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It is evident today that Nigerian economy is characterized by a number of challenges. From the inception of military regime, the economy was burdened by mismanagement which brought in additional problem such as high fiscal deficits which, threw macroeconomic services in to despair, epileptic power supply which rendered growth activities in the country handicapped, there was low output in production, high unemployment, and a crushing external debt overhand prevailed, all this existed prior to the inception of a civilian democratic leadership of president Olusegun Obasanjo. There has been tremendous changes and growth in the economy and national development of Nigeria from 1999-2010.

This study employ the secondary data, such as books encyclopedia, journals, internet materials and government publications, in gathering information that enabled better understanding of the subject matter.

In these findings, the study identifies the historical background of Economic Diplomacy of the past regime and there policy and as a result of the epileptic and mismanagement of political as well as economic activities, these made the new civilian administration of president Obasanjo employ his 'idiosyncrasies' cum methods. And the extent to which he has been able to exert influence on foreign policy matters through the general reforms from 1999 to 2010

The study recommends that for the identified strategies to be fully impactful for economic growth of the country as well as the national development there must be transparency of government and earring official must be persecuted.






Title Page





List of Abbreviations

Table of Content



1.1       Background to the Study

1.2       Statement of the Problem

1.3       Objective of the Study

1.4       Research Question

1.5.      Rational for Study

1.6       Scope/ Limitation of Study

1.7       Literature Review



2.1       The Subject Matter of Economic Diplomacy in Nigeria

2.2       Meaning and use of Diplomacy

2.3       Economic Diplomacy from the Ancient to the Modem time

2.4       Main Tenets of Nigeria's Economic Diplomacy



3.1       Foreign policy as a tool for Nigeria Economic Diplomacy

3.2       A History of Nigeria’s Foreign Policy

3.3       Significant of Foreign Policy in Nigeria



4.1       The impact of Economic Diplomacy on Nigeria's Foreign Policy: 1999-2003.  

4.2       National Development Strategies cum Economic Reforms

4.3       Anti-Corruption Crusade

4.4       Debt Cancellation.



5.0       Summaries

5.1       Recommendation

5.2       Conclusion



List of Abbreviation

ACT-EU: Economic Partnership Agreement ADB African Development Bank

APPA: .. African Growth and Opportunity Act

AU:  . African Union

CET: .. Common External Tariff

CMAG: .. Commonwealth Ministerial Action Group

COPAZ: . Commission and the Co-Prosperity Alliance Zone

DFID: Department for International Development

ECOMOG: ... West African Peace Monitoring Force

ECOWAS:  Economic Community of West African States

EEC:  European Economic Community

EFCC: Economic and Financial Crimes Commission

EPA: Economic Partnership Agreements

EU: .. European Union

FATF: ... Financial Action Task Force

FCT: .. Federal Capital Territory

FDI: Foreign Direct Investment

G-7: Group of Seven Countries.

GAIT: .. General Agreement on Tariffs and Trade

GDP: Gross Domestic Product

GOS: .. Government of Sudan

ICPC: .. Independent Corrupt Practices and other related offences Commission

JLO: . International Labour Organization

IMF: . International Monetary Fund







1.1    Background of the study.

Harun ur Rasid, (2005) looks at diplomacy from a traditional sense, that us "diplomacy as political diplomacy". This means that diplomats are primarily engaged in political relations because close or strong political relations lead to relations in other area including economic. Harun went to state that empirical evidence suggests economic relations are not initiated in a significant way in a political vacuum in which there is a lack of trust. (Ibid 2005).

Economic relations may act as glue to political relationship. There is a growing realization that if economic relationship are strong. It impacts on political relationship and whatever ripples occurs in political relations, it gets sorted out because the countries involved have a stake in not losing out beneficial economic relationship. Harun further argues that the term "Economic diplomacy was earlier known as Trade Diplomacy and trade diplomacy comes with the nationalization of industries in many countries from the 1950s to the 19790. This resulted in gradual involvement of diplomats in trade matters that is to help sell products of nationalized industries. Meanwhile that "bread and butter" issues are the principal objectives for growth and prosperity of the people. Added is that while strong economy exists, it can stabilize the political terrine and guarantee the leaders longer tenure in power.

