From
available statistics, only few countries of the world can match Nigeria’s
endowment in natural resources. With an estimated population of over 160
million, and onshore and offshore that boast of some of the finest deposits of
oil and natural gas, a rainforest belt that offers the best cash crops and hard
wood and a savannah region with very large tones of oil seeds, coffee, chilies,
spices and abundant solid mineral resources. In fact, the opportunity
that Nigeria offers investors in export is immense and irresistible. In spite
of all these, Nigeria’s economy has remained largely monolithic with investment
in non-oil export sector being everything but strategic.
There is no
gain saying that any policy or strategy aimed at achieving the nation’s Vision
20 2020, this country’s economic recovery should, therefore, integrate the
development of the non-oil export sector to play its desired role.
Indeed, only a purposeful and well-articulated non-oil export development
policy that must form part of our general development plan can achieve such a
goal.
Export
and National Development
The close
connection between international trade and development in developing countries
cannot be over emphasised. As a result, the pattern of trade, the
institutions involved in it, and the strategies employed for maximising benefit
as well as best terms of trade are of utmost importance to developing
countries. The importance of the trade sector to the economy of
developing countries shows significant contribution of the export sector. Given
the above scenario, there can be no significant development in Nigeria unless
something is done about our non-oil export sector.
The non-oil
export sector, which has suffered neglect over the years, suffered a
major setback as the total income generated from its export has been unstable.
For example, the total earnings from non-oil exports dropped by 34 per cent in
just one month, the latest economic report released by the Central Bank of
Nigeria has indicated.
A report
recently obtained from Central Bank of Nigeria (CBN) noted that the revenue
fell by 34.8 per cent and 4.5 per cent below the levels in the preceding month
and the corresponding month of 2013, respectively. The drop in the non-oil
exports reflected, largely, the fall in the earnings from food products,
manufacturing and industrial sectors.
The report
stated: “A breakdown by sectors showed that proceeds
from agriculture, manufacturing, industrial, food products, minerals and
transport sub-sectors stood at $658.32million, $115.47million, $71.61million,
$11.82million, $9.82million and $68million. The shares of agriculture,
manufacturing, industrial, food products, minerals and transport sub-sectors in
non-oil export proceeds were 75.92, 13.32, 8.26, 1.36, 1.13 and 0.01per cent.”
The
incentive regime has been very weak with only Export Expansion Grant
occasionally working out of 12 incentives. Even the incentive that is working
favours foreigners to the detriment of indigenous companies.
Strategic
Action Plan
The new
strategy being proposed by this paper is not a revolutionary concept, but
rather an evolutionary one. The strategies earlier employed to boost the
non-oil export capacity of Nigeria had all being anchored on one or more
government agencies. This strategy proposes a progression of anchoring the
strategy on a higher authority – the presidency. Taking a cue
from Obama Export Initiative, there is need to constitute a NATIONAL STRATEGIC
EXPORT COMMITTEE. The committee must be statutory and chaired by the President
or the deputy. Other Public sector representatives must not be below the rank
of Permanent Secretary. The bulk of the committee members will be private
sector technocrats highly knowledgeable in the subject matter.
This will
further emphasise the sensitivity of non-oil exports and the seriousness with
which the government aims to tackle the much publicised diversification of the
economic base of the nation in favour of non-oil export. The key function of
the committee should be to formulate, monitor and review export plans, policies
and targets to ensure compliance by operators. There should be sub-committees,
which should meet more regularly to review the role of the sector and prepare
inputs for quarterly meetings. To ensure continuity and stability, members
should be allowed a minimum tenure of five years.
This
committee should also receive report of problems; fraudulent practices etc from
both exporters and other operators, and make recommendations for
solutions. It should also be a one stop solution ground for exporters and
all operators. The committee should take up the development of the service
export sub-sector as a matter of national importance.
Matters
of urgent attention
1.
Introduce
initiatives to improve conditions that directly affect the private sector’s
ability to export by removing trade barriers abroad, by helping firms —
especially small businesses overcome the hurdles to entering new export
markets, by assisting with financing, and in general by pursuing a
government-wide approach to export advocacy abroad, among other steps.
2.
Develop
programmes designed to enhance export assistance to SMEs, including programmes
that improve information and other technical assistance to first-time exporters
and assist exporters in identifying new export opportunities in international
markets.
3.
Revive all
export incentive schemes currently not available to assist exporters. This is
because these schemes will not run alone but will rather serve as the pivot for
the success of other incentive schemes already in existence; that is why it is
an evolutionary strategy.
4.
Promote
services trade, including the necessary policy and export promotion tools. This
has become necessary because the former incentives focus on agricultural
products and manufacturing to the detriment of services and outsourcing in
which Nigeria has comparative advantage.
Other
Recommendations
In the face
of unfavourable developments in the international oil market which is likely to
be with us for some time to come, Nigeria must seek alternative exports or face
the unhappy consequences of constantly reduced foreign exchange earnings.
