Loomnie

From a BusinessDay Nigeria column:

[O]ur trade policy has remained very inconsistent many years after independence. Recent reforms – particularly the NEEDS – have however tried to considerably minimize the unpredictability of the trade policy regime by establishing a schedule to fully adopt the Economic Community of West African States (ECOWAS) common external tariff (CET) by 1 January 2008, and respect obligations under multilateral trading systems. However, according to Afeikhena Jerome in a 2005 paper titled” Institutional Framework and the Process of Trade Policy Making in Africa: The Case of Nigeria”, “trade policy formulation and implementation in Nigeria, even though conditioned by the global context, is dominated by governmental and inter-governmental agencies whose responsibilities overlap and between which coordination is deficient. There is no identifiable source or structure of research and analytical support for trade policy making in Nigeria”.

Reminds me of a meeting I had in 2008 with a high-ranking official at the Nigerian ministry of trade. I asked whether I could get a copy of the country’s trade policy document. He said there was no document like that, and there hadn’t been one in a while.

BBC Focus on Africa Magazine:

It is early morning in the Kenyan capital, Nairobi, and a small independent wholesaler is doing a roaring trade.

The city’s street traders and small independent retailers have come to stock up on household products, one of which is toothpaste.

This wholesaler stocks two brands. The first, the so-called genuine article, is manufactured by Unilever, one of the world’s biggest consumer goods businesses.

The other, the wholesaler describes as “Chinese” – Unilever calls it fake.

By close of business this wholesaler is justifiably pleased. He has sold more tubes of counterfeit toothpaste than the genuine article, which is excellent news for the bottom line.

On the genuine product he has made a 13% mark-up, on the counterfeit an impressive 50%. Fair play to him, some might say – after all it is only toothpaste. Continue reading.

Contrary to “popular knowledge”, a new book suggests that China took a turn for the worse in the 90s. You might want to read MIT’s Yasheng Huang‘s book Capitalism with Chinese Characteristics. Or, if you are really busy – like me – you might start with/settle for the review of the book by The Economist. I strongly resist digging into the review here. You are best served reading the review yourself.

Dani Rodrik’s take on the recent breakdown of the Doha round of negotiations.

I have just added a roll of the allafrica.com feed on trade news to the blog. It is directly below Recent Comments, at the right hand side. I am also currently reading the book The Least Developed Countries and World Trade, a Swedish International Development Agency (Sida) publication. The study was prepared by Stefan de Vylder. I will let you know what I think of it.

I just read that the federal government of Nigeria has just decided that buses and trucks imported into Nigeria must not be older than 10 and 15 years respectively. The age limit for imported cars had already been set at 8 years some years ago. In the report – at least the part I read in the newspaper – there was no mention of air pollution. The minister of trade and commerce, Charles Ugwu, said that it was to stop the ‘importation of vehicles that would require excessive maintainance’. Well, the real reason is not really that far-fetched: the announcement was made at a meeting with the local automotive manufacturers/assemblers and major importers/distributors. Remember, Nigeria has a history of import prohibition as a trade policy instrument.

The first thing that came to mind: Tell those importers in Cotonou that business just got better.

In the closing lines of a post on the Zambian copper industry I wondered whether anyone knew the details of the deals between oil companies and the Nigerian government. A news story I read in BusinessDay rekindled that interest, and a post I read at NigerianCuriosity made me decide to actually blog about it. The news story says that the Nigerian House of Representative found out, during a visit of the House committee on the upstream oil industry to the Department of Petroleum Resources, that the Memorandum of Understanding between Nigeria and major oil companies elapsed in 2003. Shell Petroleum Development Corporation (SPDC) Chevron, Total, Exxon Mobil and Nigeria Agip Oil Company were on the list of companies said to be affected by this. The committee chair, Mr Tam Brisibe, was also quoted to have said that Nigeria signed the MoU with its joint partners in 1986 when it had problems marketing its crude oil. The concern of the committee was that Nigeria might have been cheated of revenues due to it. But I think that the more serious concern should be about how it so happened that the MoU elapsed and nobody noticed.

But then…
…when I googled the only information I got about any MoU was from the Oil and Gas Insights website. The report said that the Nigerian government sought to terminate the MoU that governs the production of onshore oil in Nigeria. The MoU ensured that a minimum profit of $2.50 per barrel was paid to the government, no matter how low the prices of oil get. There was no maximum cap, but future explorations were assured of a tax rate of 65.75%, lower than the 85% for projects that were already in production. Under the Petroleum Profits Tax Act, the tax rate is 85% on all chargeable income; the MoU was supposed to serve as a tax incentive. A letter was written to Shell about this, telling the company that the MoU was going to be replaced with a standard tax plan.

The website also reported that the NNPC said, in January, that it was going to renegotiate the details of its joint ventures, ventures like SPDC in which the NNPC owns 55% and Shell 30%.

So?
So I still don’t understand the structure of the Nigerian oil industry, and it doesn’t seem like the chair of the House committee on the upstream oil industry, Mr Tam Brisibe, does. The fact that these two reports – one from a Nigerian newspaper quoting Mr Brisibe, and another from an industry magazine/website – are conflicting makes it even more confusing. I hope that the investigation of the House committee will help throw some light on the issues, and make the most volatile, but yet most lucrative, industry in the country a little bit more accessible to curious members of the public. I will try to follow the story.

Ref:
Oilandgasinsight
BusinessDay

I officially declare my interest in the trade policies of Nigeria and ECOWAS, especially as they concern trade within ECOWAS. This means that I will be having posts on trade on the blog pretty soon. To celebrate my declaration I am drawing attention to a product just newly introduced by Ecobank. The bank has introduced a multi-currency account that can be operated from any of Nigeria, Ghana, Sierra Leone, Liberia, Guinea Bissau, Guinea, Cote d’Ivoire, Cameroun, Burkina Faso, Senegal, Togo, Mali, Niger and Benin. What this means is that one can withdraw money from an Ecobank Nigeria account from say a Liberia Ecobank, in the local currency. Yesterday I drew the attention of one of my friends here in Cotonou to it. When I saw him today he told me that he had gone to reactivate his Ecobank account.