DOMESTIC OUTCOMES OF NIGERIA’S ECONOMIC DIPLOMACY 1999-2007
Economic Diplomacy(ED) is the management of international relations aimed at promoting exports and increasing access to Foreign Direct Investment (FDI). Nigeria has embarked on various policy reforms including bank recapitalization policy, privatization, anti-corruption campaign, and poverty alleviation. However, various studies on Nigeria’s ED had focused more on the process of its implementation rather than its outcomes. This study, therefore, investigated the outcomes of the various ED policies on the nation’s Gross Domestic Product (GDP); FDI, citizens’ ability to meet family obligations and democratic participation.
The political-economy theory was employed. A Cross-sectional survey research design, was conducted using a semi-structured questionnaire elicited information on citizens’ perception of the outcomes of ED on democratic participation and ability to meet family obligations. Convenience sampling technique was used to select a total of 1029 respondents, comprising of 509 from the North and 520 from the South. Eight In-depth Interviews(IDIs) were conducted with selected members of Senate Committees on Foreign Affairs, Privatisation, and Banking; Director of Research and a research fellow of the Nigeria Institute of International Affairs; an anthropology scholar and two research officers of Non-governmental Organisations. Publications of Central Bank of Nigeria, Africa Peer Review Mechanism country report and press reports were used to obtain data on the outcomes of ED policies on the nation’s GDP and inflow of FDI. While secondary data was content analysed, primary data was analysed using descriptive statistics.
The ED policies increased international trade and resulted in increases in the nation’s GDP and FDI inflows by 5.5% and 61.9%, respectively. However, bank recapitalization policy and privatisation caused loss of jobs. Poverty alleviation enhanced self-employment and improved democratic participation. Improvement in citizen’s democratic participation following poverty alleviation and privatization programmes, was indicated by more respondents in the North (18.8% and 11.9% respectively) than in the South (10% and 10.7% respectively). Conversely, increases in citizens’ democratic participation, due to recapitalisation policy and anti-corruption reforms were reported by more respondents in the South (35% and 15.7% respectively) than in the North (20.8% and 16.0% respectively). Privatization and bank recapitalisation policy was also indicated with ability to meet family obligations by more respondents in the South (15.7% and 20.8% respectively) than the North (12.3% and 20.2% respectively). Also more respondents in the South (19.5%) than the North (16.1%) reported that ability to meet family obligations was due to poverty alleviation programme. However, only 11.5% from North and 11.3% from South reported that bank recapitalisation policy enhanced ability to meet family obligations. In addition, IDIs revealed that ED generally improved the nation’s GDP and FDI but did not improve the social well-being and democratic participation.
Nigeria’s economic diplomacy contributed positively to increased Gross Domestic Product and inflow of Foreign Direct Investments. However, it led to job losses and did not improve citizens’ ability to meet basic family needs and democratic participation. Policy makers should implement policies, that could improve the well-being of the citizens.
TABLE OF CONTENT
List of Tables vii
List of Figures ix
Background to the study 1
Statement of the Problem 8
Research Questions 12
Objectives of study 12
Study Hypotheses 13
Justification of Study 13
Definition of Terms 14
Economic Diplomacy 14
1.8. Chapterisation 18
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
Economic Globalisation And Development 20
The Imperative Of Economic Diplomacy In Nigeria’s 31
Theoretical Framework 58
Contending approaches of global socio-economic relations 58
Research Design 73
Sampling Technique 75
Data Collection Techniques 77
Population of the Study 77
Data types and instruments for data collection 78
Primary sources 79
Scoring of items in Study Questionnaire. 80
3.6 Data Analysis
DOMESTIC IMPLICATIONS OF NIGERIA’S
ECONOMIC DIPLOMACY 82
Economic Imperative of Nigeria’s Foreign Policy 87
Institutional outcomes of Nigeria’s Economic Diplomacy 87
Debt Relief 87
Gross Domestic Product 90
External Reserves 93
Employment Rate. 96
Foreign Investments 105
Perceptions of reforms’ relevance to citizens’ welfare 106
Citizens perception of outcomes of domestic programmes 107
of economic diplomacy
Research findings and analysis 109
Perceptions of outcomes of Poverty Alleviation 109
Perceived Outcome of Anti-Corruption Policy 118
Perceived Outcome of Democracy 123
Perceived Outcome Of Privatisation Policy 129
Perceived Outcome Of Bank Recapitalisation 134
The outcomes of Foreign direct investments and
Remittances on Nigerians 140
4.8.1 Perceived Outcome Of Foreign Investors 140
Domestic Employment Of Remittances 144
Test of Study Hypothesis 149
5.0 Domestic Imperatives Of Nigeria’s Economic Diplomacy
: An Overview 163
Summary, Conclusion and Recommendation 193
LIST OF TABLES
Table 2.0: Corruption Ranking of Nigeria
Table 2.1: Flow of Non-Oil Foreign Private Capital
Table 4.1: Nigeria’s Gross Domestic Product (GDP) 1999-2006 Table 4.2: Nigeria’s External Reserves 1999-2006
Table 4.3: Employment Rate 1999-2006 Table 4.4: Total Foreign Capital Net Flows
Table 4.5: Table showing perceptions on the relevance of reform programmes on citizens’ well being
Table 4.6: Demographic Characteristics Of Respondents
Table 4.7: Respondents’ Perception Of The Impact Of Poverty Alleviation Programmes On Their Socio-Economic And Political Lives.
