Using Geographical Indication to Offset the Debt of Developing Nations: A Case for Nigeria.

Introduction

The debt of developing countries, also called the Third World debt, first became a concern in the 1980s and has continued to grow in numbers to date.[1] ?Today, developing countries owe an estimated debt of $381 billion.[2] Nigeria alone, as of September 2022 owes about 44.06 trillion naira.[3] This has led to a street joke that when shared by 216 million Nigerians, each person will owe about 203,703 naira. While incurring debt is not necessarily a bad decision in business, the problem occurs when there are no viable means of paying back. Poor debt management, low government revenues and usage for consumption of goods rather than productive investments have been itemised as the three major causes of the bad debt recorded by developing countries.[4] This concise article is an attempt to prescribe the use of geographical indication as a critical means for offsetting the debts of developing countries, especially Nigeria.??

Meaning of Geographical Indication

A geographical indication (GI) is a distinctive sign (mostly placed on a product) to identify a product whose quality, reputation or other unique characteristics relate to its geographical origin.[5] In recent times, a few countries are beginning to seek the use of the sign in relation to certain types of unique services.[6] GI is mostly used for agricultural products, foodstuffs, drinks including wine and spirits, industrial products, and handicrafts. Examples of some countries’ GI signs are shown below:

?

The significance of such a simple sign on a product is more than meets the eye. The sign placed on a product is a mark of assurance showing that the product in question comes from a country or region or soil, known to be a place of quality for such a product. It could be the particularly skilled handicraft of Italians in making shoes; or the trusted champagne composition from France; but it can also be the Agbo from the Yoruba part of Nigeria used to cure fever, or the Ofada Rice from Nigeria which is healthy and rich in fibre, the Nsukka Yellow Pepper that adds healthy taste and aroma to food, or the Ogili from the eastern part of Nigeria used to make certain types of healthy soup.

Once the sign is used on the product, it tells the world the source of the product and the law recognises the right of the holders to prevent its use by third parties whose product does not conform to the applicable standards and has not been given the right to use same. For the avoidance of doubt, it is important to reiterate that what is protected by law is not the product itself, but the sign used in identifying the product. So, where for example, there is a GI for Nigeria’s Ofe-Akwu and an Italian chef or market seller comes into Nigeria, purchases the palm kernel and know-how of making the soup-stew Ofe-Akwu, and returns to sell the soup in Italy as Gucci’s Soup, no right in GI is breached. However, if such an Italian is to sell and market the Ofe-Akwu as Ofe-Akwu, then a GI right is breached.

The rights to a GI have been categorised by some countries. For example, the French Republic categorised its GI rights into L’Apellation d’Origine ?Prote?ge?e and Appellation d’Origine Contr?lée (PDO-AOC), Protected Geographical Indication (PGI) and the Traditionally Speciality Guaranteed (TSG). The PDO-AOC stands for a product for which the principal steps for production are done following a well-established technique within the same geographical area, giving the product its characteristics and denomination of the French territory.[7] The PGI ‘identifies an agricultural product, raw or processed, which quality reputation or characteristics is linked to the geographical origin.’[8] Then, the TSG refers to those products or foodstuffs ‘for which its specific qualities are related to a composition, methods or manufacturing or processing based on a tradition.’[9] In all these cases, the right to exclude others is recognised.

GI seek to offer the right of monopoly which translates to a pathway to the wealth of a nation. How the GI opportunities can therefore be leveraged and used by developing countries as a tool for the development and offsetting of debts will now be discussed in the various sub-heads below.

The Market Value of GI: A Lesson for Developing Countries

A recent study focused on testing the validity of the proposition that GI products drive market value and price premia, revealed whilst using the Hungarian off-trade wine market as a case study, that price premia is indeed attainable by using some GI.[10] The result of the research is not far-fetched when considering the fact that consumers value a collective brand over an individual brand. This is one of the major practical differences between a GI and a trademark.?

In the European Union, GIs registered in the 28 member states from 2011 to 2017 were about 3,153. In 2017 when the sales value of those GIs was measured, the value was EUR 74.8 billion. As of 2010, there was an increase in value by 37%.[11]

Another study[12] reveals that GI information impacts sensory perception and leads to the acceptance of GI products. 99 participants participated in the research to rate the acceptance and intensity of the cooked rice samples in terms of appearance, aroma, flavour, texture and overall liking and they rated the cooked rice samples higher in appearance and overall liking stating how important the GI information impacted them. Interestingly, the study provided empirical evidence about how GI information modulates sensory perception and acceptance. It was recommended that the rice industry, farmers, and traders better employ GI labelling to increase the consumer acceptability of their products. Marketers have often used this knowledge to promote market acceptance.

Yet another study on demand and price premiums for agricultural products revealed that GI products captured the highest percentage premium in markets for agricultural common products.[13] However, GIs with stricter regulations like the PDO yielded higher premiums than others like the PGI.

