Business Feature

Experts: Nigeria can raise $150bn from non-oil export

•Canvass easy port access, dedicated export terminal

 

Against the backdrop of the announcement of the N50 billion Economic Sustainability Plan (ESP) fund to boost non-oil exports, PAUL OGBUOKIRI reports that aside funding, logistics challenge is a major disincentive to the nation’s export chain

 

Non-oil exports capacity

 

The Nigeria Export Promotion Council (NEPC) said that the Federal Government’s One-State-One-Product (OSOP) initiative will enable Nigeria’s non-oil exports reach the sum of $30 billion in the next four years.

 

This came as NEPC disclosed that the Federal Government has identified about 22 nonoil strategic products that will be exported to diversify the nation’s foreign exchange earnings away from oil.

According to the Executive Director, NEPC, Olusegun Awolowo, this initiative is part of the zero-oil plan currently being implemented by the organisation, in collaboration with the private sector, and is estimated to be worth over US$150 billion in annual export value at full capacity.

 

Some of the targeted products include; palm oil, cashew, cocoa, soya beans, rubber, rice, petrochemical, leather, ginger, cotton, Shea butter, tomato, banana and plantain.

 

Speaking during the implementation of OSOP Value-Chain Export Development meeting in Uyo, Mrs. Pauline Ndulaka, a deputy director at NEPC, said Nigeria’s reliance on crude oil and gas exports has contributed to the volatility of the economy.

 

She said: “With the proper implementation of OSOP, the nation’s foreign reserves would rise from non-oil exports in the next 10 years, create at least, 500,000 additional jobs annually and lift Nigerians out of poverty,” she said.

Ndulaka further urged state governors to focus on productive comparative advantage in their states and develop it for export, citing Akwa Ibom with lots of exportable products such as fresh coconut oil, cassava, seafood, palm fruits, and iron ore, among others.

 

Nigeria’s import surged by 54 per cent yearon- year to N6.85 trillion in the first quarter of 2021 from N4.44 trillion recorded in the corresponding period of 2020.

 

Total trade in the period stood at N9.76 trillion, 14 per cent higher than N8.55 trillion recorded in Q1 2020. Meanwhile, earlier in the year, leather makers in the country had said that about N1 billion was needed to upgrade the value chain in the sector to international standards.

They had decried the loss of a huge chunk of the international market following the EU ban on Nigeria’s leather exports. The National Secretary, Association of Leather and Allied Industrialists of Nigeria, Mr. Ken Anyanwu, said the improvement in the quality of Nigeria’s leather products had become imperative.

He said: “We don’t have the kind of equipment that can help us manufacture products of international standard. Unfortunately, the Federal Government has not come out with strong support for the industry.”

 

Anyanwu said that the leather products’ makers had sought the assistance of the Abia State Government, in addition to the support from their cooperative societies for the purchase of vital standard equipment to meet the EU deadline.

“The facilities are expensive; they cost between N500million and N1billion. Already, sensitisation to the National Quality Infrastructure spearheaded by the EU and the United Nations Industrial Development Organisation has begun. The entire value chain of the leather sector is in need of overhaul, right from the rearing of livestock to the tanneries and the leather factories,” he said.

 

Anyanwu also lamented that the restrictions posed by access to foreign exchange and the fluctuations in the value of the naira had discouraged investors.

 

He said prospective investors were skeptical about making any commitment and would rather wait to see some stability in the value of the naira and the economy as a whole.

Presently, over one million pairs of shoes are exported every day from Aba, reaching an estimated 51 million pairs annually. The shoes are said to be purchased by traders from African countries, mostly Cameroun and Congo Democratic Republic. Other leather items such as bags and belts are also exported from Aba and other places informally on a weekly basis to other African countries with Cameroun as the major transit market.

 

Challenges of non-oil export

 

When the European Union banned the exportation of several agricultural produce from Nigeria two years ago, the pronouncement made headlines. The affected items included beans, sesame seeds, melon seeds, dried fish and meat, peanut chips, palm oil and leather.

 

Since then, stakeholders across the value chain have held countless conferences and seminars to educate people on the importance of improving the quality of the production processes.

 

However, the problem of agricultural exports and indeed the entire non-oil sector has been made more complicated with the influx of importers, customs agents and all manner of businessmen seeking to raise foreign exchange or generate income through exports.

An export consultant and Chief Executive Officer of MultiMix Academy, Mr. Obiora Madu, described the rush for non-oil exports as a delicate situation for Nigeria, which must be handled carefully.

He said: “Government and its agencies must get ready to checkmate fraudulent people, who in this race for forex are going to export rubbish out of Nigeria and worsen the situation. “It will get worse; every one you meet now – transporters, freight forwarders – is asking for information on non-oil export.

As an export consultant, I get these calls very often.”

