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The Nigerian Giant, an Imposing Neighbour

By its size and population
Nigeria is almost a subcontinent
in and of itself. The country
continues to have one of the most
dynamic economies in Africa, with
GDP growth of around 6% in 2009. The
effects of the international crisis have
been felt, however, with a significant
drop in oil prices, scarcer credit and a
financial sector made fragile by toxic
assets. These factors threaten the precarious
macroeconomic equilibrium
that had been attained between 2003
and 2007, and it is increasingly difficult
to believe in the ambitious “2020
Vision” that aims to make Nigeria the
world’s twentieth-largest economy by
2020. Although Nigeria is the secondranking
economic power in sub-Saharan
Africa, its economy is lacking in
competitiveness, ranked ninety-third
out of 134 countries. The country’s economic
performance is above average
for sub-Saharan Africa, but well below
that of other regions in the world. The
economy is not diversified and remains
largely dependent on the petroleum
sector, with the consequence that the
country’s budgetary circumstances are
highly correlated to fluctuations in the
price of oil.

Inversely, Nigeria has been able to
hold its food dependence at a relatively
low level compared to other West
African countries. Regarding rice, a
staple that is central in the food policy
debate in West Africa, comparison of
degrees of rice dependency across the
sub-region show an ongoing deterioration
of the rice balance, except in
Nigeria. Rice growing in Nigeria has
in part met rising demand, thanks to
substantial support policies. However,
while local rice production reaches the
cities in the centre of the country, the
large coastal cities continue to be supplied
heavily with imported rice. Nigeria
is thus simultaneously the most
powerful agricultural economy in the
region, and the country that imports
the most food (via both regulated and controlled channels and informal and
illegal pathways).

The development of trade between
Nigeria and neighbouring countries
reflects a trend that is seen well beyond
Nigeria. The shift of trade to bordering
areas and regional markets is happening
in two apparently contradictory
directions. First, the regional integration
dynamics supported by ECOWAS
are increasingly successful in erasing
national borders. Second, some bordering
countries are increasingly pushing
for wider use of cross-border
differentiation. Intra-regional trade
with Nigeria is set in a framework of
multiple realities : food security issues
in Niger with informal trade flowing
from Nigeria, competition issues with
Cameroon, re-export trade issues with
Benin. The markets that prosper on
both sides of the Nigerian border make
these regions remarkably dynamic in
terms of trade. The intensity of trade
and its ambiguous effects in the different
countries raise many questions
about trade policy, in particular with
respect to grain products.

Nigeria’s trade policy contrasts
sharply with that of its neighbours,
by its instability as much as by its protectionist
tendencies. Although Nigeria
has subscribed to the ECOWAS stipulations
(and is the seat of the organization’s
headquarters), the Nigerian
government continues to apply high
tariffs to certain products, and issues
import bans every year. These disparities
between countries are a boon to
trade networks that are well integrated
across the regional area. It is likely that
implementation of a free-trade scheme
within ECOWAS will strengthen trade
with Nigeria, but in this case the future
of re-export trade will be jeopardised.
This poses a challenge for the different
value chains and their actors, namely
reconversion and developing the capacity
to meet consumer demand, in
particular in cities. This also implies,
assuming that government authorities
agree, that Nigeria revise its tariff
policy across the board (a maximum
customs tariff of 35% and an end to
import bans).

These issues raise questions about
Nigeria’s role in meeting the challenges
of regional integration, and in particular
the country’s agricultural sector’s
position in today’s regional dynamics.
We hope that this issue of Grain de sel
will provide readers with keys to understanding
the situation and some
solutions to the problems.

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