Zhiyuan Xu and others questioned the proposition that GI certification can promote the technical complexity of exporting high-quality agricultural products in developing countries. This led the authors to test China’s provincial panel data from 2005 to 2019 and found that GI certification can significantly improve the technical complexity of agricultural product exports.[14]

Finally, Bramley and others identified information and reputation as the major theories upon which the value and protection of products are hinged.[15] They noted that capitalisation on product quality consequently leads to the creation of niche markets, and economic rent. ?Zakaria and Bruno’s research further corroborates that GI products have an ambiguous effect on international trade and their trade impact depends on the importance and reputation of the product for consumers, although heterogeneity in consumers’ home-bias products also plays a role.[16] No wonder Paloma’s research found that wines with the ‘Vineyard Valley’ designation of origin and market orientation strategy, improved economic performance through an increase in the export market, increase in export revenue and improvement of quality of life of its agents in the sector.[17]

The summary of all these case studies above is that there is multiple empirical evidence that GI increases the market value and acceptability of products, although it may be impractical to calculate or place exactitude to the value of GI itself. What is clear, however, is that GI increases product value and income. Sadly, this opportunity is under-utilised by most developing countries in Africa, especially Nigeria. How then can developing countries take advantage of the leverage the GI provides to boost their income and clear their debts?

How Can Developing Countries Take Advantage of GI?

A. Identifying GI of Developing Countries: A Business Opportunity

The first step towards taking advantage of GI is to identify the existing GIs. This is crucial as one cannot begin to talk of commercialising its product if the product is unknown. One of the major problems that have inhibited most African developing countries for years, is ignorance of its government and bureaucracy towards approval. Developed countries appear to always be ahead of structuring and commercialising their intellectual property and then exporting the same to Africans who, sadly, are mostly consumers of products rather than manufacturers of products.

For instance, during a seat out with colleagues, we were able to identify at least 263 products and services of Nigeria that can qualify as GI. Sadly, to date, there has been no holistic scientific data collection and analysis of Nigeria’s products and services that can pass as GI. Although, there has been piece-by-piece or part research here and there.[18] For instance, the herbal practitioners of Nigeria have a list of herbal plants and know-how to utilise the plants for various health treatments. Also, the Nsukka Yellow Pepper underwent some scientific research from which it was discovered that the plant cannot survive in other soil outside Nsukka without losing its original smell and taste.

One major risk of the delay towards identifying these GI products is that urbanisation, globalisation, and digitisation continue to shift Nigeria away from its traditional roots without Millennials and GenZ having the know-how of those products and services. Sadly, due to the inevitable migrations of younger generations to the cities, most of that knowledge has not been handed down by their grandparents.

Thus, there is a need to commission a body that will undertake these projects and go to the rural areas to identify products and skill sets that can pass as GI. In the absence of any government-funded-led body, any company or research data analysis company can take advantage of the opportunity, knowing that a GI draft Bill is in place and the government sooner than later will be requiring such a report. An international body can also partner with locals to fund such a project and wait for the harvest.

B. GI Law for Developing Countries: a legal opportunity.

It is the recognition by law that makes the GI right of exclusion applicable and protectable. Solomon traced the root of geographical indication to the recognition by international traders, and he suggested that it was the recognition and push for such laws that offered the possibility of monopoly in commerce.[19] It is the laws and regulations that create the structure by which GI can be exported and commercialised.

The international community, through the World Trade Organisation, entered several treaties meant to regulate claims and monopolies of the uniqueness of products based on geography. The Paris Convention provided against false indications of the source of goods; the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods took the standard further. And the TRIPS Agreement, especially articles 22 – 24, addresses the international protection of GIs. But the governance of the registrations of GI and what is permissible or not, are more detailed in the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration, the Madrid Agreement Concerning the International Registration of Marks; and the Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks. Sadly, some developing countries in Africa are yet to domesticate these treaties to have the binding force they deserve in their states.

Nigeria is one of such countries as at the time of writing this article. The implication of not having a GI law in place is that none of its products will be recognised as a GI, hence the massive exploitation of Nigeria’s intellectual property rights and knowledge. Recently, UNESCO has recognised Senegal as the source of jollof rice and Senegal is almost concluding steps toward adopting the Lisbon Agreement. The implication is that Nigeria may never have the right to claim GI for its unique jollof rice.

To worsen the Nigerian situation, the GenY and GenZ in a bid to gain followership on social media are exposing all the trade secrets of Nigeria’s GI. Watching some of the influencers on YouTube and IG/Instagram, I discovered that whilst they have indeed promoted and popularised Nigerian products, they have done the same ignorantly and without a strategy in mind to keep some fundamental secrets unexposed. The result is that Italian Chefs, US chefs, and others, now have the technical skills to make the Nigerian Jollof Rice, Pepper Soup, Zobo, et cetera, as part of their products and menu. Nigeria is losing massive income daily because of the lack of a legal regime.

