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A Special International Report
Prepared by
The Washington Times
Advertising Department - Published on September 30, 1999
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Sponsors (1) Federal Ministry of Finance
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Democracy acts as springboard for business
“Democracy is like trade, an issue of give and take,” explained Minister of Commerce Mustafa Bello. “To Nigeria, democracy is a springboard for commerce. It will also be of help to West Africa. Other countries in the region look to our policies to shape theirs.”
As the largest market and economy in the subregion, Nigeria accounts for the majority of trade within West Africa; the effects of which are felt throughout the continent. Already Africa’s second largest economy, an economically strong Nigeria would serve as a driving force behind many striving African economies. With other countries building viable economies, a whole new set of potential markets would open up and the opportunities for American and Nigerian trade would grow exponentially.
In addition to its status as the world’s eighth largest oil producer, Nigeria has huge reserves of natural gas – one of the world’s largest – metal, timber, rich agricultural lands, an abundance of solid minerals, including some of the world’s highest quality coal, and a market of some 110 million people. Much of this wealth has been left entirely untapped. Bello is anxious to see that potential realized, and the ground lost as a result of Nigeria’s former political climate regained.
One of the ministry’s primary policy goals is to promote longstanding trade relations – multilateral and bilateral – which suffered neglect at the hands of military governments with little regard for world opinion. While Nigeria had obligations to international finance organizations, countries and trading partners, successive regimes took power which felt little responsibility to deal with such duties. The situation led to an eventual impasse with the World Bankand the International Monetary Fund (IMF), along with several major trading partners.
The problem also became one of perception: Nigeria was believed to be voluntarily rejecting foreign trade relations. “Because of the prolonged existence of a military regime which also chose a posture of hostility and indifference to international organized opinion and to its trade partners, the country only appeared self-sustained,” Bello explained. “A lot of potential was being ignored.”
For that reason, the minister said, the new African Growth and Opportunity Act is an important piece of legislation not only to help Nigeria regain its footing and realize its potential, but to promote advances across the entire African continent. “We have to see how we can boost trade with countries in the subregion to bring about the economic turnaround we need,” he explained.
In the years to come, that relationship is expected to broaden even further as American investors expand their trade activities with Nigeria. The U.S. currently exports capital equipment and technical expertise for the country’s thriving oil industry and food for its swelling population.
According to a recent report by an interagency assessment team co-led by Keith Brown, U.S. Agency for International Development (USAID) deputy assistant administrator for Africa, and Ambassador Howard Jeter, deputy assistant secretary of state for Africa, Nigeria’s economic transformation and resurgence would have an enormous, positive impact on regional development and create billions of dollars of opportunities for new economic ties with the United States, including exports and other sales and commercial ventures.
While the minister conceded that at this tenuous stage in its political travels Nigeria would appreciate financial and technical assistance, he stressed that his nation unquestionably prefers trade over aid.
“Aid, said our one time Prime Minister, will make us appear like small children always expecting things to come to us easily,” Bello said. “The Act means a lot to us and we intend to do whatever is necessary to see that it works and it is passed. We are not interested in aid.”
Promoting intra-African trade
According to the minister, lack of adequate trade relationships have not only left Nigeria behind; the lack of an exchange relationship has made it dependent on overseas technology, expertise and capital. Nigeria’s industries, for instance, currently rely heavily on raw materials which are taken from the country, processed beyond its borders and then brought back to be sold. “There is no other alternative than to expand our trade frontiers,” Bello said.
One of Nigeria’s most promising sectors is its textile industry. With such a vibrant, thriving business – the largest in the northern part of the country – the minister believes there is a huge market for Nigerian textiles in the U.S. While he would like to see that potential realized, he also understands the U.S.’s trepidation in opening up the market to these goods.
“The worry in the past was that industrializing nations like the Asian Tigers will use countries like Nigeria to dump their own goods in the U.S.,” Bello said. “We know that and understand that it is a legitimate concern of the American government, but we do not want to be a conduit for other countries to dump their goods. We have the goods to sell in the U.S. and we intend to sell them on an equitable trade basis.”