Table 4.8: Registered Unemployed Citizens 1999-2006 Table 4.9: Consumers Price Indices
Table 4.9.1: Industrial Relations Statistics
Table 4.10: Perceptions Of Impact Of Anti-Corruption Programme Table 4.11: Perceptions Of Impact Of Democracy
Table 4.12: Perceptions Of Impact Of Privatization Policy Table 4.13: Perceptions Of Impact Of Bank Recapitalization
Table 4.13.1: Commercial Banks’ Selected Performance Indicators
Table 4.13.2: Ratio of loans To Small Scale Enterprises To Commercial Banks, Total Credit Table 4.13.1: Perceived Influence Of Foreign Investors
Table 4.15: Use Of Remittances
Table 4.16: Table Showing The Correlation Of Government Policies And Influence On Nigerians.
Table 4.17: Table Showing The Correlation Of Perception Influences Of Nigerians.
Table 4.18: Table Showing The Correlation Of Ages Or Respondents To Perceived Influences.
Table 4.19: Table Showing The Correlation Of Sex Of Respondents To Perceived Influences.
Table 4.20: Table Showing The Correlation Of Marital Status Of Respondents To Perceived Influences.
Table 4.21: Table Showing The Correlation Of Academic Qualifications Of Respondents To Perceived Influences.
Table 4.22: Table Showing The Correlation Of The Employment Status Of Respondents To Perceived Influences.
Table 4.23: Table Showing The Correlation Of Occupational Classifications Of Respondents To Perceived Influences.
Table 4.24: Table Showing The Correlation Of Job Experiences Of Respondents To Perceived Influences.
Table 5.0 Total Foreign Capital Net flows
Table 5.1: Percentage Distribution Of Cumulative Foreign Private Investment In Nigeria Analyzed By Type Of Activity
Table 5.2: Percentage Distribution Of Cumulative Foreign Private Investment In Nigeria Analyzed By Type Of Activity
Table 5.3: Respondents’ Perception of the impact of poverty alleviation programmes on their socio-economic and political lives.
Table 5.4: Analysis Of Elections Petitions By States.
1.1 Background to the study
Since the end of the Cold War, nations have been faced with numerous challenges; including that of adjusting to the imperatives of globalization. Agbu described the challenge of globalization “as the challenge of surviving in a global world of unbridled greed, propelled by global capital and trade and advances in new technologies1.” The challenges of globalization, according to Friedman, include the integration of markets, finance and technologies in a way that is shrinking the world from medium size to a small size thus enabling each persons and nation reach the world further, faster and cheaper than ever before2. However, Ake had suggested that globalization is a part of the overall hegemony facilitated by the end of the Cold War and the emergent new world order of uni-polar existence3. Arising from this suggestion and the dictates of contemporary international politics (as orchestrated by the unipolar power bloc), within the context of globalization, liberal democracy stands as the only ideology while the only religion is market forces. In line with these perspectives, Bello saw globalization as a sweeping strategy of global economic roll back which is unleashed by Northern political and corporate elite to consolidate corporate hegemony in the home economy and shore up the North‟s domination in the international economy4.
1. Agbu.O. 2004. Globalisation and Nigeria‟s Economy. Paper Presented at the International Summit on Budget Implementation, NIIA, February 23-27, Lagos. p. 1
2. Friedman T.L, 1999.The Lexus and the Olive Tree, Straus and Giroux, New York. p.4
3. Ake C., 1981. A political Economy of Africa, London and Ibadan: Longman.
4. Bello W. 1994. Structural Adjustment programs: Success for Whom? In J. Mander & E.Goldsmith (eds.) The case against global economy. San Francisco. Sierra Club Book.
