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Monday, 6 June 2016

Why Nigeria must not Consider signing the European trade agreement deal and how it would affect your small business.

The European trade agreement deal with west African nations is one in which when it is rectified by any nation would grant European manufacturers complete and unrestricted access to sell their product in any west African nation that signs the deal. So far some west African nations have signed it  and by the statement of the Vice President Yomi Osinbajo at the 49th Ordinary Session of ECOWAS in Dakar. He said, Nigeria could not be committed to such an agreement without wide consultations.
: “There are ongoing negotiations on it. We are discussing with the Manufacturers Association of Nigeria, MAN, and some other key economic players about it." We would recall that Goodluck Jonathan during his time as President refused to sign the trade agreement, but the fact that this new administration under Buhari is bringing it up again it shows that the federal Government may be interested in signing this agreement.

How will the EPA deal affect you as a local manufacturer either small scale or large scale?

1. European industries and companies produce in very large quantity and according to the economic of scale production in large quantity is cheaper, meaning if Nigeria rectifies the EPA deal imported produce will be cheaper and of better quality than those manufactured by our small scale Nigerian manufacturers. So take for example you are thinking f going into small scale detergent production, dried food packaging or even the production of footwears. If the cost of production of your product grosses at 100,000 Naira for producing a thousand sachet detergent and your European competitor who produce in bulk produces 15000 sachets of detergent at the production cost of 500,000 Naira then you can see that your local detergent will not be able to compete with that of the European manufacturer and as such you may have to fold up your business because the European manufacturer that have been in business for years will have a better quality product, better packaging, better marketing strategy and cheaper but quality products which means your own local produce may not even catch anybody's attention in the market.
2. European industries have the production capacity all they want is the raw materials because there is nothing that we can produce here in Nigeria that they cannot produce better and at a cheaper cost, so the agreement will take Nigeria backward to the days of exporting unprocessed raw materials and minerals instead of finished goods that would have boost the nations economy. Take for example we will export 2kg ore of iron for 50naira per kg and the European industry will use it to produce expensive products like phone accessories, jewels, security locks, zippers and automobile spare parts that Nigerians will now in turn buy for large amounts of money.
3. Nigeria remains the main target of the European industries in this new European partnership agreement. We have a large market, the largest in Africa and the European industries want to get a share of that. They know we import so much from China and they also want to compete taking advantage of our high dependence on importation. The European trade agreement would not improve our economy but rather it would make us completely reliant on imported goods as it would kill our local industries.
4. The EPA agreement will bring about mass unemployment in Nigeria as local industries that can't compete will fold up and their employees will lose their jobs, Small scale Businesses that are into product manufacturing like liquid soap, bleach and izal will go out of business and this would create more unemployment in the country.
5. It would reduce the need for foreign direct investment. why would I build industries in your country when I can produce and import into your country even at a cheaper rate? That would be the mindset of European investors that would have been interested in doing business with us.
6. It would further reduce the value of the Naira. With Nigeria spending more Naira on importing European products and getting little in return as foreign exchange as we may have little to export to Europeans to complement our imports, it would put more pressure on the Naira and further reduce its value.
7. Nigerian industries may have nothing to export to Europe in terms of finished goods. There was a similar trade agreement deal with America at one time and African countries were unable to export anything outside because even some of the raw materials they export could not meet the standard set by the custom and other import inspection bodies of the foreign country. Who is to say that products exported from Nigeria will meet European standards for them to accept it, just recently Nigeria was banned from exporting beans to a European nation because it did not meet their standards. Who is to say that even with the EPA agreement that this cases would not repeat itself.
8. It would not encourage creativity amongst our youths and younger generation who are already enjoying the luxury of watching others produce things for them in a Nigerian import dependent economy.
9. Corruption continues, the corruption question cannot be exempted from this issue. Will corrupt importers or third parties and middle men not use this to take advantage of Nigerians?
10. Diversification of the Economy. Importing everything including toothbrush is not going to help us in our drive to diversify the nations economy.
What should can we do to stop Nigeria from signing this agreement? Well this is just Steve Azuka of <a href=""><a>opinion on the EPA deal there are others that think it is the best option at this time. But my advice to you is to resist and protest the signing of this agreement as it would spell great Negative consequences for us as a nation and for the future generation.

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