International Trade Optimisation and Multilateral Trade Agreements in Africa: A Case Study of African Growth and Opportunity Act (Agoa) in Nigeria

Abstract

The African Growth and Opportunity Act (AGOA) trade program had a great and promising start, and the first decade witnessed a spike in export and job opportunities for Nigerians and Sub-Saharan Africans until the fall in trade occurred during the second decade. As a policy solution, African policymakers consider the implementation of Trade policy remedies as critical for trade optimization and to support the existing tariff-free trade agreements. Unfortunately, the fall in trade for Nigeria persisted amidst offers for trade optimization to help mobilize resources for active trade engagement and revitalize its dwindling and underproductive trade programs. Similarly, the existing trade agreements do not sufficiently reflect the contributions of trade mechanisms in business development and economic growth due to several reasons. While Nigeria has benefited from the trade program, the impact on the volume of trade in Nigeria after 24 years remains an illusion that should be unraveled. This study is in three parts. The first part presents an overview of the African Growth and opportunity Acts (AGOA) and assesses AGOA’s performance based on certain key performance indicators. The second part examines AGOA trade preferences trade agreements (PTA), and evaluates the extent trade optimization strategies have helped to reposition multilateral trade agreements, increase trade and optimize international trade benefits. In the third part, existing policy-based strategies or initiative were assessed, and the inclusion and integration of unilateral trade preferences in existing multilateral or preferential trade agreements (MTA/PTA) investigated. The extent the trade policy remedies have affected MTA/PTA and trade in Nigeria was examined using a qualitative approach. Overall, the study reviews and discusses critical research and policy frameworks and examines the relevance of policy remedies based on primary data collected through the distribution of questionnaires. In this study, a combined purposive and snowball sampling method were used to collect data and the findings described using non-numerical features. Also, the multiple case study approach was adopted to assess the impact of AGOA trade on several socioeconomic indexes (volume of trade and trade balance, etc.). For data gathering, thirty (30) questionnaires were distributed across four organizations, which includes the Federal Ministry of Industry, Trade and Investment (FMITI), FMITI Multilateral Trade Division (AGOA Branch), Ministry of Foreign Affairs (NMFA) and FMITI Nigeria Export-Import Bank (NEXIM) Divisions. The questionnaires were iii administered by representatives of the organizations assigned by the researcher and staff of the organization. Based on the study, three research questions were examined and the research hypotheses tested using both primary and secondary data gathered from open-ended questions as opinions, views and perspectives. The study shows that AGOA trade increases market capacity, leads to market expansion and business development. However, several internal and external limitations to trade undermine the substantial impact of trade on the volume of trade and economic growth, and as such, trade accountability is critical for strengthening trade agreement, trade optimisation and full implementation of trade policy to guarantee trade mutual benefits. Also, the study reveals that trade legislations are potent, but the current trade legislations cannot guarantee mutual participation of Nigeria in AGOA and AfCFTA trade programs due to weak institutions and poor implementation of trade policies which undermines the contributions of existing trade agreements. While the study showed that AGOA trade program was faulted, trade experts and stakeholders are confident the trade bottlenecks can be addressed by leveraging AGOA’s contributions to trade in repositioning the Nigerian market. Hence, the study suggests the need for a result-driven review of national trade policies to accommodate trade optimisation strategies offered by AfCFTA, and to support economic growth which has remained elusive over the years. In addition to trade policy review, major causes of incessant policy failure in Nigeria should be identified and jettisoned to ensure economic dependence. Overall, the study is a useful document for the review of AGOA’s conditions by Nigeria government to decide if its current trade policy postures fit into the AGOA’s framework and current realities.