THE LEGAL PROVISIONS RELATING TO FOREIGN INVESTMENTS IN NIGERIA WITHIN THE CONTEXTS OF NEPAD AND AGOA

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THE LEGAL PROVISIONS RELATING TO FOREIGN INVESTMENTS IN NIGERIA WITHIN THE CONTEXTS OF NEPAD AND AGOA

CHAPTER 2 

ECONOMIC TERMS AND EMERGING GLOBAL TRENDS

2.1          Relevant Fundamental Concepts and Terms

In aid of the presentation of this study, an attempt is made to define certain concepts and terms used. Being terms in current use in association with foreign investments and also in the principal instruments of the New Partnership for Africa’s Development (NEPAD) and African Growth and Opportunity Act (AGOA), they have meanings usually associated with them currently, and lend themselves to being received as such even if no universal definition is available. Other terms and concepts are taken as they arise in the course of the presentation.

              Globalization

It is easy to understand, though difficult to define. It is about the growing interdependence of peoples and nations worldwide. Professor Obadan described it as the increasing inter–connectedness and interdependence among the world’s nations, government, regions, business, institutions, communities, families and individuals; in its economic sense, that is economic globalization, he says it is “the process of change towards greater international economic integration through trade, financial flows, exchange of technology and information, and movement of people. Openness and markets constitute the platform of globalization while trade, finance and investment, and entrepreneurs are the heart”.1 Krietzman says about it thus:

There is an intuitive understanding of what globalization means and with it an uneasy feeling about how much in control of events we really are or can be in a world of large, transnational organizations. Anthony Giddeus defines it as ‘the intensification of world–wide social relations which link distant localities in such a way that local happenings are shaped by events accruing many miles away and vice versa’.

He goes on to say that it is not an entirety new phenomenon given the experiences of mercantilism, and that “the movement of capital around the world and the new geometry of production that is developing in which firms take a global view of location, is an inexorable trend.

               Regional Integration

By multilateral treaties and protocols, nations in certain geographic setting may agree on a common approach to problems of trade, development, migration, and the environment, although trade and tariff are the usual areas of attraction. The level of co-operation could increase from a community of interest to an economic union with central economic and political institutions.

The European Union (EU) which started as the European Community may be cited as its best model. The nations of the continent of European are united with a Court, Parliament, and a common currency, among others.

Below this example are other bodies which have not achieved the same degree of integration but have areas of co-operation among the constituent nations, and may be sub-continental bodies. The North Atlantic Free Trade Area (NAFTA) brings Canada, the United States and Mexico together. The African Union, which will be considered later, has not achieved the cogency of the EU, but it has sub-regional bodies of which the Economic Community of West Africa (ECOWAS) founded in 1975 is its best model.

Other efforts at regional integration in Africa are the Southern Africa Development Community (SADC) which interlocks with the less successful East African Community; while the unsteady Arab Maghreb

Union brings Algeria, Libya, Mauritania, Morocco and Tunisia together.3

Regional integration will be in favour as a response to globalization. It encourages trans-border trade and investment. It is an express policy objective of Nigeria.4

               Good Governance

In its sweeps, it includes multiparty democracy, open and accountable government, and actions aimed at eliminating gender inequality, poverty and corruption. Its existence is also judged by such other indices as access to justice, operation of fair economic policies, respect for human rights and the rule of law, and public participation through the civil society. As an inclusive term its scope is open. Developed countries urge it on developing ones in issues of aid, investment, debt relief and the like.

               Deregulation, Privatization, Commercialization

They are frequently used in association with investment and globalization. They involve a reversal of regulation by state legislation and of state participation in economic activities. Deregulation involves the removal of existing restrictions on investments and the operation of market forces in the determination or participation and value of economic activities through the repeal of the relevant legislative and institutional controls. Privatization involves dis-investment by the state to give place to private investors in particular enterprises.5 Commercialization involves removal of state subsidies in a particular enterprises and opening it to the market. The terms have blurred boundaries.

