What is the status of the EU-Africa EPA?

By Rafiq Raji

eu africa

On 23 June 2014, I attended an event in London hosted by the Financial Times and the Nigerian Customs Service themed “Business in Nigeria: Trade facilitation for Africa’s business hub”. In preparing for my attendance, I looked up Nigeria’s recent trade statistics and doing business indicators. It could be better. Nigeria ranked nine places lower to 147th in the World Bank’s 2014 Doing Business ranking, below the Sub-Saharan Africa (SSA) average ranking of 142nd. The top three SSA countries were South Africa (41st), Botswana (56th), and Ghana (67th). In terms of ease of getting electricity, ease of registering property, ease of paying taxes, and ease of trading across borders, Nigeria ranks lowest in Africa and in some cases was amongst the bottom five. On the positive side, Nigeria ranked highest in SSA at 13th place on ease of getting credit, higher than South Africa. When the audience was finally allowed to ask questions, I put these facts before the Nigerian officials and wondered if they could explain what happened. As far as they were concerned, the World Bank got it wrong. At least that is what I interpreted their responses to be. Doing business in Nigeria remains profitable in spite of these inefficiencies, however. Investors look at Nigerian success stories in the cement and noodles manufacturing industries and think to themselves: where the heck were our heads all this time? But of course, fans of Nigeria wish it would fix the myriad of problems it has. Trading through the country’s ports can be unnerving and an energy shortfall increase production costs for businesses by as much as 40-50% according to some estimates. The Nigerian authorities’ are certainly committed towards increasing the country’s electricity production capacity. Progress remains slow, however.

However, the question I was really looking to ask at the earlier mentioned event is the title of this article. When asked by another participant, the Nigerian trade and industry minister gave an answer that was truly music to my ears. According to him, Nigeria will not sign an Economic Partnership Agreement (EPA) that potentially harms its industrial development. That was in June 2014. A month later, heads of state of member countries of the Economic Community of West African States (ECOWAS) endorsed a negotiated EPA that is the words of the communiqué issued, “has taken due account of the technical concerns raised”. The Cotonou Agreement – the EPA in question – is actually a marked improvement from the Lome and Yaounde Conventions. Exports to the EU from African, Carribean and Pacific Countries (ACP) actually declined during the period of the four Lome Conventions which subsisted between 1975 and 2000. However, the Cotonou Agreement had some provisions that were potentially harmful to local industries on the continent. A major issue was import liberalization, as early as 2015, for some African countries. For obvious reasons, some countries raised objections. The argument for some level of protectionism in the early stages of a country’s industrial development is a strong one. The US and EU continue to protect select markets. As ECOWAS has endorsed the Cotonou Agreement and plans to sign it, I wonder if the West African regional bloc was able to secure concessions from the EU in regard of the technical concerns it earlier raised.

Photo credit: Deutsche Welle

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