He listed one of the basic factors for the success of non-oil export trade as building capacity. To him, building capacity is a specialised activity, which involves both holding seminars and practical demonstrations on the field.

 

He said everyone in the non-oil export value chain right from the farms or mines up until the point of exports would have to be sensitised to international standards.

Although he acknowledged the efforts of the Nigeria Export Promotion Council in the development of non-oil exports, he added that the council was unable to build capacity as it had no structure for it.

He said: “Exports thrive on a tripod: development, promotion and capacity building.

As their name implies, NEPC’s key function is promotion. It has tried though to cut across into these other areas but the fact is that structure-wise, there must be changes. “If we want to take non-oil exports seriously, we need to review the entire process and policies. It is not solely the business of NEPC and Ministry of Trade and Investment.

 

But it also includes the Ministry of Agriculture, Immigration and Foreign Affairs; all these people have something to do with exports. When government agencies are working in different directions, you can’t get a positive result.”

Madu called for a critical look at export policies and restructuring after goals have been determined. He stressed the importance of creating policies with a lifespan of not less than five years, so as to enable business owners to plan and make investments.

 

He said: “Government should create Key Performance Indicators that will be used in judging stakeholders across the export chain. They should make it impossible for anyone who wants to create bottlenecks for exporters.”

FG’s N50bn export promotion fund

 

The Federal Government has announced plans to boost its non-oil exports with N50 billion as part of its Economic Sustainability Plan (ESP).

 

The decision, it was gathered, followed the recent launch of the Economic Community of West African States (ECOWAS) Trade Promotion Organisations (TPO) Network towards increasing the volume of trade within the region. Executive Director /CEO of the Nigerian Export Promotion Council (NEPC) Segun Awolowo is also the inaugural president of the ECOWAS TPOs.

 

Also, the NEPC is now repositioning the nation’s export through the implementation of its N50 billion Export Expansion Facility Programme (EEFP), which is part of the ESP whose development and implementation is being led by Vice-President Yemi Osinbajo.

 

The EEFP is expected to significantly raise the volume of non-oil exports in Nigeria, a spin-off of the Zero Oil Plan developed by Awolowo and approved by President Muhammadu Buhari.

 

Besides providing financial support for the average Nigerian exporter, the EEFP is also going to see the establishment of top-notch warehouses in the country close to airports where Nigerian goods meant for export would be packaged to global competitive standards ahead of their exportation.

 

The EEFP, in line with the Federal Government’s ESP, is focused on cushioning the effects of the COVID-19 pandemic on non-oil export businesses, thereby safeguarding jobs and creating new ones.

 

Earlier in March this year, Minister of Industry, Trade and Investment, Otunba Niyi Adebayo, officially flagged off the EEFP and also launched the first online Grant Management Portal (GMP) for non-oil exports. Considering the significant role it plays in growing the Nigerian economy,

 

Micro, Small and Medium Enterprises (MSMEs) are the target group of support from the EEFP and the Export Development Fund (EDF). At the launch of the TPO Network, Osinbajo stated that there was need to expand intra-regional trade in the ECOWAS subregion, with the opportunities presented by the African Continental Free Trade Area (AfCFTA) agreement. Boosting export trade

 

Following this development, the Nigerian Shippers

 

Council (NSC), has called on the Federal Government to consider the establishment of a dedicated export terminal to, among other things, achieve trade balance in the face of declines and instability in the crude market.

 

The NSC Executive Secretary/CEO, Emmanuel Jimmy, who made the call this week in his office when he played host to some maritime journalists, said the export drive has become urgent to turn the tide and avoid looming collapse of the economy.

 

The shippers’ council boss noted that given the major dislocations in world economy occasioned by the ongoing Coronavirus pandemic, critical specialisation in ports administration has become very necessary and compelling.

 

Meanwhile, more and more investors rush daily into Nigeria’s non-oil export trade. The Federal Government recently said that over N500 million had been raised as licensees and leaseholders in the solid minerals sector.

 

It had previously threatened to revoke at least 1,500 mining licences and leases due to dormancy, resulting in a struggle by the licence holders to activate their operations.

 

The President, Miners Association of Nigeria, Alhaji Sani Shehu, had in February listed some of the factors militating against the sector as lack of adequate funds and inadequate mining equipment. He accused commercial banks of frustrating indigenous miners in their quest to access the Small and Medium Enterprise intervention fund.

 

“Normal commercial lending conditions should not be applied to the SMEs fund. Most commercial banks prolong the process and the miner gets frustrated after three or four months of chasing a loan facility.

 

The intervention fund is meant to be a solution and so, we should access it.

We are competing in a disturbing scenario; other miners from Asia get their loans at two per cent with over 20 years to repay. “We are happy to have it at nine per cent but at least, let us have access to it. Presently, only about 10 per cent of the miners in the country have accessed that fund,” Shehu said.

 

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