In that spirit, ministry policy is to intensify business-to-business contacts while at the same time maintaining relationships with counterpart agencies in the U.S.. Since the handover in May, those contacts have flourished. A project is now under way to identify target groups of potential investors within the U.S. and make them aware of the possibilities Nigeria offers.
“We had very useful discussions with the U.S. Department of Commerce,” Bello said. “We identified constraints that exist in expanding Nigeria-U.S. trade relations and … we identified some steps we need to take not only to cover the ground we have lost, but also so Nigeria’s economy can play the role which by right of its size, its potential and its hopes it should play.”
This will be no easy task, the minister conceded, and Nigeria may need a higher level of understanding and support to consolidate its democracy given its difficult circumstances. “We have come through a very harrowing period where the economy has been distorted beyond all logic,” Bello explained. “We are trying to restructure our economy so that foreigners will now be encouraged to do business with us, while at the same time responding to the domestic pressure of trying to amend internal economic problems – unemployment, severe poverty, undesirable levels of corruption and a high degree of apathy and cynicism.”
As the minister pointed out, in many ways the U.S. needs Nigeria as much as Nigeria needs the U.S. Nigeria has always been a major trade partner for the U.S., even during the times of political crisis. U.S. companies as diverse as Coca-Cola, Caterpillar and Chevron have been involved in Nigeria for decades. But, the minister lamented, the relationship could have been much better.
When the national elections that were to end a decade of military rule and return Nigeria to democracy were annulled and human rights abuses became widespread, the U.S. imposed limited sanctions on the country. Among other things it terminated development assistance, restricted travel of senior Nigerian officials, limited military-to-military relations and opposed new World Bank loans. The effect was to curtail American investment in the country.
Since the return of democracy, restrictions have been lifted and the U.S. government appears to want direct evidence that the Nigerian economy is ready to go through some basic restructuring – evidence the new government is busy supplying. “They are interested in our privatization, improvements in standards of accountability, openness and transparency,” said the minister. “They are interested in seeing growth and development in key sectors, as well as our coming to terms with the IMF and World Bank.”
It is important, those involved in restructuring Nigerian trade policy feel, that the U.S. government and financial institutions understand Nigeria is ready and willing to achieve what is needed on its own. There is a place, many feel, for more business-to-business contacts to parallel the hoped-for level of government-to-government negotiations. The age of a government stranglehold on all aspects of the economy is over for Nigeria, and the new attitude to trade is reflecting the change.
“On our part, we have indicated our willingness to do the things required for a higher level of understanding,” Bello explained. “We have come through a very harrowing period where the economy has been distorted beyond all logic. It’s going to take a lot of work to improve the standard of living, justifying the reason for democracy. There has to be a view, in the eyes of the ordinary Nigerian citizen, that democracy can deliver. You have to make a tangible difference in the life of the ordinary citizen so he doesn’t think, what is the difference? Why go through the process of democratization if the civilian administration is just as bad as the military?”
The minister is anxious to ensure a change is put on the ground for the people to see to demonstrate that democracy is superior to military dictatorship. “It will require good policies and these policies have to be funded.” He hopes those policies will be funded by trade.
This means performing a difficult balancing act between restructuring the economy along the lines that it will satisfy foreign investors that they can, in fact, do business in Nigeria, and, at the same time, responding to domestic pressures – unemployment, severe poverty, corruption and cynicism.
International Appeal
In the last few months, the government has set in motion a number of policies aimed at attracting foreign investment. It has set in motion an aggressive privatization program and has moved to free the economy from government intervention and controls to create more market access.
“We want a system that is more open,” Minister Bello explained. “One that is defined by less government and greater involvement of private interest and capital.”
This means open competitive and international bidding, privatization and greater prudence and discipline in public expenditure.
“We are now identifying key sections of the economy and setting in motion some policy initiatives that in the next two to three years will improve efficiency, reduce government expenditure and involve wider private sector participation,” Bello said. “We want to institute structural changes as quickly as possible so momentum is not lost.”