Now the term "economic diplomacy" has become a buzz-word in all countries. In the process the term has raised confusion among many as to its exact meaning, although everyone has a formulation and advancing policies relating to production, movement or exchange of goods, services, labour and investment in other countries. A distinctive feature of economic diplomacy is that private sectors are involved in the decision making process to influence negotiating position to remain in the global or regional competitive market. Harun Ur Rashid (Ibid 2005:1- 2) some consider economics diplomacy to be a fairly recent addition to the work of professional diplomats, who previously tended to concentrate almost exclusively on political tasks.

Commercial work, like other functional sectors, consular or cultural, was traditionally viewed with disdain, and represented a secondary career track for high-flying diplomats.

However, in a globalized and interconnected world, economics is more important than ever as a determine element in international affairs. It is also a sizable component of relations between states. Thus economics has moved to center-stage in diplomacy and now extends beyond 'commercial diplomacy'. Aside from foreign trade, it includes external investments, financial flows, aids, bilateral and multilateral economic negotiations and technology exchanges, which all 'band' countries contributes to nation building.

Economic diplomacy is an active and interconnected factor in integrated diplomacy, where the lines of division between functional areas are blurred and each sector influences the other. In some ways, we have evolved back to the earliest recorded days of relations between kingdoms and principalities, when commerce was an important motivation for reaching out to other foreign entities. It led ancient civilization to exchange spices, silks and other precious commodities with distant lands, thereby creating the norms and procedures within the exchange could be carried out. These were the first 'international' accords and treaties that were not only concerned with conquest and territory, but with mutually beneficial commercial dealings within a legal framework. This portal explores the multiples dimensions of modern economic diplomacy as a component of international relations as analyzed by Ambassador Kishan Rana. (2002).

The emergence of a democratic Nigeria in May 1999 ended 16 years of consecutive military rule (Bureau of African Affairs June 2007). Military rule in Nigeria has a devastating effect on the countries economy. Economy diplomacy and national development has haphazard, policies were distorted, and implementation processes undermined. In addition, corruption, fraud, general mismanagement and lack of respect for human right became the order of the day. As such, the Nigerian economy as well as the nation's development was in a serious comatose when the civilian regime of Chief Olusegun Obasanjo assumed office in May 1999. However, hopes and expectations were high, and the Nigerian people were yearning for the dividends of democracy in socio-economic aspect. But how did the new civilian administration fair in the management of the national development with the use of economic diplomacy and what are the results? These are the issues to be addressed by this study. Going backwards a little the late General Sani Abacha regime, came to power in November 1993 under the pretence of resolving the political logjam, occasioned by the annulment of the June 12, 1993 presidential elections, but instead sought to perpetuate himself in power.

In the process, institutions were subverted, polity undermined and political crisis intensified. The economy was the worse for it. The junta 'through its repressive and dastardly acts undermined the economy as well as the national development" (Adebonyon and Madasiru 2001). At the time that President Obasanjo came into office in 1999, the economy was stagnating and was characterized by poor management of public expenditure, low investor confidence, widespread corruption, infrastructural decay, a high debt burden severely eroded social capital and high incident of poverty, with 70% of the population in 1996 living in absolute poverty. Inflation was at its peak and double standard became the rule of operation, the economy, after about four decades of political independence and economic management, suffered from fundamental structural defects, and remained in a persistent state of disequilibrium (federal republic of Nigeria April 2000). Its relationship with the outside world was poor and production as well as technological base was weak, outdated, narrow, inflexible and externally dependent (April 2000): Also, infrastructure was poor, inadequate, lacked maintenance and economic incentives were generally low, giving rise "to inadequate utilization of the factors of production. This mirrored the Nigerian economic, national development and the entire situation of the country until June 8, 1998 when the head of the military junta General Sani Abacha died. Immediately after the provisional "Ruling Council met and decided the General Abdul Salam Abubakar should fill the vacuum.