               Economic Sovereignty

This is a dimension of the sovereignty of states that concerns particularly their right to exercise permanent ownership and control over the natural wealth, resources and economic activities within their territories for national development and well-being of their people. It expresses the economic self–determination of states to give real meaning to legal independence. It is expressed in two major resolutions of the United Nations: Resolution 1803 (xvii) of the General Assembly on the

Declaration of Permanent Sovereignty over Natural Resources in 1962 and

Resolution 3281 (xxiv) of 1974 adopting the Charter on the Economic Rights and Duties of States. “There is considerable support for the view that the doctrine of permanent sovereignty over natural resources is a jus cogensprinciples of modern international law”.6

               Foreign Investment

Foreign investment means investment with a foreign element and it involves the flow of capital, technology and knowledge from abroad to be host state. The usual characterization is into Foreign Direct Investment (FDI) and Portfolio Investment (PI) with control as the distinguishing factor. In the former, control and management are important to the foreign investor; in the latter they are not, as he is primarily interested in dividends, interest, capital gains and other benefits.

Views differ as to the value of foreign investment for a developing country, such as Nigeria is, but arguments for its advantages preponderate and are better received.8 This study assumes its necessity. It is in any case a goal of the government of Nigeria since the return to civil rule in 1999.

Other concepts  such as sustainable development have brought in the idea of developing in a consistent and wholesome manner, with environmental and poverty alleviation questions having primacy;9 while developmenpartners refers to partners who may not necessarily be in the same economic group but lend support to one another to achieve agreed goals. NEPAD members on the one hand and the European Union and the “G.8 countries”, for instance ,are development partners because they accept the NEPAD objectives and channel their own development programmes to

Africa through NEPAD.  World leaders such as the American President George Bush and the British Prime Minister Tony Blair use the term to suggest relations of equity and not of dominance

2.2          Economic Sovereignty and Emerging Global Trends

 Sovereignty is received generally in the sense of supreme power, freedom from control, or autonomy. The broad legal sense accepts this general usage. Specific legal usage includes territorial sovereignty, sovereignty of the state, people or parliament and economic sovereignty.

Nigeria is a sovereign state. This refers to the fullness of her powers and freedom to act in matters concerning her as a country, and her equality with other nations in the affairs of nations. Sovereignty, the equality of states,

and self determination are principles of customary international law, and are often expressed in international instruments.

2.2.1 Nigeria’s Economic Sovereignty against the Background of International Law

While sovereignty as expressed above is an old principle of international law, economic sovereignty as a nuance of it is recent, arising approximately with the emergence of many new nations into formal independence in the last century. Nigeria was in this category. According to Bollecker–Stern.

While sovereignty was for a long time, and until recently, only a legal sovereignty, it has become now – that is since the Second World War and especially since decolonization, which can be analyzed as the translation into reality of legal sovereignty – also an economic sovereignty. This evolution was brought about by the establishment that legal sovereignty did not suffice to give a State the mastery over its existence: and while States acceded to international existence that is to sovereignty, the neo–colonial economic relations they entered into with developed countries – either their former metro poles or other States – wove around them a network of constraints so tied as to empty of all its meaning their newly acquired sovereignty. Sovereignty did not suffice. The economic problems were there to remind us of that fact. A new dimension had to be added to sovereignty to give its true meaning:

the economic dimension.

The consideration of this concept is important because the view will be advanced that even the realization of the fullness of it is affected by modern trends. But first it is necessary to consider how Nigeria’s economic sovereignty is expressed in international instruments.

Nigeria as a young State in the post World War II flood of the grant of independence by the colonial powers had not only legal sovereignty as expressed above but was a beneficiary of international action towards economic sovereignty. It has its greatest expression in the issue of control over national and natural resources and economic activities within her domain.

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THE LEGAL PROVISIONS RELATING TO FOREIGN INVESTMENTS IN NIGERIA WITHIN THE CONTEXTS OF NEPAD AND AGOA