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During your tenure as the Head of Trade and Economics Section of the EU, how much did the trade volume increase between the EU and Nigeria?
The total volume of trade between Nigeria and the EU has increased over the years: about 20 billion euros in 2016, 26 billion euros in 2017, and 34.4 billion in 2018.
An important point I also would like to stress is that Nigeria has always had positive trade balance with the EU: about 2 billion euros in 2016, 5 billion euros in 2017 and 10 billion euros in 2018.
Which European country/countries does Nigeria trade with the most?
According to the 2018 figures of the National Bureau of Statistics, the top three EU countries from which Nigeria imports goods, mainly oil refined products, chemicals and machinery are the Netherlands (N1,501,640.1), France (N377,569.9) and Germany (N357,731.5), representing respectively 27.8%, 7% and 6.6% of the overall imports of Nigeria from the EU. In terms of exports, the three top EU countries to which Nigeria exports goods are: the Netherlands (N2,051,225.5), Spain (N1,934,078.4) and France (N1,513,883.7), representing respectively 24.4%, 23.1% and 18% of Nigeria’s overall exports to the EU. Let me add that the UK accounted for 6.2% of total EU exports to Nigeria and 8.3% of total EU imports from Nigeria in 2018.
How would you grade the economic relations between Nigeria and the EU?
I would grade the economic relations between Nigeria and the EU as very good, although they could certainly improve. Let me explain. Economic relations include trade and investments, but I would also include the development cooperation support that the EU gives to Nigeria to improve its competitiveness and business climate. With respect to trade, the EU has remained over the years Nigeria’s most important trading partner in exports and imports, representing about 40% of Nigeria’s total external trade. In terms of investments, EU Foreign Direct Investments (FDI) stock in Nigeria stood at 38.4 billion euros in 2015 according to Eurostat, representing more than 50% of the overall FDI stock in Nigeria according to the United Nations Conference on Trade and Development (UNCTAD). Even during the period of recession in 2016, the stock of EU FDI in Nigeria stood at about 37 billion euros.
The stock of EU FDI in Nigeria shows that European companies have an interest to long-term investments in the country, contributing to local growth and job creation. European companies do not come to Nigeria to make quick profit and leave. They do not content themselves with selling without investing in local production. The EU delegation and the European Business Organisation (EBO) Nigeria, a business group uniting leading European investors and corporate organizations in Nigeria, that was launched last year at the 7th edition of the EU-Nigeria Business Forum in Lagos, is currently preparing a study mapping the European businesses present in Nigeria. I am sure that through the study we will discover that many large companies operating in Nigeria, even some that look entirely indigenous, have as ultimate owners European investors, and contribute a lot to the Nigerian economy in terms of growth, job creation, and tax payment.
But as I said, economic relations include also the support the EU provides to private sector development, business environment and trade facilitation in Nigeria and in the ECOWAS region. Under the 10th and 11th EDF, the EU is funding a number of regional programmes covering economic integration, private sector development, trade facilitation and competitiveness. I would like to mention in particular the Nigerian component of the West Africa Competitiveness Programme, implemented by GIZ (the German development cooperation agency), which is an 11 million euro project seeking to improve competitiveness and exports through value chain development. The project is implemented in seven states and focuses on four value chains namely: tomato (including pepper and chilli), ginger, leather and garments.
The project is targeted at improving the performance and growth of farmers and industry/processors, including contributions to regional and global exports in the selected value chains and improving the climate for businesses at national and regional levels. It is worth to mention that under the 10th EDF, the EU has funded a Nigerian Competitiveness Support Programme that, among its success stories, has improved the business environment in Kaduna and Kano states, supported the Nigerian government and the National Assembly in the adoption of a Competition and Consumer Protection Bill, which as you know has been recently signed by the President; contributed to the establishment of a National Quality Infrastructure in Nigeria including the drafting of a National Quality Policy; the establishment, and incorporation of a National Accreditation board which is now operational; the construction of a National Metrological Institute in Enugu, the establishment of national technical regulation bodies and the organisation of a Nigeria National Quality Award in line with the ECOWAS quality award process. A number of private sector development activities are also co-funded by the EU.
These include the COLEACP Fit For Market programme and the TradeComII programme. The COLEACP programme is providing support to producers of horticultural products willing to export their products to Europe, while the TradeCommII programme is about to support the Nigerian Export Promotion Council (NEPC) in capacity building for a number of Nigerian SMEs willing to export cocoa, cashew and sesame products to Europe. In the power sector, the EU is providing a comprehensive package to support both the improvement of the public sector-led interventions and boost the investments from the private sector amounting to 165 million euros under the 11th EDF. The European Investment Bank (EIB) has also made significant investments in the country. Since 2010, the EIB has disbursed 296 million euros under seven facilities signed with nine Nigerian banks, of which 210 million euros was disbursed to 50 sub-projects for on-lending in foreign currency, averaging 4.5 million per project. The sectors covered include wholesale & retail trade, education, manufacturing, construction, transportation, accommodation, human health, information & communication, electricity & gas, agriculture, scientific & technical activities.
In 2018 the EIB provided 17 million euros equity participation into the newly established Development Bank of Nigeria, which is intended for financial intermediaries on-lending mainly to MSMEs in local currency. The EIB has also committed 87 million euros in Nigeria through funds, making it number one among the African countries in terms of the amounts invested into SMEs and Mid-Caps. Since 2003, these investments have been made into 90 companies, of which 850 million euros have been indirect investments and 113 million euro direct investments. The present portfolio includes 65 companies.
Last but not least, the EU has been working on the implementation of External Investment Plan (EIP), one of the instruments of which is the establishment of a European Fund for Sustainable Development, which will provide guarantees to facilitate and de-risk investments in five thematic areas: “Sustainable Energy and Connectivity”, “Micro, Small and Medium Sized Enterprises Financing”, “Sustainable Agriculture, Rural Entrepreneurs and Agribusiness”, “Sustainable Cities” and “Digital for Development”.
The EU Delegation will organise focused and targeted workshops in the coming months explaining who and how to benefit from these new guarantee instruments to invest in the country. I think that all I have just explained shows how good economic relations are between the EU and Nigeria. However, I think these relations could certainly improve. First, Nigeria is still a long way from diversifying its exports. It is not acceptable that non-oil exports which is mainly cocoa, leather, shrimps and prawns represent only about 5% of the overall exports to the EU, considering that the EU is the main destination of Nigeria’s non-oil exports. Second, EU investments, but also local investments, would increase even more, if Nigeria wished to take advantage of international trade, and become signatory to the African Continental Free Trade Area, and to the Economic Partnership Agreement between West Africa and the EU. As you know Nigeria has not yet signed these two agreements, unlike many other African countries.
I strongly believe that these agreements, if properly implemented, would support the diversification of Nigerian economy, and attract investors, that could use Nigeria as hub to open factories and manufacture products that could be sold duty free and quota free, not only to several hundred million consumers on the African continent but also to 500 million consumers in the European market.
How would you grade Nigeria’s economy compared to when you first came to the country?
When I arrived in Nigeria in 2014 the economy was growing at about 6%, now it is growing at about 2%, after a period of recession. It is not a mystery that Nigeria’s economy follows the trend of the international crude oil market. In this respect, I have not seen much change in Nigeria’s economy over the last five years. Nigeria still needs to continue efforts to integrate its market to international value chains, to boost its manufacturing sector, to diversify its export base, and to diversify its government sources of revenue: to summarise, it still needs to become less dependent on oil and gas. In my view, it is essential that Nigeria realises how important international trade and international trade agreements are to achieve this result.