It is important to stress here that the morning of May 1999 witnessed a turning point in the political history of Nigeria as civilian political leaders were sworn in and the birth of the fourth republic became a reality after a prolonged military rule. The newly born fourth republic became highly instructive considering the scope and array of economics and political problems bequeathed to the country by the prolonged years of military rule and which the newly elected civilians have to cope with. Thus it is interesting to note that the performance of the Nigerian economy as regard its foreign policy in 1999 was mixed. Inflationary pressures eased especially during the second half of the year. At this period, inflationary pressures had decreased to 6.1 per cent. This was a great decrease as it had risen up to 70 percent in 1995 and 1996 (Mash a 2000: 36). This coincided with period of expansionary fiscal deficit and money supply growth.

Also, the Naira exchange rate was stable as the dollar exchanged for N92.00 to a dollar as at the last quarter of 1999. However, the later part of year 2000 witnessed a drastic increase in the exchange rate. At this period up to the second half of year 2000, a dollar was exchanged for N35.00 this shows a decrease of about 50 percent in the value of the Naira (CBN 1990). Although, on assumption of office in May, 1999, the Obasanjo administration immediately took decisive diplomatic steps to put in place on enabling environment for the thriving of democracy, regaining international respectability, and credibility and putting the economy on the path to sustainable growth and development. (Mudasiru and Adebonyon, 2001).

As at 1996, Nigeria's external debt stood at US$31,407,000.00 which presented Nigeria as the highest indebted country in Africa followed by Cote d'Ivoire which has US$19,713,000.00 (cited in Southern, 2000). However, as at the end of December 1998, Nigeria's debt service obligation amounted to some 36 per cent of the National budget which translated into a payment of some $1.68million out of the $3.61 6illion that was actually due for 1998 (The Guardian 13, September, 1999).

However, it is important to stress that Nigeria borrowed some $28.025 billion over the period 1979 to 1995 and paid back $35.845 billion in principal and interest, yet the outstanding debt as at the end of 1997 still stood at a staggering $27.008 billion (The News, 1999). A total US$724.9 million was used to service the country's debt in 1999 representing an increase of US$ 452.4 million over that of 1998 (CBN 1999). Also, there was a decline in the debt conversion scheme in 1999 as applicable for the as application for the program dropped from 29 in 1998 to 20 in 1999. The value of the application for the program dropped from 29 in 1998 to 20 in 1999. The value of the applications also dropped to US$276.5 million from US$20,060.8 million.

Consequently, the total debt redeemed declined from U8$88.4 million in 1998 to U8$ 59.7 million in 1999 (IBID 1999). Therefore, the cumulative value of debt redeemed between 115 and 1999· amounted to $524.32 million. Therefore, on assuming office as earlier pointed out, the Obasanjo's administration took certain decisive steps to put in place an enabling environment for the thriving of democracy which in turn leads to national development, regaining international respectability and credibility and putting the economy on the path of sustainable growth and development (Madasiru and Adabonyon 2001)


1.2     Statement of the problem

Economic diplomacy connotes an instrument for the purpose of achieving a desired end; much of its focus is on how state and political elite employ its instrument of economic in advancing national development. With the inception of the regime of Ibrahim Babangida in August 1995, the conduct of Nigerian foreign policy was said to have been basterdized. The need for Obasanjo's economic diplomacy from 1999-2007 as a result of the economic relations that existed between Nigeria and the outside world, in which Nigeria was regarded as one of the 'risky' countries to enter into business with and was also listed among other countries with a threatened economy (Guardian 2006). Talking about the intricacies of economic diplomacy which needs to be understood, it is imperative to note that Obasanjo led a crusade of anti­corruption, even when Nigeria was rated as one of the most corrupt nation in the world with its position rising between 4th and 61t1 in the last six years (Ibid) the following thought provoking question have emanated thus. What are the factors responsible for national development, does economic diplomacy really aid development? And to also ascertain if foreign policy through economic diplomacy real~ leads to national development, to also see what extent has foreign policy with the instrument of economic diplomacy aid the countries national development.


1.3     Objective of the Study

The broad objectives of this study are to examine Economic Diplomacy and National Development. An appraisal of its impact in Nigeria 1999-2007. Other objectives are:

i.          To examine the policies and the strategies adopted in achieving them.

ii.        To investigate the connecting fabric between economic diplomacy and national development.

iii.     To examine the effect of Obasanjo's policy of economic diplomacy and national development on the Nigerian economy between the period of 1999-2007.


