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TRADE: ‘‘Russia Should Extend More Preferences to Nigeria’’

Kester Kenn Klomegah

MOSCOW, Mar 23 2009 (IPS) - As cooperation between Nigeria and Russia is strengthened, Russia should consider extending preferences to some goods from Nigeria to further boost trade between the two oil producers, according to the deputy director of the Russian Academy of Sciences’s Institute for African Studies, Professor Dmitri Bondarenko.

His suggestion comes after Nigerian Foreign Minister Ojo Maduekwe and his Russian counterpart Sergey Lavrov held a review meeting of the two countries’ intergovernmental commission on economic and scientific-technical cooperation on Mar 17 last week. They agreed on a broad range of bilateral economic issues.

Bondarenko told IPS that the commission could become a tool for the revival of Russian-Nigerian economic cooperation.

This possibility is symbolised, albeit ambivalently, by the Ajeokuta plant which could become the largest metal producing plant in Africa. The building of the steel plant started in 1970 during the Soviet era. According to Bondarenko, it was ‘‘unfortunately stopped in the late 1980s due to problems on both ends’’.

This has made the Ajeokuta project is ‘‘a painful topic in discussions among Nigerian policy experts on Russian-Nigerian relations’’.

For trade relations between Russia and Nigeria and other African states to improve appreciably, Bondarenko suggested that ‘‘Russia gives some trade preferences to African countries – for example, tax exceptions or reduction among other measures. This can become an effective political step to strengthen relations with African countries’’.

However, at least two points should be taken into account, he said: firstly, such measures should only apply to specific goods, so as not to discourage non-African partners. For example, if Russia gives preferences to African imports of pineapples and bananas, it would have to do the same with Latin American importers of the same goods for economic and political reasons.

Secondly, such preferences should apply to direct imports by African companies but not to trade mediated by Russian or third countries' companies.

The value of trade, having practically doubled in 2008 to about 300 million dollars, and the allowance for re-exports – more than one billion dollars – serve as an indicator of current growth.

Today, Nigeria is Russia’s second largest trade partner among sub-Saharan African countries. Russian business circles show an ever greater interest in entering the promising market of that large country.

Dr Bashir Obasekola, a prominent Nigerian economist and the outgoing president-general of an organisation representing the Nigerian community in Russia, told IPS that ‘‘the trade current trade statistics of about 300 million dollars seems peanuts given the potential of both countries and the size of their economies.

‘‘The volume of trade should be in the billions of dollars, even without military hardware. One of the major hindrances to free trade and a significant increase in trade transactions between Nigeria and Russia is the lack of direct air flights,’’ Obasekola said further. ‘‘This makes it more inconvenient and expensive for potential investors to travel easily to both countries.

‘‘Besides, there are no adequate economic and social statistics available to potential Russian and Nigerian investors.’’

He also explained that Russian industries need raw materials, agricultural produce and other consumer goods that are cheaply available in Africa. Without special incentives, these things cannot easily get to the Russian market.

‘‘Such measures as changing import-export tariff policies could encourage buyers and sellers in both countries to trade. Adequate legal protection should be made available for investors in both countries. The lack of legal mechanisms is sometimes being exploited by criminals in both countries,’’ he added. This led to fraud and the illegal seizure of properties and investments.

Apart from the differences in the level of economic development and climate, Russia and Nigeria are similar in several ways. Both countries have large populations, with a variety of mineral resources. Nigeria and Russia are both suppliers of oil and both play significant roles in regional and world affairs.

Both countries are emerging economies, although Russia is far ahead in economic development, a member of Group of Eight industrialised countries (G8) while Nigeria is aspiring to be part of the 20 most-developed economies by the year 2020.

The Russian private and public sectors could also play significant roles in the infrastructural development (energy, housing, roads and railways) of Nigeria, Obasekola said finally.

The two governments hope that the commission will help them to actualise the existing rich potential that both Russia and Nigeria possess in the trade and economic field and in the sphere of large investment projects.

These would include projects related to the development of infrastructure; the ferrous and non-ferrous metals industry; electric power, including nuclear energy; and the extraction of hydrocarbon and other mineral raw materials.

‘‘We agreed to speed up work on modernising the legal base of our relations. A whole array of important draft documents are in the stage of elaboration, including an agreement on the encouragement and protection of investment,’’ Lavrov said after the official meeting.

The Russian foreign ministry’s spokesperson, Andrey Nesterenko, said at the start of the diplomatic talks that, ‘‘economic and trade ties between Russia and Nigeria have been picking up in recent years, which is consistent with the two leaderships’ policy of taking the partnership to a new qualitative level’’.

Nesterenko added that ‘‘key aspects of Russian-Nigerian cooperation is to bring all the available suggestions for large projects in the energy sphere, the ferrous and non-ferrous metals industry and other sectors onto a practical footing."

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