By Merit Ibe, [email protected]
Growth in non oil exports (NOE) has remained weak due to structural bottlenecks, unfair forex policies, floods, the Russia War in Ukraine, among others, stakeholders have stressed.
They are of the view that the decline in the contribution of the NOE to total exports show that there is still more work to be done in terms of eliminating the various barriers to increasing the nation’s NOE especially the ease of doing business, Foreign exchange policy and export of services.
Some others say aside the war in Ukraine, which distorted global supply chain around the world, the ease of doing business, exchange rate pressure, high cost of transportation, insecurity and the infrastructural deficits impaired the non-oil sector’s performance in 2022.
Inflationary pressure contributed, to a large extent, to the southward movement spotted in the non-oil sector in 2022.
In spite of concerted efforts to diversify the nation’s export earnings, the contribution of the non-oil sector, to the total export earnings dropped to 10.1 per cent in 2022 from 12.8 per cent in 2021.
The Nigeria Export Processing Zones Authority (NEPZA) said Nigeria recorded $1.345 billion from non-oil exports in the first quarter, representing a year-on-year (Y/Y) increase of 8.5 per cent.
According to the National Chamber of Commerce and Industry, Mines and Agriculture (NACCIMA) and the Centre for the Promotion of Private Enterprise (CPPE), the increase in NOE is paltry and speaks to the non-diversification of export revenue.
Though the government’s and CBN’s efforts to increase NOE have yielded some positive results, much more needs to be done. Most of the issues with the low level of NOE export have to do with structural deficiencies that undermine the potential for exports. Well known issues such as power outages, poor infrastructure, bottlenecks with port infrastructure, the multiplicity of taxes and constraints to the ease of doing business all add to the cost of NOE.
These factors often make Nigerian products uncompetitive relative to products from other countries.
On his part, Director General of NACCIMA, Sola Obadimu, lamented the challenges of port inefficiencies and deteriorating state of infrastructure, among others as barriers to efforts to boost NOE.
“There are issues with exporters who get their earnings from exports converted back to them at official rates.
Meanwhile, the accute shortage of forex for manufacturers to buy equipment and other inputs particularly for exporters of manufactured products – as opposed to exporters of unprocessed items. This may be considered to be a bit unfair.
“As some of them have opined at several fora, there is no special forex window open to manufacturers of exportable items despite their unique contributions to the economy compared to pilgrims who sometimes benefit from same facility.
“Deteriorating state of infrastructure, state of roads, power supply, ports inefficiencies, have not helped either.
At a summit, themed, ‘Trade and Non-oil Export: Changing the Narrative for Rapid National Development’, Chairman of Manufacturers Association of Nigeria Export Promotion Group (MANEG) and Director, External Affairs, at British American Tobacco West and Central Africa, Odiri Erewa-Megisson, emphasised the importance of government’s support for non-oil export businesses in growing revenue.
Erewa-Megisson said it was important that the government stepped up to support non-oil export businesses by offering incentives and allocating funds specifically to foster revenue growth in the country.
“The cost of running a business in Nigeria is hefty, compared to other places in the world. So, the government must provide incentives. That way, exporters can have a fair chance to compete with their counterparts in other countries and make a mark in terms of revenue growth.”
She stressed the need for the government to streamline regulatory agencies and alleviate the burdensome procedures faced by exporters, while commending the harmonisation of the foreign exchange (FX) rates. She said exporters should receive priority in accessing the FX market.
“All the barriers that are there – different agencies, duplicity of roles – there are so many barriers in place that impede businesses.”
Also citing structural inefficiencies and current foreign exchange policy as factors behind the weak growth in NOE, Muda Yusuf, CEO at CPPE, said “The weak non oil export performance is a reflection of the challenges bedeviling the real economy. These are issues bordering on productivity, competitiveness and efficiency.
“Globally, export business is driven principally by competitiveness, both in quality and price. The reality is that structural bottlenecks are major constraints to the competitiveness of our non oil export sector.”