The private sector is key in making economic decisions By Jide Ayobolu

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Vice President Yemi Osinbajo says the Federal Government is committed to ensuring adequate consultation, especially with the private sector, in taking vital decisions on the economy.

The Vice President stated this recently in Abuja at the launch of the Nigerian Economic Diplomacy Initiative (NEDI), an initiative of the Foreign Affairs Ministry.

He said the country was committed to all Pan African and other deal that had made Nigeria to stand out as a country, with a view to integrate Africa.

”We are also committed to ensuring adequate consultation is made, especially with the private sector, before we make further commitment to some of the international treaties that are important to us.

He said Nigeria was also committed to strengthening economic ties at the official level on issues like technical cooperation, air services, double taxation, investment promotion and protection and citizens’ rights among others.

He noted that the trade and investment ties between countries were driven mainly by their private sector actors.

”In the case of Nigeria, the private sector is particularly important because it accounts for well over 90 per cent of our GDP.

”We are fully aware that building a competitive and vibrant national economy of our dream relies on enabling the innovation and dynamism of our private sector operators to flourish.

”Given that private sector actors and indeed talented individuals that would drive trade and investment are numerous: it follows that they may not have access or the means to obtain the information they need about the opportunities that abound especially abroad. So the vision of the minister to use the NEDI to bridge the vital gap is a welcome development indeed,” he said

Foreign Affairs Minister, Geoffrey Onyeama said NEDI was a platform and mechanism for matching and connecting businesses.

According to him, NEDI seeks to surmount all business huddles and barriers by leveraging on the ministry’s presence in 100 countries to match Nigerian and foreign businesses.

”This we do through an Internet portal where any Nigerian business after satisfying credibility check can upload their data onto a website. ”And with the help of dedicated staff and the information would be available to Nigerian staff in missions in the 100 countries,” he said.

According to him, in addition to NEDI, the ministry also created a window for diaspora brain gain.

”There are millions of Nigeria, who would want to come home if they could find job commensurate to their skills.

”And, conversely we know that there are Nigerian institutions and businesses that are looking for skills not available in the country.

”We have therefore added a window where Nigerians in diaspora can upload their profile and the ministry will help to match them to needs of businesses and institutions in Nigeria.

”What NEDI add is a simple credibility and secured environment to grow the Nigerian economy,” he said

He said that the ministry would soon launch an internet base mechanism for validating document with payment online to check corrupt practices.

He said this would obviate the need for people to go through the often corruption prone bureaucracy to have document validate.

Economic diplomacy is a form of diplomacy. Economic diplomacy is the use of the full spectrum economic tools of a state to achieve its national interests.

The scope of economic diplomacy can encompass the all of the main international economic activities of a state including, but not limited to, policy decisions designed to influence exports, imports, investments, lending, aid, free trade agreements, etc.

Economic diplomacy is concerned with economic policy issues, e.g. work of delegations at standard setting organizations such as World Trade Organization (WTO). Economic diplomats also monitor and report on economic policies in foreign countries and give the home government advice on how to best influence them.

Economic diplomacy employs economic resources, either as rewards or sanctions, in pursuit of a particular foreign policy objective. This is sometimes called “economic statecraft”.

Economic diplomacy is traditionally defined as the decision-making, policy-making and advocating of the sending state-business interests. Economic diplomacy requires application of technical expertise that analyzes the effects of a country’s (receiving state) economic situation on its political climate and on the sending state’s economic interests.

The sending state and receiving state, foreign business leaders, as well as government decision-makers, work together on some of the most cutting-edge issues in foreign policy, such as technology, the environment, and HIV/AIDS, as well as in the more traditional areas of trade and finance. Versatility, flexibility, sound judgment and strong business skills are all needed in the execution of economic diplomacy.

International and domestic economic issues – this includes the “rules for economic relations between states” that has been pursued since World War II.

And owing to the increased globalization and the resultant interdependence among state during the 1990s obliges “economic diplomacy to go deep into domestic decision making” as well. This covers “policies relating to production, movement or exchange of goods, services, instruments (including official development assistance), money information and their regulation”.

State and non-state actors – All government agencies that are involved in international economic mandates are players in economic diplomacy (though they often do not describe them as such).