- Activation of the commodity exchange
In
recognition of its dire need a commodity exchange was approved for Nigeria
years ago; unfortunately, since its establishment the nation has not gained any
benefit. This absence of a commodity exchange has robbed the sub sector
of growth opportunities. The inactivity of the commodity exchange market leaves
all manners of characters in the trade and makes it possible for foreigners to
get into the country and move directly to the farm gate to procure commodities
by passing everybody in the commodity trading chain.
As a result
of all these, the pricing of Nigerian commodities since the scraping of the
commodity Boards is governed by the laws of the market demand and supply. The
ridiculous prices are either fixed by farmers and middlemen or by foreigners
who wish to transfer funds out of the country. This leaves bona fide exporters out in the
cold. There are no signs that these outrageous domestic prices will abate
hence the need for us to ensure as a matter of urgency the full take off of the
commodity exchange market.
2. Establishment of a National Institute For
Export
The
international market is often described as ruthless, selective and fiercely
competitive. In the face of the issues and difficulties associated with
exporting, the personnel of an enterprise going into export must be trained to
enable them handle the export functions effectively. They need to develop the
necessary skills, knowledge and confidence to initiate and conclude export
transactions.
The truth
about exporting is that the quality of your export is a reflection of the quality
of your manpower. The fact that we have not done so well in non-oil
export is traceable to the absence of export education policy in the nation.
Only one university in Nigeria offers a degree programme in International
Trade. The absence of a national export institute has allowed charlatans to
exploit exporters with sub-standard training and ripped them office their
scarce resources.
3. Establishment of Export Houses
Export
Houses are recognised secondary marketing channels for small and medium enterprises
in export. In Canada for example, 40 per cent of their exports outside
the United States are contributed by Export Houses. Many developing countries
have come to realise the need to have export houses to assist SMEs because of
their numerous constraints.
While large
firms tend to possess necessary resources and skills to handle exporting in
house, many small and mid-size manufacturers do not. Smaller firms tend to shy
away from exporting, not only because of their limited resources and lack of
knowledge regarding foreign markets, but also because of the perceived risk and
uncertainty associated with overseas sales. As a result, during their initial
stage of export involvement, they often need assistance from export
intermediaries.
Intermediaries
perform an important economic function by linking individuals and firms that
otherwise would not have been connected. Such a function is especially critical
in export transactions characterised by the geographical and cultural
separation between sellers and buyers. Usually dubbed ‘traders’, export
intermediaries are specialised service firms whose mission is to bridge the gap
between domestic manufacturers and foreign customers.
Intermediaries
can calm smaller manufacturers’ ‘fears’ about foreign markets by leveraging
their knowledge about overseas markets and efficiency of selling products
abroad. They economise on exporting costs, through their contacts, experience,
specialisation and scale of operations, more efficiently than many
manufacturers can achieve on their own. For the concept of an export management
company to work, both parties must fully recognise the delegation of
responsibilities; the costs associated with these activities; and the need for
information sharing, cooperation, and mutual reliance.
- Evolving export-led Sme policies
Just as
recommended in the case of agriculture, it is imperative that SMEs’ policies
have an export orientation at the point of conception. This would
culminate in the entrenchment of a wide-spread export culture in the country.
Experiences of industrialised countries have proven that small and medium scale
enterprises are the pivot of exports as they account for at least 60 per cent
of export activities. With SMEs in the centre of exports, repatriation of
proceeds is guaranteed. It is recognition of this type of advantage that UNIDO
has supported the Federal Ministry of Industries Trade and Investment in
establishing and organising the Aba leather products-cluster. This
strategy should be extended to other products.
- Making poverty alleviation programmes export-led
All the
poverty alleviation programmes must have export as part of their strategies for
national economic growth. For this to be possible, people at the helm of
affairs in these institutions need to be exposed in order for them to see the
need to integrate export in their policy formulation. The International Trade
Centre has an Export lead Poverty Reduction Programme we can copy from
Conclusion
Nigeria is
no doubt one of the most promising countries in Africa and its potential as a
net exporter of agro industrial products, manufactures and services has never
been in doubt and will continue to attract high interest from the international
business community. The main thrust of all the sectoral economic reform
policies is aimed at:
- Diversifying the economy in favour of non-oil export and poverty reduction activities
- Adopting strategies aimed at integrating the economy into the globalised economic framework, using domestic competitiveness as a lunch-pad for reasserting the country’s position in the globalisation process.
Result from
the various interactive stakeholders meetings in the past has indicated the
preparedness of the Nigerian private sector to accept the challenge of driving
the nation’s economy. This acceptance is, however, predicated on the ability of
government to provide the proverbial enabling environment. It is, therefore, in
recognition of this that recommended solutions need to be vigorously pursued.
In doing
this also, the government must accept and act on the fact that a lot of
financial investments must go into the creation of the necessary support
structures towards making Export the hub of the nation’s economic development
and growth
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