1.4     Research Questions

i.    What were the objectives of the impacts of economic diplomacy and national development on Nigeria economy?

ii.   Did Nigeria government engage to economic diplomacy?

iii. What method of economic diplomacy did the Obasanjo's administration undertake?

iv.              Was economic diplomacy actually a triggering force for national development?


1.5     Rationale for the Study

The rationale for the study varies in the sense that firstly the work attempts to examine the origin of diplomacy cum economic diplomacy, secondly this work attempts to examine the impact of economic diplomacy on national development, the work also provide knowledge on how government and political elite should better employ foreign policy for the betterment of the nation at large as the return of democracy to Nigeria in 1999 improved the countries image all over the world, this will allowed the country to be more active in the international arena. Obasanjo has been several part of the globe in a bid to restore foreign investment flow back to the country, after the break down of relation with the wider world. This study also attempts a contribution to the literature of Nigeria’s economic diplomacy in the world. It is particularly important because it examines how obasanjo has made Nigeria a country to be recon within the international scene after a long while.


1.6     Scope/limitation of Study

By virtue of the vastness of the details that the researcher requires in this work the methodology of drawing of a sample frame may be difficult; the researcher thereby seeks to structure the work in that, studying the past to understand the present which will involve the reference to historical antecedents to explain the present day manifestations. To this effect, secondary data collection techniques, which involves sourcing for information and available data analysis from libraries, internet, newspaper and journals as well as articles is explored.


1.7     Literature Review

On this on this interesting subject of economic diplomacy and national development, there are various issues that will surface, such as the state of Nigeria before the Obasanjo's administration in (1999) as well during his time in office, as a result of the need to resolve these issues. It is pertinent to note that there are numerous and vast volumes of publication and journals to the credit of notable scholars, their immense contribution provide us with secondary data thereby providing necessary fact but not all.

The encyclopedia Britannia, (331) Defines diplomacy as the establish method of international discourse or the art of managing international relations chiefly by negotiation. Historically diplomacy means the conduct of official relations between sovereign states, usually bilaterally.

In the 20th century, diplomacy expanded to cover summit meeting and other international conferences, public and parliamentary diplomacy, the international activities of supranational and sub national entities, unofficial diplomacy by non- governmental elements and the work of international civil servant.

The first contact between individual tribes as they started communicating with each other for various reasons can historically speaking is considered as the origin of diplomatic practice. The appearance of tribal societies, together with their co-existence and mutual competitiveness brought about the need for at least occasional mutual dialogue. Diplomatic activities thus appeared in a rudimentary form quite early on in human history, and the time of its origin is definitely tied to the reasons and the form of its manifestation (Nicolson, 1988:5) thus here we can establish that the institution of diplomacy is as old as human history (Benco, 1997) but if we accept this thesis that "the state has to be considered as the key factor in diplomacy', then it is necessary to conclude that, although we observe the origin of diplomacy in the ceremonial and symbolic elements of communication between individual tribes, "Diplomacy proper only appears with territorial social groups and the state as their essential forms of organization'. (Ibid 1997) in this context according to Milan Jazbee we can identify the era of the Greek city state as the most important one in the development of diplomacy.

A very important mile stone in the development of diplomacy appears with the emergency and rise of Italian city states, which in the 14th and especially the 15th century contributed with their varied activities to the establishment of diplomacy and all these elements of it that still determines its basic nature. Intensive political and economic mutual contacts as well as contact with other states, gave rise to a need for permanent emissaries from these states in those with which they cooperated most intensely (Banco 1998:49). Permanent diplomacy representations the basis of which were established in this period, is one of the two foundations of diplomacy. The other, the mutual communication between the state sending the representative and its mission in the receiving state appear, parallel with the introduction of permanent representatives and bodies of representatives.

