An Evaluation of the Impact of Nigeria’s Trade and Investment Policy Reforms

Current efforts at reforming Nigeria’s economy cover all known approaches to trade and investment reforms. At unilateral level the National Economic Empowerment and Development Strategy (NEEDS) forms was adopted. Bilateral efforts manifests in the increasing number of bilateral investment treaties and bilateral trade agreements in the recent years. Efforts at regional level include intra-regional efforts under the auspices of the Economic Community of West African States (ECOWAS) and extra-regional efforts as exemplified by the on-going negotiations of an Economic Partnership Agreement (EPA) between West African countries and the European Union (EU). Multilateral efforts are not lacking as Nigeria is actively engaged in the negotiations of Doha Development Round (DDR) of the World Trade Organization (WTO). Efforts at liberalizing trade and investment regimes in the country are not new as the country attempted structural adjustment programme (SAP) was pivoted on trade, exchange rate and investment reforms, perhaps the dimension and the speed at which the current efforts are being conducted are the new elements in the current wave of trade and investment reforms. Against the background of various attempts at liberalizing trade and investment policy regimes in Nigeria since the mid-1980s and the current efforts at negotiating and/or designing new trade and investment policy at unilateral, bilateral, regional and multilateral levels this paper presents an evaluation of past efforts with a view to informing the current efforts. Trade and investment theories and the linkages between them provides evidence on potential impacts of reforms on economic growth and performances; lessons from the design, implementation, expectation and effects of the past reforms provided rich information on the limit to realizing these potential effects. Notwithstanding that the nature and form of agreements are currently under negotiations, different estimates of possible impacts of these agreements have pointed to opportunities and challenges. The emerging trend points to a relatively fixed costs of reforms that are invariant to approach (unilateral, bilateral, regional and multilateral) to trade and investment reforms. However, the benefits appear to be dependent on the approach with multilateral promising the greatest benefits of all. More importantly the realization of the benefits not automatic and it may not even be realized at all if the reforms are truncated. There is, therefore, the need to manage the trade and investment reforms in order to optimize the potential benefits. The paper suggested some practical steps forward in guiding commitments to be made at the different levels of negotiations which include (1) tying the rate (depth, height and width) of reforms to be committed to progress made at addressing supply response constraints. (2) Given the diverse interest of stakeholders and the country in general, there is a greater role for external agent of restraint hence unilateral trade and investment reforms may not offer the best option. However, for other approaches to be optimally beneficial to the country there is the need for mainstreaming trade in the adopted development strategies and also for prioritizing issues at regional as well as at multilateral level. (3) There is a greater need in Nigeria for coordinating and harmonizing institutions and policies for improved performance of the economy. For instance, trade and investment policy reforms process needs to balance interests of stakeholders at both the design and implementation stages. The realization of optimum benefits from trade and investment reforms is contingent on complementary policies that among other things guarantee macroeconomic stability, a necessary and almost sufficient condition for sustainable pro-poor growth that is the long-term goal of the Nigerian economy.