Globalization, is therefore, construed as a phenomenon which aims at enforcing and reinforcing the supremacy of the developed North, over the developing South in the global system. Thus, Bilton had perceived that globalization has become the process whereby technological, political, social, economic, and cultural relations increasingly take a global scale, with profound consequences for individuals, local experiences and everyday lives5. In the developing world, the challenge centers on how best to integrate into the World System, in a manner that not only preserves their sovereignty but also enhance their development. While there are many facets of globalization, (e.g. technological, social, cultural, economic and political aspects) the economic aspect is at the heart of the quest by countries to achieve national development, side by side with the preservation of their sovereignty. As a theme therefore, economic globalization constitutes a major subject of interest in this research work. Economic globalization refers to the increasing integration of economies around the world through declining barriers to trade, migration, capital flows, „technology transfers‟ and direct investment6. It is also characterized according to Daouas, by the intensification of cross-border trade and increased financial and foreign direct investment flows prompted by rapid liberalization and advances in information technology7.
The resultant effect of economic globalization is the creation of a global market for goods and services indifferent to national borders and governments; and that in which transfer into consuming nations of the world, had been heralded by
5. Bilton T .1996.,Introduction http//wwwpolity.co.uk/global/pdf/INTR.PDF
6. Sanders, H. 1996, Multilateralism, Regionalism and Globalization: The Challenge to the World Trading System. London: Routlege.
7. Daouas M. 2001, Africa faces Challenges of Globalization. Finance and Development December 38(4). Pp 4-5
information technology and made possible by trade liberalization. Bourguignon however noted that globalization has “opened a window of opportunity, one that may not stay open for a long time8”. The outcome of this is a response by the country either individually or collectively to brace up to the challenges of globalization while seeking to reap the benefits of the „window of opportunities‟ provided by economic globalization. In accessing the opportunities, there is an increasing recognition that nations must position themselves properly within and abroad. The external content involves the development of a virile foreign policy posture and the informed articulation and implementation of such. Perhaps, this was why Fafowora, emphasized that:
In a harsh world, with finite resources, every nation must focus its foreign policy to secure for its citizens a greater share of the world‟s known and unknown resources to maximize its influence9.
His view is partly informed by the changes brought about by the impacts of the end of the bipolar world order, and the imperatives of globalization. Bayne observed one of the profound changes in the 1990s thus:
During the 1990s, world trade grew about twice as fast as world output; (and flows of FDI grew twice as fast as
trade… The process is stimulated by new technologies… (that) shrinks distances, speed up transactions and accelerate the pace of change10.
The consequence, according to Ana Criste, is that
Economies are losing their national character and their public and private agents are becoming increasingly
8. Bourguignon, F .2006, Foreword, in Ian, G and Kenneth, R.
Globalization for Development: Washington: Palgrave Macmillan. p.1
9. Fafowora, O.2001. Selected Essays and Speeches on Nigerian Diplomacy, Politics and Economics. Ibadan: Dokun Publishing House, Nigeria. p.298
10. Bayne, N. 2005. Current Challenges to Economic Diplomacy in Bayne, N. and Woolcocks, S. (ed.), The New Economic Diplomacy. Hampshire: Ashgate.
global, assembling a transnational system of production based on the international division of labour11.
He thus concluded that:
The role of economic diplomacy as a tool of promotion and protection of national interests gained new importance with foreign policy strategies12.
While different countries have at different times utilized different instruments in pursuing their foreign policy objectives, Nigeria has adopted, in recent times, Economic Diplomacy as a key plank to achieve its foreign policy goals and national development. Economic Diplomacy, in this regard, connotes the deployment of the country‟s foreign policy to attain economic benefits. Without prejudice to the official adoption of the phrase “Economic Diplomacy‟ by the Federal Government in 1988 as its foreign policy template, economic pursuits as a factor in foreign policy making and implementation have played very crucial roles in post-independence Nigeria ever since. Economic Diplomacy according to Asisi Asobie is the management of international relations in such a manner as to place accent on the economic dimension of a country‟s external relations13. It is the conduct of foreign policy in such a manner as to give topmost priority to the economic objectives of a nation.
