February 25, 2014

Csea Conducts Empirical Research To Identify New Trade Opportunities For Nigeria With Poland

The attainment of Nigerias development aspirations depend largely on the appropriateness of the economic decisions made today. Given its mono-cultural nature, the sustainability of the Nigerian economy can only be guaranteed by successful economic diversification efforts.

One important element of such efforts, which might be the panacea for the countrys economic problems, is the promotion of international trade and exports of non-oil and non-primary products. In fact, the experience of many emerging and developed economies has proven that promoting exports and pursuing the commercial success of domestic businesses are key factors in achieving sustainable inclusive growth.

While the federal government, through its various ministries and agencies, has been making efforts to deepen trade and investment relationship between Nigeria and other countries, the process will be incomplete without the identification of new markets with great promises for Nigerian businesses.

In order to fill this gap, researchers in CSEA recently carried out a research aimed at identifying new and realistic exports opportunities for Nigerian businesses in Europe (particularly in Poland). The focus of the research is to understand the bilateral trade relationship between Nigeria and Poland for the period 1995 to 2012. More importantly, rather than using the conventional discretionary methods of identifying products with market prospects, the study adapts an empirical model (i.e. the Decision Support Model, DSM) and uses the results of a Growth Identification and Facilitation Framework (GIFF) study by Lin and Treichel (2011).

The choice of Poland stems from the fact that it is one of the few European countries that have remained resilient despite both the financial crisis and the recent EU crisis. Also, Poland has continued to show positive signs of future economic progress and expanding imports demand.The results of the descriptive analysis reveal that a low level of import and export intensities exists between the two countries while there is a mismatch between Polands import demand and Nigerias major export supply.

However, the empirical analysis suggests that this situation could be reversed. The results show that Poland has experienced impressive growth in demand for products in which Nigeria has actual and potential export capacity. Also, Nigeria faces relatively lower tariffs on Polands top imports while the cost of transportation and logistics associated with trading with Poland is lower than those of Nigerias current major export partners like India and Brazil.

The paper identifies the enormous unexploited market opportunities (in terms of specific export products) available to Nigeria businesses from trading with Poland and therefore recommends that, in its quest for industrialization, the Nigerian government should support the private sector to take advantage of this opportunity.

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