By Omodele Adigun
As the nation frantically campaigns for import substitution, the combination of high product rejection and poor export funding, among other factors, may have cost the nation over 67 per cent in the value of its non-oil exports which tumbled from $2.97billion to $1.63 billion.
Data from the Central Bank of Nigeria (CBN) and the pre-shipment agents, Cobalt, have shown that the value of Nigerian non-oil exports fell by 67.29 per cent within a spate of 18 years.
The statistics on the Formal Non-oil Exports Performance from 1996 to 2015, provided by the Nigerian Export Promotion Council (NEPC), show that the Free on Board (FOB) value of Nigeria’s non-oil exports declined from 107.45 per cent in 1997 to 40.14 per cent in 2015. Conversely, in monetary terms, the value, however, jumped from $167.7million in 1996 to about $1.63billion in 2015.The total FOB value for the period stood at over $24.9billion.
FOB value, according to an online Business Dictionary, Investopedia, is a trade term that indicates whether the seller or buyer has liability for goods that are damaged or destroyed during shipment between the two parties.
But Mr Seun Olatunji, the President of the Association of Metal Exporters of Nigeria (AMEN), explaining it in layman’s terms, says FOB value is the value or the amount you are selling the goods or that particular shipment.
The data on the first 10 years performance of non-oil exports compiled by the CBN indicate that the value peaked at $957.31million in 2006, followed by about $816.9million; $749.5million; $668.03million and $661.7million in 2003, 2005, 2002 and 2004 respectively.
However, statistics put together by the pre-shipment agents, Cobalt, in the following nine years show dramatic increase in the value, even as the percentage differences continued to oscillate.
For instance, the highest of $2.97 billion was recorded in 2013 with 15.96 per cent increase over the $2.561billion recorded in the previous year. The FOB value for 2011 was the second highest with $2.77billion followed by over $2.714billion of 2014. The 2007 figure was the lowest with about $1.4billion.
Commenting on the abysmal performance of the Nigerian exports, Comfort Sakoma, founder & CEO of Poize Capital Global , a firm that helps local businesses export into other African and U.S. markets, blamed it on the twin problems of the inability of Nigerian SMEs to take the advantage of the African Growth and Opportunity Act (AGOA) as well as high number of product rejections.
Her words: ”AGOA was designed to increase trade between the U.S. and participating African countries. AGOA allows ‘Made in Africa’ products to be exported into the United States duty (tax) free. Since its launch 16 years ago, Nigeria, with more than 17 million SMEs has exported less than $3 million in the non-oil sector. Conversely, South Africa, with 650,000 SMEs has exported $1.4 billion in the non-oil sector in the same period of time.
”Nigeria is the 38th largest export economy in the world. Nevertheless,we continue to record the highest number of product rejections in the continent’s export profile to developed countries. For example, the number of rejects in major foreign markets between 2012 and 2013 revealed that Benin Republic had two rejects; Ethiopia got three; Zambia recorded five, South Africa had 56, Egypt had 95, while Nigeria recorded 102.”
But Mr Bashir Wali, the acting Managing Director of Nigeria Export/Import (NEXIM) Bank, would rather blame poor export credits for the decline performance.
According to him, credit to the non-oil sector dropped from N852billion in 2008 to N122billion in 2014. “This partly explains the decline in performance of non-oil exports as the declining domestic export credit shows a drop from an annual average of N525 billion to the current level of about N125 billion. This caused the non-oil export earnings to stagnate at about 5 per cent of total export earnings,” he said.