Put differently, economic diplomacy is, simply, the diplomacy of economic development. Thus, as Nigeria transited to a civilian democracy in 1999, Olu Adeniji, the former Foreign Minister argued that one of the cardinal principles enumerated for Nigeria‟s foreign policy was the creation of the necessary economic,
11. Ana C.A. (2006), Emerging Post-Colonial Solidarities: China‟s New
Economic Diplomacy towards Sub-Saharan Africa, Paper presented at the 16th Biennial Conference of Asian Studies Association of Australia.pp 4-16
13. Asobie, H.A. (2001), “Globalization: A view from the South”, Annals of the South-Science Academy of Nigeria, No. 13, January – December. p.48
political and cultural conditions to secure the independence of Nigeria and other African countries14. This is embedded in section 19 of the 1999 Constitution of the Federal Republic of Nigeria. The pursuit of this goal has, since independence, been at the bilateral, multilateral, sub-regional, regional and global levels.
The imperative for economic diplomacy arose from the nation‟s lingering developmental challenges and the desire by successive governments to take advantage of the opportunities offered by Diplomacy. For example, the adoption of economic diplomacy during the regime of Ibrahim Babangida (1985-1993) sought to pursue, in a more coherent determined manner, the development of the national economy. This policy was formulated against the backdrop of Nigeria‟s mounting economic crisis during that period which was characterized by high rate of inflation, unemployment, and declining industrial capacity utilization15. It was therefore adopted in response to the need to facilitate the rejuvenation and strengthening of the country‟s economy through the promotion of exports, investment and increase access to foreign direct investment.
However, almost three decades after, there is still no consensus on the feasibility and successful implementation of economic diplomacy. While some scholars such asYusuf16, Babatunde17, and Aluko18, opined that economic diplomacy helped in projecting Nigeria‟s image, there is no agreement on its specific and tangible economic benefits.
The Structural Adjustment Programme, for example has been criticized for
14. Adeniji O. 2003. Essays On Nigeria Foreign Policy Governance And International Security, Ibadan: Dokun Publishing House p.37
15. Fawole, W.A.2003, Nigeria External Relations and Foreign Policy under Military Rule (1996-1999), Ile-Ife: OAU Press Ltd, Nigeria.
16. Yusuf. T.A. 2001, The Structural Adjustment Programme and the Nigerian Economy. Malthouse Press Ltd. Lagos.
17. Babatunde, O. 2002. Readings in Political Economy and Governance in Nigeria, Lagos: CSS Ltd,
18. Aluko, F.S. (2006), “Globalization and Political Economics Crisis”, in Journal of Economic and Financial Studies, vol. 3(1), December.
the hardship it imposed on Nigerians19. While the period 1993 through 1999 was not particularly remarkable in the deployment of foreign policy for the pursuit of economic motive, the reasons consisted not in any improvement in the nation‟s economy but by the fact of the credibility crisis that the Abacha regime brought upon itself or was to confront. With the advent of democracy in 1999, the thrust of the nation‟s foreign policy moved towards the conversion of foreign policy activities into concrete achievements which are of direct benefit to Nigeria20. In order to achieve this, the Obasanjo led administration adopted the National Economic Empowerment and Development Strategy (NEEDS) as a home-grown poverty reduction strategy, in May 2004. As an economic agenda, NEEDS was fundamentally influenced by the analysis of Nigeria as a rent-based state; the expectation being that NEEDS would crystallize into a process of economic growth, poverty reduction and value orientations in Nigeria.
Despite the new thrust however, Akinterinwa observed that Nigeria‟s Human Development Index (HDI) was still very low, and poverty still reigned in the midst of plenty21. This view, must however be examined in relation to the extant global economic order to which Nigeria‟s political economy is affiliated. From his perspective, the factors responsible for the failure of economic development in Nigeria in spite of government‟s professed commitment to same through the instrumentality of foreign policy are securely locked up in the vagaries of the global order the primacy of which globalization assumed a primacy in recent years. But how valid is this submission with the exclusion of Nigeria‟s internal domestic
19. Fawole W.A. The Constitution and Nigeria‟s Foreign Policy. Nigerian Forum, 20 (9&10):pg 218-231.op.cit.
20. Mohammed, A. (2001), National Security Adviser, at the presidential retreat on national Security, Abuja, and August 10-12. p.1
21. Akinterinwa, B.A. 2004. (ed.), Nigeria‟s New Foreign Policy Thrust: Essays in Honour of Ambassador Oluyemi Adeniji, CON. Ibadan: Vantage Publishers Ltd.
politics and policies? The gap is his submission becomes germane given that Daniel
A. Omoweh had also observed that,
Twelve years after the Babangida administration had officially declared the adoption of economic diplomacy as Nigeria‟s „new foreign policy plank‟, the debate continues to rage as to whether, it has been able to bring the crisis- ridden economy back on keel. It is all the more so because of the continuation with economic diplomacy by subsequent government, though with varied emphasis22.