Some scholars have argued that trademark law offers protection via collective and certification marks and that a sui generis law on GI is unnecessary. First, Nigeria’s Trade Marks Act only expressly recognises certification marks. Secondly, this writer has stated before that collective and certification trademarks can best be used as initial protective measures by developing countries but not as a substitute for GI protection.[20] Whether or not provisions of GI are presented as sui generis law or as an additional part of the Trade Marks Act, is simply academic. The main point is that GI goes beyond a restricted collective or certification group and has serious benefits and consequences for the development of a country. GI requires a responsible government to step in to protect the interest of not just a collective group or community, but also the interest of the country. By so doing, national approval and certification are recognised by foreign consumers and Government revenue can be generated. The Government through its Export Promotion Council can offer Generic and Intensive Support for such communities and their entrepreneurs.

Therefore, it is hoped that developing countries like Nigeria, will through its certification bodies like the Standards Organisation of Nigeria, et al, develop and institutionalise certification marks and register them in all countries of the world using the SANi-ARIPO-OAPI-WIPO strategy.[21] When the GI Draft Bill becomes law, a more befitting and robust protection of the certification marks can then be explored. It is, however, important to note, that most GI laws usually forbid the registration of a trademark as GI. While the rationale is to eschew confusion and conflict, it is suggested that developing African countries can amend such provisions in their GI law to indicate that certification or collective trademarks may graduate into GI upon approval by the Registrar or other relevant authority. This is a fundamental input the African Union AfCFTA should reflect.

C. GI Promotion for Developing Countries: A Marketing Opportunity

After identifying GIs, and creating laws to give them life, there is a crucial need to promote these products and services through strategic international PR and marketing. Scholars have traced the impact of digitisation in the marketing of geographic indication products.[22] According to Bartoli, GI marketing labels ‘shape consumers’ preferences by providing additional knowledge regarding the attribute of products such as origin, quality, heritage and authenticity, which positively affect consumers’ willingness to buy.’[23]

Marketing psychologist has for years studied the buying behavioural patterns of consumers and developed a principle known as the ‘anchoring effect’. This principle prescribes that people tend to unconsciously latch onto the first fact they hear, basing their decision-making on that fact, whether accurate or not. As such, the first facts presented by most GI products i.e. the Rooibos Tea, the Italian Shoe, et al, stick to the human brain and cause consumers to prefer such products. These facts are often presented through the masterful crafts of skilled copywriters.[24]

Recently, the French Baguette was promoted to acquire UNESCO heritage status after many years of redundancy in market value and a continued decrease in income. President Macron had strategically pushed a campaign that the Baguette is envied around the world and that it remains the French identity. In his words ‘250 grams of magic and perfection in our daily lives.’[25] After the campaign, consumers’ emotional bias for the Baguette began to grow slowly.

Thus, marketing promotions are significant to popularising the GI product of a country. Whilst many developed countries are intentional, strategic, and focused on it, most developing countries appear not to have a budget for the promotion of their GI products.

D. Price Control and Distribution – an export opportunity.

Finally, it is important to reiterate the power of monopoly which the law of GI provides. With the right to exclude others comes the right to monopoly, and with monopoly comes the power to control price and distribution. Perhaps, the danger of such powers at the hands of a few individuals is one reason why GI as a sui generis law is preferred to a certification trade mark. ?

Thus, the government can create avenues for communities, and businesses to easily export their products while enjoying various tax incentives as provided by other trade laws. The government will be able to enjoy incentives from the repatriation of profits from outside the country to inside the country. There will also be more engagement of export logistics companies as export activities and employment will increase. In turn, the economy will improve and reliance on a particular means of income will be curtailed.

Conclusion:

GI presents opportunities for African developing countries to harness their rich resources, improve their economy, and pay off their gigantic debts. The steps to taking advantage of the opportunity as a country present yet another opportunity for the players. This article has highlighted the need and opportunity to identify the GIs of a country, the need and opportunity to create indigenous laws and regulations, and the need and opportunity to market GI products and export the same whilst controlling price and distribution.

?

Author:

Ifeanyi E. Okonkwo (Senior Associate & Deputy Head of Sector)

Intellectual Property, Tech, Media & Entertainment

[email protected]

[1] SR Hurt, ‘Third World debt’ in Britannica economics available at https://www.britannica.com/topic/Third-World-debt accessed 18 Feb 2023.

[2] World Bank ‘International Debt Statistics’ https://www.worldbank.org/en/programs/debt-statistics/ids accessed 18 Feb 2023.

