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The plan by the Central Bank of Nigeria (CBN) and the Bankers’ Committee to commit about N500 billion loan to export-oriented companies to boost non-oil export earnings is timely. This is, indeed, the appropriate time to increase our non-oil exports and reduce the current overdependence on crude oil earnings. It is also part of the government’s efforts to fully diversify the economy.
The CBN Governor, Godwin Emefiele, who disclosed the plan at an event to mark the end of the 2022 Bankers’ Committee Retreat in Lagos, said the loan is part of the CBN’s RT200 programme to raise $200 billion in Foreign Exchange (FX) from non-oil proceeds over the next 3-5 years. The initiative will likely encourage the improvement of the quality of our non-oil exports in the global market as well as boost the volume of export repatriation. Currently, Nigeria’s products are being rejected globally because of poor quality and packaging. It is based on this that the N500billion loan has been packaged to promote non-oil exports.
The modalities for the disbursement of the loan to the beneficiaries will soon be made public by the CBN. While oil and gas exports account for about 80 per cent of the nation’s total revenue in the second quarter (Q2) 2022, according to figures from the National Bureau of Statistics(NBS), the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated recently that non-oil export earnings contributed 73 per cent of the revenue in the 2023 budget estimates.
Also, figures from the CBN showed that Nigeria earned $2.59billion from non-oil exports in Q1 2021. The good news is that 200 exporters accounted for 95 per cent of the $4.2billion that the country earned from non-oil exports last year. In addition, statistics from the Nigeria Export Promotion Council (NEPC) showed that non-oil exports generated $2.6billion in the half year of 2022(January- June).
This represents an increase of 62.57 per cent compared to about $1.60billion and $981.44million made in the first half of 2021 and 2020, respectively. According to the Executive Director of NEPC, Dr. Ezra Yakusak, a significant growth has been recorded in the non-oil exports, with about 4.15 million metric tons of Nigerian products exported in the last two years. This is despite global economic slowdown that affected businesses within the period. Pre-shipment inspection data also showed that half-year non-oil performance in 2020/2021 was the highest since 2018. From the foregoing, there is no doubt that Nigeria’s economic survival depends, to a large extent, on the non-oil exports. There should be a strategic plan to increase awareness of the opportunities in the sector. The benefits of leveraging on the opportunities in the sector will enhance the growth of our Gross Domestic Product (GDP). Besides, there is need to strengthen the value of the naira, and review the foreign exchange regime. The current depreciation of the naira against major foreign currencies is not good for exports. A recent World Bank report has confirmed that Nigeria’s non-oil sector has the potential to exceed crude oil earnings. That is why it has become necessary to address the issue of quality and poor packaging of these products.
Nigeria must use the opportunity offered by the non-oil exports to earn more money. Many countries in Africa are exploiting the opportunity to export their agricultural goods. Nigeria, which ranks highest in the production of yam but unfortunately don’t perform well in yam export market, should improve the quality of its yam for exports.
For Nigerian firms to benefit from non-oil exports, there is need for exchange rate stability, stable power supply and improved transportation and security as well as good governance. With the economy hamstrung by multifaceted factors and weak revenue generation despite higher prices of crude oil in the international market, the way forward is to grow the non-oil sector.
We enjoin the NEPC and the Ministry of Industry, Trade and Investment to work towards ending the rejection of Nigeria’s products abroad. Therefore, the plan by the NEPC management to embark on inter-agency fact-finding working visit to some foreign countries to ascertain the specific causes for the reported rejection of Nigeria’s export commodities is highly welcome. Enhancing the quality and packaging of our non-oil exports will make them acceptable in the global market. It is time for the government to give priority attention to the exploitation of our non-oil exports. That is perhaps the best way we can grow the economy outside oil.