These „varied emphases‟ have in the years after the formal official adoption of economic diplomacy regime hinged on the quest for economic development and the retention of the country‟s position in international politics as the „Giant of Africa‟. However, as would be observed in the course of this study, this quest has had in its trails varied international and domestic influences on Nigeria and her citizens.
Given these influences, the question that arises is: what does Nigeria and her citizens stand to benefit from economic diplomacy as a foreign policy response to economic globalization? Would this economic policy thrust revive the prostrate economy, raise the living standards of the majority of Nigerians, create employment and re-position the economy in the global system? It is against the foregoing, that the study seeks to empirically examine the implications of economic diplomacy as both a response to the threats as well as „windows of opportunities‟ afforded by economic globalization on Nigeria and her citizens.
22. Omoweh, D.A. (2000), Dynamics of Globalization Impact on Nigeria and Africa, in NIIA Enlightenment Course Series, vol.1. (1).
1.2 Statement of the Problem
During the regime of General Ibrahim Babangida, „economic diplomacy‟, was adopted as the main thrust of Nigeria‟s foreign policy. Theoretically, the foreign policy thrust was intended to serve the country‟s goal of economic development. Without prejudice to the neglect of the foreign policy thrust from 1993 to 1999, (given the domestic upheavals of that period) the goal of bringing the country‟s foreign policy objectives to bear on the nation‟s economic crisis subsists since 1999. This is informed by the fact that while economic diplomacy in the early 1990s was used to articulate abroad the improvement of investment climate in Nigeria including the numerous incentives, put in place to encourage and induce the flow of foreign capital to the country, the Obasanjo-led regime pursued the same agenda through summit level shuttle diplomacy by the President23. However, Akinterinwa had observed that the shuttle diplomacy of the President was a pre- cursor to the re-enactment of economic diplomacy. He had observed that:
The perceived failure in the past of foreign policy to deliver in economic terms led to periodic focus on what was called economic diplomacy…factors which accentuated the role of economic factors in foreign policy and led to the era of “economic diplomacy” arose not from failure of foreign policy to deliver in economic terms, but from lack of internal economic growth to take advantage of the openings created by diplomacy….”economic diplomacy”…sought to pursue in a more coherent and focused manner, the development of the national economy through foreign policy measure24
23. Akindele R.A. 2003, Foreign Policy in Federal Politics: A case study of Nigeria
24. Akinterinwa B.A. 2001. Nigeria in the World. Issues and Problems for Sleeping Giant. Lagos: Pumark Educational Publishers. op. cit. p.427
Thus the new slant in the economic diplomacy of the Obasanjo administration stems in part from the urgent need of the country to recover from its
„pariah status‟ and to restore the confidence and goodwill of foreign investors towards the country. These needs in turn, had necessitated the Obasanjo-led administration to embark on the launch of the Nigerian Economic Policy, to fill the missing gap as it were, in the alignment of the domestic and external dimensions of economic diplomacy in order to fully tap into the opportunities occasioned by economic globalization. The objectives of the policy were to:
i. Revive and grow Nigeria‟s comatose economy
ii. Significantly raise the standard of living of the people;
iii. Put Nigerians back to gainful employment opportunities;
iv. Reposition the economy to participate beneficially in the global economy; and
v. Make Nigeria the hub of the West African Economy25
To achieve these goals, in an era of economic Globalization, the Federal Government placed top on priority the attraction of foreign capital and international investors into the economy through the implementation of neo-liberal policy of privatization and the consolidation of the power of free choice (democracy). However, given the comatose condition of the country‟s banking system, government pursued vigorously, the Bank Consolidation Policy (May 2004 to July 31st 2005) aimed at revitalizing the country‟s banking sector and thus make it financially strong, viable and dependable for foreign capital inflows and domestic transactions. Furthermore, government enhanced the fight against corruption by setting up anti-corruption institutions as well as pursued poverty alleviation programme with the intent of raising the standard of living of the growing poor across the country.
25. See http//wwwnigerianbern.org/nig_ecopolicy.htm
While scholars like Yusuf26, Babatunde27, and Aluko28 have drawn attention to the economic content of the nation‟s foreign policy thrust; looking at how it impacted on the country‟s economic growth and development, less attention has been paid to the context of the policy. This negates the assertion of Rosenau that the foreign policy content of a nation must take cognizance of both domestic and external realities. In the light of these, he advocates the need to focus on both the context and content of foreign policy in any analytical enterprise29.