Thus we can conclude that in the mid ages especially in the 15th century. The basic elements of diplomatic practice were formed. The institution of permanent diplomatic representative was widely establishment and accepted as was mutual communication (albeit at a low technical level) between the state sending the representative and the representative himself. This communication is built mainly upon the instruction to the diplomatic representative and upon his report on the condition of the state receiving him. Even at this point, communication was mainly taking place between rulers rather than state this was the time when according to (Nicolson, 1988: 10) "diplomacy as a profession can be said to have been generally recognized". This phase of the formation of clear outline in diplomatic practice ended with the peace of Westphalia in 1648 which among other things facilitated the start of the classical era of European diplomacy (Satow 1994:5).

The most important period in the formation of what we know as classical diplomacy is during the 18th and 19th centuries when Western Europe began and developed its overseas economic expansion, with alternating combinations of balance of power and constantly rearranging political relations within the leading group of European state. This facilitated the further development and formulation of diplomatic practice and encouraged the development of international law and its codification. The development of classical diplomacy reached its apogee at the congress of Vienna in 1815, when diplomacy was first recognized as a profession or an activity with its own internationally recognized rules of behavior (Sen. Nicolson). According to Barston (2006:1) diplomacy is concerned with advising, shaping and implementing foreign policy. Diplomacy has been said to be concerned with the management of relations between state and other actors. As such he states that it is the means by which states through their formal and other representatives, as well as other actors, articulate, coordinates and secure of exchange of views, lobbying, visits, threats and other related activities. On the other hand Harold Nicolson (1959: 4-5) describes diplomacy as the management of international relation by negotiation. It refers to the process of barging among state in order to narrow areas of disagreement, resolve conflicts or reach accommodation on issues over which agreement cannot, otherwise be reached. Bargaining itself could be according John Spanier, (1979) either or tacit (i.e. disguised). When it is explicit, it is essentially a peaceful process. Hence he continues that diplomacy is generally defined as the method by which international relations are managed and adjusted by ambassadors and envoys, that is, by those trained in the art of peaceful management of international relations. However, when bargaining is tacit, diplomacy could take the form of fighting aimed at establishing leverage over an opponent in negotiation, it is in this sense that 'war is said to be a continuation of diplomacy by other means'. Narrowly conceived in the manner defined above, diplomacy is different from foreign policy. While foreign policy is the substantive aspect of external relation, diplomacy is the procedural aspect. In this restricted sense, diplomacy is the process of putting into effect the foreign policies of nation-states (op.cit, 1959)

For Nicolson, it consists of strategies and tactics for implementing foreign policy. It is therefore, distinct from the substantive formulation of a nation's goals and objectives in its relation with other actors in the international system. Flowing from the above, diplomats carry out policies using whatever tactics seem appropriate within the prescribed guidelines. Its primary tool is negotiation, mainly by accredited envoy, though political leaders also negotiate. Foreign policy is generally publicly enunciated; but most diplomacy is to further the state's interest which are dictated by geography, history, and economy. Safeguarding its independence, security and integrity-territorial, political and economic comes first. Diplomacy seeks to strengthen the state, gaining advantage and allies while neutralizing its opponents. Thus, it tries to create goodwill towards the state it represents (Encyclopedia Britannia, 33).

It should be noted, however, that, though in principles, a distinction may be made between foreign policy as substantive and legislative and diplomacy as procedural and executive, in practice, both diplomacy and foreign policy are contemporary. In some cases, they are even indistinguishable; as the process of implementing foreign policy entails a measure of policy decision-making and alteration of declared objectives. It is in this broad sense that the term diplomacy should be conceived if we are to make any meaning of the concept of "economic diplomacy’.

Diplomacy is often thought of as being concerned with peaceful activities, although it may occurs within war or armed conflict or be used in the orchestration of particular act of violence, such as seeking over flight clearance for an air strike, more generally there is also a widening content of diplomacy. At one level the changes in the substantive forms of diplomacy are reflected in terms such as "oil diplomacy" "resource diplomacy" "knowledge diplomacy” “global goutce" and "transition diplomacy". Certainly what constitutes diplomacy today according to him goes beyond the sometimes matter narrow politico-strategic conception given to the term. Nor is it appropriate to view diplomacy in a restrictive or formal sense as being the preserve of foreign ministries and diplomatic service personnel. Rather diplomacy is undertaken by a wide range of actors including 'political', diplomats, advisors, envoy and official forms of wide range of 'domestic' ministries or agencies with their foreign counterparts, reflecting its technical content; between official from (different international organizations such as the international monetary fund (lMF) and the united nations (UN) secretarial 'or involving foreign corporations and a host government transitionally; and with or through non-governmental organizations (NGOs) and 'private' individuals.

