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By Merit Ibe, [email protected]
Stakeholders in Nigeria’s manufacturing export sector have said the industry is facing a crisis, with revenue experiencing a significant decline and have called on the federal government to intervene and address the situation.
They say a harsh business environment with challenges like poor infrastructure, logistics issues and a rising cost of doing business have made it difficult for local manufacturers to compete globally and have led to business closures and exits by multinational companies.
The stakeholders are urging the government to engage with them to find solutions and improve the competitiveness of Nigeria’s manufacturing exports.
The World Bank, in its recently published report ‘Africa Pulse’ said revenue from the manufacturing export sector plunged 166 per cent to N778.4 billion from the N2.1 trillion height reached in 2019.
The report said since 2019, the trend has been downwards, recording significant decline to N960.7billion due to COVID-19, while a minor recovery was recorded in 2021 at N1.15trillion.
In 2022, a huge drop to N781.1billion was recorded and another significant drop to N778.4 billion was recorded in 2023. In the same period, the share of manufacturing exports to non-oil exports dropped to 24.8 per cent in 2023 from 82.4 per cent in 2019.
The bank blamed the country’s dwindling foreign trade on poor infrastructure and inefficient logistics, among other factors.
Expressing sadness over the drop in revenue, Nigeria’s manufacturers and exporters, said there is an urgent need for deliberate intervention from the federal government to boost performance and revenue in the sector.
They canvassed for access to loans at single digits, elimination of administrative bottlenecks and multiple regulatory checks by different regulators, noting that the harsh business environment in the country is making local products uncompetitive globally.
In his view on the sector, Director General of Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said: “The rising cost of doing business has worsened competitiveness of Nigerian products in the global market, which is evident in the drastic reduction in global demand for these products.
“The reduction in global demand for Nigerian products was further buttressed by the NBS report that confirmed that the manufacturing export value of Nigeria plummeted by 166% from 2019 to 2023.
“In addition, the exorbitant lending rate of over 30 percent has contributed largely to a drop in the share of manufacturing exports to non-oil exports from 82.4 percent to 24.8 percent in 2019 and 2023 respectively.”
Chairperson of the Export Group of MAN (MANEG), Odiri Erewa-Meggison, said it is concerning to see exporters not doing well as they should.
Querying how exporters can compete on a global scale without a deliberate intervention from the government, Erewa-Meggison said: “The cost of doing business in Nigeria has increased by more than 300 percent. Just take a cue from the recently increased electricity tariffs.
“Exporters need deliberate interventions such as access to loans at right rates, support with eliminating administrative bottlenecks and multiple regulatory checks by different regulators. A consolidated or harmonised regulatory approach would be preferred.
“The high cost of electricity makes it more difficult to produce. The incentives need reviewing and streamlining to ensure qualifying exporters take benefit without having to compromise by settling anyone to get their incentive like Export Expansion Grant (EEG).
“There is an urgent need for a stakeholders’ engagement between government and exporters to discuss and agree on a way forward.
“If exporters are to commit to repatriating their full export proceeds back to Nigeria, there are certain things exporters will like the government to equally commit to. For example, there is a need to review the items on the exports proceeds list in the CBN foreign exchange manual to ascertain and ensure the list is still relevant and updated to suit current needs.”
Also reacting, chairperson of the Export Group of Lagos Chamber of Commerce and Industry (LCCI), Mrs. Bosun Solarin, said in 2020, the then vice president, through the office of the Presidential Enabling Business Environment Council (PEBEC) tried to help small businesses by cutting the cost of production, like NAFDAC registration. “From 2020, many small businesses emerged into production but most have gone into extinction because of various policies that are anti-business.
“When people find a way to come into business through export, they are confronted with so many bottlenecks, bad policies and insecurity,” Solarin said.
She continued: “If we don’t pay attention to security so that people can go back to the farm, if we don’t pay attention to interest rate so that the productive sector can get money to do business, if we don’t pay attention to logistics so that people can even move their products with ease, then we have not started.
“Nigeria is signing off for the guided trade of African Continental Free Trade Area (AfCFTA) very soon and logistics is a problem to even move things.”
She urged government to pay attention to these issues to boost the sector again.
In his comment, Director, Centre for the Promotion of Private enterprise (CPPE), Dr Muda Yusuf, said the implementation of the National Single Window (NSW) initiative will go a long way in enhancing Nigeria’s foreign trade.
“When you have a process that is highly bureaucratic, it gives people the opportunity for physical interaction that also gives room for discretion, which is a fertile ground for corruption, extortions, delays and inefficiencies which are also affecting the cost of goods and services.
“The impact on business will be significant. No matter what sector you talk about, what happens in the import/export sector impacts the sector, directly or indirectly. Whether you are in manufacturing, mining or whatever, as long as you import or export goods. And if you talk to those who clear these goods, they will tell you the kind of experience they go through.”