Significantly also, the economic thrust of Nigeria‟s foreign policy has not been fully discussed in the context of the imperatives of globalization. This makes the conclusions on previous studies rather tentative in view of their primary focus on content of the policy. To gain a holistic understanding of the economic motive underlying foreign policy and how such has contributed to the nation‟s economy, there is the need to go the extra mile by taking cognizance of context, domestic and external for such.
Thus, in the light of the above, Omoweh, while observing that the continued existence of poverty in the country, after the structural adjustment programme would seem that economic diplomacy may not have had any qualitative impact on the livelihoods of a growing number of citizens who then should have been the ultimate beneficiaries of the policy had queried the efficacy of economic diplomacy in delivering the masses from the throngs of poverty. While he did not doubt the usefulness of the instrument in the attraction of foreign capital into the country, he had raised certain issues, which this study sought to provide answers. For example, he asked:
26. Yusuf op.cit.,
27. Babatunde op. cit.,
28. Aluko op. cit.
29. Rosenau, J.N.(ed.),.1969. International Politics and Foreign policy: A Reader, New York Free Press
And even if foreign capital is interested in investing in the Nigeria economy, into what sector is the investment flowing; its pattern and its implications for the people and the country‟s economy? Who benefits more from economic diplomacy, is it the people, the State or foreign investors?30
The challenge posed by this enquiry is expected to be fully answered in the course of this study as the pattern of foreign direct investment and in particular the sector of the economy that benefits most from such FDIs would be investigated. Furthermore, the interaction with Nigerians and the scrutiny of the outcomes of such investments should reveal the real beneficiary and the nature of such benefits.
In addition to this, it has been observed that International migration has been on the increase in the past few decades due to various reasons including demographic imbalance between rich and poor countries, large and increasing differences in the socio-economic development between the rich and the poor countries, the internationalization of labour markets and the relative low cost of travel31. In Nigeria, general economic mechanics affect the overwhelming majority of Nigerians; as migrant workers come from all classes irrespective of age, educational background and state of origin. However, this migration is observed as a source of foreign capital through remittances sent by the migrant workers to their families in Nigeria. Given this, it behoves one to find out the extent to which Nigeria‟s economic diplomacy is being efficiently employed to harness the advantages of remittances derived from migrant workers as a contributory factor to national development.
30. Omoweh, op. cit.
31. Nightingale, F. (2005), Nigeria: An assessment of the International corporation situation: The case of female labour.wwwpepnetorg/file/media/pdf. retrieved June 10, 2008
1.3 Research Questions
From the foregoing discussions, and the light of the gaps observed in the extant literature on the subject matter, some vital research questions have emerged, and these include:
1. Is economic diplomacy a vital tool for achieving national development in the era of economic globalization?
2. To what extent is the task of achieving National Development successful through the instrument of economic diplomacy?
3. What is the perceived influence of economic globalization induced domestic policies on the economic and socio-political responses of Nigerians to governance?
4. What are the perceived implications of Foreign Direct Investments in particular reference to people‟s well being in Nigeria?
5. What are the particular influences of remittances, as a source of foreign capital, on Nigerians social well being?
1.4 Objectives of the study
The broad objective of this study is to examine the impact of economic diplomacy as an instrument of foreign policy execution and its implications for domestic economic advancement of Nigerians. The specific objectives include:
a. Identify the reasons for Nigeria‟s focus on economic objectives in its foreign policy thrusts between 1999 and 2007.
b. Determine the socio-economic and political outcomes of the foreign policy thrust on Nigerians
c Examine the extent to which economic diplomacy contributed in the attraction of FDIs and remittances.
d. Find out the outcomes of such FDIs, and remittances on the Nigeria
1.5 Study Hypotheses
⦁ The domestic programmes of Nigeria‟s economic diplomacy will not be significantly related with citizens‟ perceived socio-economic and political outcomes.
⦁ There will be no significant relationships among the perceived domestic outcomes of Nigeria‟s economic diplomacy.
⦁ The demographic characteristics of the citizens will not be significantly related with the perceived outcomes of Nigeria‟s economic diplomacy.
⦁ Remittances, as a form of foreign capital from relations abroad are primarily used for cushioning adverse impacts of family poverty.