[3] Kayode Tokede ‘Nigeria’s debt service cost up 23.4% to N3.04 trillion’ ThisDayLive available at https://www.thisdaylive.com/index.php/2022/12/12/nigerias-external-domestic-debt-services-up-23-4-to-n3-04trn/#:~:text=With%20its%20current%20N44.,Year%20(YoY)%20from%20N2, accessed 18 Feb 2023.

[4] Kathrin Berensmann, ‘Poor debt management, low government revenues: why developing countries are facing a renewed debt crisis’ The Current Column (2019) 11 February 2019.

[5] WIPO ‘Geographical indications’ https://www.wipo.int/geo_indications/en/ accessed 17 Feb 2023.

[6][6] Ifeanyi E. Okonkwo ‘Nigeria’s quest for its own statute for the protection of geographical indications gains momentum’ IPKitten Thursday, March 17, 2022, available at https://ipkitten.blogspot.com/2022/03/guest-post-nigerias-quest-for-its-own.html.

[7] See https://www.inao.gouv.fr/eng/Official-signs-identifying-quality-and-origin/PDO-AOC accessed 18 Feb 2023.

[8] See https://www.inao.gouv.fr/eng/Official-signs-identifying-quality-and-origin/Protected-Geographical-Indications, accessed 18 Feb 2023.

[9] See https://www.inao.gouv.fr/eng/Official-signs-identifying-quality-and-origin/Protected-Geographical-Indications accessed 18 Feb 2023.

[10] Gal P and Jambor A, ‘Geographical indications as factors of market value: price premiums and their drivers in the Hungarian off-trade wine market’ AGRIS Online Papers in Economics and Informatics, Vol 12 No 2, pp 71-83.

[11] WIPO ‘The importance of geographical indications to the sustainable development of Nigeria’ August 13, 2020.

[12] Jarma Arroyo SE and Ors, ‘Effect of geographical indication information on consumer acceptability of cooked aromatic rice’ Foods, 2020 December, 9(12) p. 1843.

[13] Oana C Deselnicu and Ors, ‘A meta-analysis of geographical indication food valuation studies: what drives the premium for origin-based labels’ Journal of Agricultural and Resource Economics (August 2013) Vol 38 No 2, pp 204-219.

[14] Zhiyuan Xu and Ors, ‘Does geographical indication certification increase the technical complexity of export agricultural products?’ Environmental Economics and Management 2022, Vol 10 – 2022 available at https://www.frontiersin.org/articles/10.3389/fenvs.2022.892632/full, accessed 18 Feb 2023.

[15] Bramley C and Ors, ‘The economics of geographical indications: towards a conceptual framework for geographical indication research in developing countries’ in The Economics of Intellectual Property, WIPO, 109.

[16] Zakaria Sorgho and Bruno Larue, ‘Do geographical indications really increase trade? A conceptual framework and empirics’ Journal of Agricultural & Food Industrial Organisation (2017) 16 (1).

[17] Paloma de Mattos Fagundes and Ors ‘Geographical indication as a market orientation strategy: an analysis of producers of high-quality wines in Southern Brazil’ Journal of Database Marketing & Customer Strategy Management 19 (2012) 10 September, 163-178.

[18] Manyong, V.M., and Ors, Agriculture in Nigeria: Identifying Opportunities for Increased Commercialization and Investment, This Research was funded by USAID/Nigeria, Implementation was by International Institute of Tropical Agriculture , In collaboration with University of Ibadan, November, 2003, available at https://pdf.usaid.gov/pdf_docs/Pnadb847.pdf> (accessed 19 December, 2022)

[19] Solomon Gwom, ‘Geographical indications in Nigeria: a legal policy deficit’ WIPO-WTO Colloquium Papers 2017, p2. See https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3425560, (accessed 20 February 2023).

[20] Ifeanyi E Okonkwo, Geographical indication protection in local and international trade, paper presented at Workshop on GI for Nigerian Export Promotion Council April 7 – 8 2022, Abuja.

[21] This strategy involves registering marks in South Africa and Nigeria (SANi) that are not part of ARIPO, then registering in ARIPO member countries, OAPI member countries, and WIPO for other part of the US, UK and EU countries.

[22] Chiara Bartoli, Enrico Bonetti, and Alberto Mattiacci ‘Marketing geographical indication products in the digital age: a holistic perspective’ British Food Journal November 2021, see p.3.

[23] Aprile, M.C., Caputo, V. and Nayga, R.M. (2012), “Consumers’ valuation of food quality labels: the case of the European geographic indication and organic farming labels”, International Journal of Consumer Studies, Vol. 36 No. 2, pp. 158-165.

[24] There are a lot of expert copywriters and PR in Nigeria including DeCritic, TBWA, Ogilvy Nigeria, et cetera.

[25] See https://www.dhirubhai.net/in/ifeanyiokonkwo/recent-activity/shares/ .