Chapters one and two of the book (Barston 2006) is concerned with discussing some of the main changes that have taken place in diplomacy since the 1960s, but before looking at the changes, it is important to discuss the task of diplomacy. According to Barston, the function of diplomacy can be broken into six broad areas - Ceremonial, Management, Information/Communication, International negotiations, duty of protection and normative/legal diplomacy, particular function within these categories are set out below. The significance of each will vary from state to state, as for some, diplomacy may be largely devoted to ceremonial representation; others may allocate resources to high level roving envoys or in support of an established role in international rule making. The functions of diplomacy are particularly closely related to evolving events and issues such as international crises, outbreak of violence, human and natural disaster which shift diplomatic sport light unto previously remote geographical area or issues.


Tasks of diplomacy

Ceremonial:-This include protocol, representation and visits

Management:- This has to do with day to day problems, bilateral co-ordination, multilateral co­operation, strengthening bilateral relationship, explanation and defense of policy, promotion of interest (Political, economic, scientific, military, and terrorism)

Information and Communication:- This has to do with assignment, reporting and monitoring.

International Negotiations:- This has to do with duty of protection.

Contribution to International Order:- This has to do with normative/rule making mediation/pacific settlement.


Traditional diplomacy is said to have been associated with the first of the functions as stated above. Formal representation, protocol and participation in the diplomatic circuit of a national capital' or institutional continue as important element in state sovereignty and as part of the notion of international society. Al a substantial level, much of the business of diplomacy is concerned with the management of short term routine issues in bilateral and unilateral relations (Co-ordination, consultation, lobbying, adjustment, and the agenda of official or private visits). Which include the promotion and management of interest which for most states are dominated by financial, economic, resources issues and terrorism along with threat management.

The term ''threat management “is used to differentiate these forms of diplomacy from defense security policy or traditional military security activities. According to R.P Barston (2006), in discussing the development of diplomacy, an overview of the periods will help to give some perspective in which to consider the major changes that have taken place, and this is as a result of providing bench mark and highlights aspects that which have been noted as part of the development of diplomacy. According to him the argument is not about 'old' or 'new' but rather as Hocking B. (1999:21-24) and others suggest, seeing diplomacy in an evolutionary sense. But rather David Davenport (2003) sees diplomacy as the subject of constant change, rather than major shifts constituting a new firm.

Harold Nicolson's analysis, written in 1961 in Foreign Affairs on the theme 'Diplomacy then and now' is coloured especially by the impact of the cold war, the instruction of ideological conflict into diplomacy and it effect on explanation, and the transformation from the small inter elite in old-style diplomacy to a new or 'democratic conception of international relationship requiring public explanation and 'open' diplomacy despite its growing complexity. According to Barston (2006) a further stinking change from Nicolson was in values, especially in the relations based on the 'creation of confidence, and the acquisition of credit'. Writing shortly after Nicolson was Livingston Merchant (1964: 117-35), he noted the decline in the decision-making power of ambassador but the widening of their area competence through economic and commercial diplomacy; he states that the use of personal diplomacy: and the burden created by multilateral diplomacy with its accompanying growth in the use of specialists. Writing at the same time, Robert Pranger (1964) additionally drew attention to methods, commenting on the growing volume of the visits and increases in the number of treaties. Adam Watson (1982), reviewing diplomacy and the nature of diplomatic dialogue noted wide range of ministries involved in diplomacy; the corresponding decline in the influence of the foreign minister; the increase in the direct involvement of head of government in the details of foreign minister; the increase in the direct involvement of head in the details of foreign policy and diplomacy; and the growth in importance of the news media.

Hamilton and Langhorne (1995, 224), writing in the mid-1990s, in the post-soviet and Yugoslav context, highlighted that 'established diplomatic procedures have, as in earlier periods of political upheaval and transition, been exploited from distinctly undiplomatic ends'.

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