1.6 Justification of Study
The end of the Cold War instantly compelled nations, Third World countries inclusive to adopt new techniques to achieve their national interest. Globalization, though a recent phenomenon but with a huge historical link with the events of post- cold war era has equally emerged to threaten the economic and political interest of nations. Nigeria‟s adoption of the instrument of economic diplomacy therefore constitutes its logical response to the perceived disadvantages that globalization has imposed on it. Thus, the examination of the content and context of the policy vis-à- vis its implementation mechanisms as well as its benefits, becomes helpful in determining its continued relevance or otherwise. Given its relevance, this study becomes useful for determining the specific strands of the policy that should be strengthened or discarded. This task conforms to the observation of the participants of the International Peace Academy Conference in 2003, where it was observed that the future of Nigeria‟s foreign policy would depend on astute economic diplomacy
which effectively tackles issues like debt relief, foreign investment and the promotion of NEPAD34.
1.7 Definition of Terms
1.7.1 Economic Diplomacy
Foreign Policy is the totality of the conscious projection of the internal sentiments and aspirations of a nation, through actions, and sometimes inaction, in order to respond to external realities from the international milieu. Since independence, the focus of Nigeria‟s foreign policy had been on the emancipation of the African continent from the web of colonialism and at the same time, seeking the promotion of the nation‟s domestic prosperity and development. However, the country‟s quest (especially on the issue of African states), had always been in conflict with the developed countries that perceive Africa as the mainstay of their metropolitan economy. Beyond this, is the competition that exists in the international milieu (both at regional, sub-regional and global level), wherein each player seeks to maximize their gains and minimize their losses. In addition to this are the internal dynamics of the domestic environment which also has direct impact in foreign relations and thus the actualization of Nigeria‟s national interest. Within the context of these, Obasanjo
…understood from the outset that Nigeria‟s economic vitality, domestic stability and the preservation of democratic values constitute the key to resources and viable foreign policy…. In terms of building the economy, the process of distribution and redistribution of national wealth, services, opportunity, and welfare is still too tentative and halting to effect any significant transformation35.
34. Nuamah, (2003) the US and Nigeria: Thinking Beyond Oil great Decisions, 34. http//wwwgreatdecisions.org/ retrieved March 14 2005
35. See Joy Ukwu. 2003 in Nigeria‟s Foreign Policy forty years after: A select annotated Bibliography, Coker Q.F, A.S. Dada, And J.A. Oni, NIIA BibliographySeries, No. 20).
This understanding and the incorporation of all nations of the world into the global market economy through the process of economic globalization necessitates the employment of a mechanism with which to achieve domestic socio-economic development (and at the same time maintain relevance in global politics) in the actualization of the country‟s foreign policy objectives. Economic globalization in this study implies the growing integration of a country‟s economy into the world‟s goods, financial and production capital markets with attendant transfer of technologies and declining barriers to trade and labour migration. It operates on the assumption that trade liberalisation is the key to any nation‟s national development. Thus the extent to which free choice is given primacy, determines the extent of consumers‟ satisfaction and thus the improvement in any country‟s productive endeavours given the existence of competition.
This global competition and domestic agitations for development and improved quality of life, within the context of the country‟s foreign policy seemed to be a major challenge that faced the civilian regime of President Olusegun Obasanjo. Within the context of this dilemma, Joy Ugwu had however observed that:
There is so much fuss about foreign policy versus domestic imperatives. But, the fact is that we do not necessarily face a choice between dealing with domestic problems and playing an active international role. Our immediate challenge is to do both by setting realistic goals and managing efficiently our limited resources. Foreign Policy and domestic problems should and equal priority. Though they compete for our attention and resources, we need to engage ourselves on both fronts36.
This, „engagement …on both fronts‟ therefore necessitated the employment
of a means an instrument that would reduce economic hardship at home, and also enhanced the nation‟s credibility and strength at the global level. Thus, the President Olusegun Obasanjo led administration, after successfully redeeming the country‟s battered international image, through shuttle diplomacy; adopted economic diplomacy as a tool for achieving the country‟s national interest.
Economic Diplomacy in this regard connotes the deployment of the nation‟s foreign policy to attain economic benefits. It is the management of international relations in such a manner as to place accent on the economic dimension of a country‟s external relations. It involves the articulation and implementation of domestic policies which is expected to yield economic benefits from the international markets. Thus, Okolie had rightly observed that at the base of economic diplomacy is the pursuit of foreign policy and development principles through predominantly economic precepts .