In so doing, the minister hopes the cost of governance will be reduced and political democracy translated into economic liberalization.
Several of the emerging sectors including telecommunications, solid minerals, power, steel and agriculture have already been thrown open through economic liberalization. Many of the opportunities are not new: the only thing lacking has been contact with foreign investors. The minister is anxious to advertise those opportunities and keep businesspeople aware of and sensitive to any new emerging opportunities in the Nigerian economy through sustained business-to-business contacts.
“We want to let people know how vibrant the economy is and that people can do business with Nigerian businessmen,” the minister said.
New Strategies
In the past, military administrations have sought insular policies, closing themselves off from the outside world. As evidence of the new government’s commitment to transparency and openness, the Ministry of Commerce and Nigerian Investment Promotion Commission (NIPC), among others, are launching themselves onto the Internet and into the information age.
“We are fighting to regain our position,” Bello said.
With no better way to show off Nigeria’s abundant potential than to let people see it for themselves, a U.S. trade delegation visit is planned to show off the opportunities that await. “We want to open up the whole country to them for their assessment,” the minister said. “Let them now have a clearer and closer picture of what investment opportunities there are here.”
“We had an administration that felt it could go it alone,” Bello says. “We paid a terrible price for it because a lot of what we needed to have done with the International Monetary Fund, the World Bank and our major trading partners like the U.S. was left undone, creating only an artificial image of self-sustenance.”
Today, the ministry is seeking to turn that image into reality.
The ministry has also begun to tackle some of the hurdles that had contributed to the lack of foreign investment including the high cost of doing business. Bello lauds the president’s frontal attack on corruption that has tarnished Nigeria’s international image.
This is an area we want to address seriously,” Bello said. “Unless we tackle it and get a true picture of Nigeria worldwide, we will continue to have problems attracting investors.”
At the ports, the government has been working to institute port reforms and to cut down clearance time for goods. “The long and lousy process at our ports will be rectified,’ Bello said. The officials from the ministry have already intervened on behalf of individual companies to help clear the goods and have spoken with customs chief to ensure the process is simplified.
Changes at the airports have been tremendous in the last few months. Customs, immigration and security staff have been cut down, streamlining the entry process and weeding out the corrupt officials that formerly discouraged many visitors from entering the country.
The same is being done at the country’s land borders – part of the ministry’s strategy to expand trade in the region. Nigeria is a member of the Economic Community of West African States (ECOWAS) and, as such, is committed to reducing trade barriers and encouraging ties with its neighbors. “We are trying to look at all the hitches and bottlenecks and make it easier for the free movement of goods and services throughout the subregion,” the minister said.
Membership in ECOWAS comes with privileges. In addition to Nigeria’s own market of some 120 million people, membership opens the door to investors to an additional market of more than 100 million people. Investors will also be able to use the West African market as a springboard into other markets on the continent.
The minister also believes democracy and the accompanying changes could help Nigeria to expand its tourist industry. He remembers a time when Nigeria used to receive many visitors before the civil war in the late 1960s brought the flow to an abrupt halt, and he is eager to return to those days. His ministry is now contemplating ways of bringing foreigners back to see Nigeria’s many historic sites and experience its rich culture first hand. “There are traditional and emerging sectors of the Nigerian economy that we would like the American business community to remain alive and sensative to,” Minister Bello said. “We will do everything possible to ensure that they do. We have a lot to offer and we intend to offer it.”
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Table of Contents (1) It's a new dawn over Nigeria |
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Nigeria is eager to consolidate its democracy by strengthening its free market economy and creating an enabling environment to encourage foreign investment. For a country hidden for 15 years beneath military regimes, democracy is unveiling a wealth of resources and possibilities.
Nigeria is already the fifth largest supplier to the United States, accounting for about one in every seven barrels of oil imported. This makes the U.S. the single largest consumer for Nigerian exports, 95 percent of which are oil. The U.S. also ranks as one of Nigeria’s primary foreign investors, with an estimated $7 billion in existing assets, according to U.S. government figures.