Further, non-state actors such as non-government organizations (NGOs) engaged in international economic activities are also players in economic diplomacy. Businesses and investors are also actors in the processes of economic diplomacy, especially when contacts between them and governments are initiated or facilitated by diplomats.

economic diplomacy is concerned with economic policy questions, including the work of delegations to conferences sponsored by bodies such as the WTO” and include “diplomacy which employs economic resources, either as rewards or sanctions, in pursuit of a particular foreign policy objective” also as a part of the definition.

Economic diplomacy is also viewed as “the process through which countries tackle the outside world, to maximize their national gain in all the fields of activity including trade, investment and other forms of economically beneficial exchanges, where they enjoy comparative advantage.; it has bilateral, regional and multilateral dimensions, each of which is important”.

The broad scope of this latter definition is especially applicable to the practice of economic diplomacy as it is unfolding in emerging economies.

This new approach involves an analysis of a nation’s economy, taking into account not only its officially reported figures but also its gray, or unreported, economic factors. An example might be the new Republic of Kosovo; in that emerging nation, widely regarded as a candidate for “poorest nation in Europe”, an enormous amount of economic activity appears to be unreported or undocumented by a weak and generally ineffectual central government.

When all economic factors are considered, the so-called “poorest” nations are demonstrably healthier and thus more attractive to investment than the raw statistics might otherwise show.

Emerging economies have learned that they are not flowers and businesses are not like bees; in other words, a nation that wants to attract business must be proactive rather than passive.

They must seek out opportunities and learn to bring them home. Tax and other concessions will likely be necessary and in the short term costly.

However, creative support of new business opportunities can generate major chances for success. This sort of activity is also a part of economic diplomacy.

The sort of economic diplomacy that utilizes a nation’s already-deployed corps of diplomats to promote the nation and seek business opportunities is not traditional, but its effectiveness is apparent.

Emerging nations seeking to conserve scarce personnel and financial resources immediately benefit from multitasking.

  1. Commercial diplomacy and NGO’s: The use of political influence and relationships to promote and/or influence international trade and investment, to improve on functioning of markets and/or to address market failures and to reduce costs and risks of cross border transactions(including property rights).
  2. Structural policies and bilateral trade and investment agreements: The use of economic assets and relationships to increase the cost of conflict and to strengthen the mutual benefits of cooperation and politically stable relationships, i.e. to increase economic security.
  3. International organizations: Ways to consolidate the right political climate and international political economic environment to facilitate and institute these objectives.

Economic diplomacy is the art of serving economic security and strategic interests of the country by the use of economic instrument in conduct of state-to-state relations

Economic diplomacy is designed to influence policy and regulatory decisions of foreign governments, as well as those of international organizations. It goes beyond trade and investment to the resolution of multiple causes of international conflicts.

The agenda of economic diplomacy is comprehensive and includes amongst others issues pertaining to foreign trade and import-export relations, promoting of national economic interests in other countries, informing and updating potential foreign investors on investment opportunities, negotiating economic and trade agreements on economic and trade co-operation, as well as co-operating with a view to eliminating problematic divergences and harmonizing standards in various sectors (economic, social, environmental, educational etc.).

Economic diplomacy is functional at three levels:  bilateral, regional and multilateral.

Bilateral economic diplomacy plays a major role in economic relations.

It includes bilateral agreements on trade, investment, employment, taxation, as well as a wide range of formal and informal economic issues between two countries. Bilateral Free Trade Agreements have been the order of the day and are being implemented by many countries around the world.

Regional cooperation is of growing importance in economic diplomacy. National interests and economic liberalization are well-served particularly within the context of a particular region. The removal of barriers and opening of markets become easier within a regional framework.

Multilateral economic diplomacy takes place within the framework of World Trade Organization (WTO), as well as numerous international economic and financial organizations such as the World Bank (WB), the International Monetary Fund (IMF), various UN agencies etc. With the establishment of WTO, there has been a policy shift in global trading system towards the promotion of economic activities. Sustaining competitiveness, however, continues to represent an important challenge for instruments and mechanisms established by bilateral and multilateral trade agreements.

Ayobolu, a public affairs analyst contributed this piece from Lagos State

 

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