President Olusegun Obasanjo began his foreign policy articulation with shuttle diplomacy, which in all intents and purposes was geared towards the projection of a good image of Nigeria to foreign investors. This became necessary given the battered image of the country due to human rights abuses, international sanctions and bad press reports on the country prior to the emergence of his democratic regime. Added to this were prevailing poverty, corruption and infrastructural decay that characterized the pre-Obasanjo Nigeria state. These problems necessitated, as observed by Okolie necessitated the adoption of economic diplomacy by the regime. In his words,
To tackle these problems and re-direct the focus of foreign policy making, the administration introduced a reform package as embodied in the National Economic Empowerment and Development Strategy (NEEDS). Moreover, he made economic diplomacy the cardinal plank of
the reform and by extension predicated his foreign policy making and implementation on economic diplomacy37.
Abdulmumin Jibrin had noted that the administration‟s pursuit of economic diplomacy was multifaceted in that its focus included the pursuit of the recovery of funds stolen by Sanni Abacha and hid in different foreign accounts as well as the campaign for debt forgiveness and the attraction of foreign direct investments. With regards to the campaign for debt forgiveness and relief, Ugwu and Alli had observed that:
Thus began a new brand of economic diplomacy aimed at achieving debt relief, a historic and unprecedented international diplomatic campaign never before seen in the nation‟s engagement with critical forces on the international scene. This was a diplomatic campaign more complex than the campaign against colonialism and against the racist and apartheid regimes in the past38.
This „new brand of economic diplomacy‟ yielded its dividends with Canada canceling a debt of $45million owed her by Nigeria. In addition to this, the Paris Club agreeing to grant a debt relief package at their meeting on June 29, 2005. Thus, through the enforcement of the Naples Terms, Nigeria was granted a debt relief totaling US$18 billion, with a condition that the nation pays US$12 billion dollars within a short period. It was expected, despite the various criticisms against the condition attached to the debt relief that the money that would be saved from the yearly debt servicing would be available to fund critical areas of education, health, 37. Okolie Aloysius-Michaels, 2010, Economic Diplomacy and the conduct of Nigeria‟s Foreign Policy under Obasanjo‟s Administration, Nigeria Journal of International Affairs, Vo. 36, No. 2,)
38. Joy Ugwu and Alli Oyesina. 2006. Debt Relief and Nigeria‟s Diplomacy, NIIA, Lagos.
and other sectors of the economy. Beyond these, various bilateral agreements for trade and investments were signed with the intent and purpose of attracting foreign direct investments and investors into the country. These achievements of Obasanjo‟s economic diplomacy therefore necessitated the articulation and implementation of domestic policies which is expected to yield economic benefits from the international markets. In this vein therefore, the domestic of the regime which was encapsulated in the economic reforms became necessary. These policies are discussed fully in subsequent chapters.
However, the „success‟ of this economic diplomacy raises some questions which this study seeks to answer. For example, who benefits most from this economic diplomacy? Is it the nation, the Nigeria peoples or the foreign investors and countries?
The thesis has six chapters. Chapter one is the introductory part of the thesis and it focuses on the background to the research, the statement of the problem and research questions. The justification for the research, study hypotheses and objectives of the study are also provided in this chapter. This chapter closes with definitions of the key concepts of economic globalization, economic diplomacy and foreign policy.
Chapter Two is divided into two sections. While section 1 deals with the review of literatures, section deals with the theoretical framework for the study. In the review, issues relating to Nigeria‟s Foreign policy before and after the cold war, and her response and consequences of economic globalization in the years that follow are examined. Thus, the theoretical background of this work was explained in relation to neo-liberalism and political economy.
Chapter Three is basically concerned with the methods employed in collecting data for the study. Thus it gives an elaborate insight into the data
collection techniques used, the data types and instruments used for data collection and data analysis.
In Chapter Four, the economic imperatives of Nigeria‟s foreign policy and citizens‟ perceived impact of economic diplomacy on their socio-political and economic lives were examined within the context of the findings from the field work of the study. The hypotheses for the study is also presented and tested in this chapter.
Chapter five, deals with the discussion of the findings of the research as it pertains to the attraction of foreign direct investment through Nigeria‟s Economic Diplomacy. It also queries the efficacy of economic diplomacy as a foreign policy tool vis-à-vis Nigerian‟s perceived impact on their socio-political and economic well being.
Chapter 6, which is the concluding chapter, deals with the presentation of the summary, recommendations and conclusions of the study
39. Abdumumin Jibrin. op.cit..