future. Is the future so zero sum to them that they are already resigned to the idea Nigerian companies will not be able to take advantage of opportunities presented to them by untrammelled access to the European market? We cannot afford to be led by people who think this way.
During the auto debate, I made the point several times that the Mexican car industry manufactures 3 million cars a year while employing 500,000 people. None of those cars are ‘Mexican cars’. They are the Toyotas and VWs and so on. Today Mexico is also the world’s largest exporter of flat screen televisions. These things have been made possible by the North American Free Trade Agreement[NAFTA] that was signed in 1994, when Bill Clinton was President. At the time it was signed, Mexican officials were dreaming and hoping that they could reach $10bn in exports per month. Today, Mexico exports goods worth on average $1bnper day made possible by a trade agreement with its richer neighbours.
Enough of policies that trap us in poverty in the name of protecting us from marauding traders. It was trade that made the Magnificent Tang Dynasty. It was trade that made the 8th Century Arabs. It is trade that continues to make America – including the trade in culture. If the Nigerian government has stumbled on a new model of broad-based wealth creation, it should tell us so we know where we are going.
My current obsession these days is trying to find out what happened to Africa and Nigeria in the late 70s in terms of economic direction. I am trying to understand how, when Britain under Thatcher, America under Reagan and even China under Deng started to move towards market economies, Nigeria and other African countries were fooling around with nationalisation of oil and other companies. We are now at a stage where the Nigerian Labour Congress, in 2014, isthreatening fire and brimstone if the government privatises a company that provides catering services to airlines. It is important to ask how the government came to own such a company in the first place.
We need to understand how it all happened because here we are again – nationalisation being replaced by insularity. Things are being banned, tariffs are being raised, free trade is being warded off, the economy is being ‘protected’. Self sufficiency – the surest path to poverty – is what is on the lips of every government official.
Who wants to wait another 30 years to look back ruefully and wonder why we didn’t do things differently? Not me.