Non-Oil Exports as Critical Plank Towards Economic Diversification
James Emejo writes on Nigeria’s slow but steady progress towards economic diversification through increasing commitments in the non- crude oil exports segment
There’s no gainsaying the fact that the federal government has sustained its commitment to developing the non-oil economy particularly the export segment in recent times – and the numbers are beginning to go up.
Data from the National Bureau of Statistics (NBS) showed that in the first quarter of 2022 (Q1 2022), the country’s total foreign trade increased to N13 trillion, higher than the N11.70 trillion recorded in Q4 2021 and further higher than the N7.86 trillion in Q1 2021.
In a marked departure from the previous performance, whereby trade was often dominated largely by imports, leading to a wide deficit – total exports in the period under review stood at N7.10 trillion of which re-exports stood at N115.80 billion, while total imports stood at N5.90 trillion.
Also, total exports increased by 23.13 per cent when compared to Q4 2021 and by 137.88 per cent when compared to Q1 2021.
Although Crude Oil exports accounted for N5.62 trillion in Q1 2022, the Non-Crude Oil export component totaled N1.48 trillion of total exports which is a significant boost compared to previous performances.
Only recently, the Executive Director/Chief Executive, Nigerian Export Promotion Council (NEPC), Dr. Ezra Yakusak, disclosed that total non-oil exports had increased to about $2.60 billion in the first half of the year (January – June 2022), representing an increase of 62.37 per cent compared to about $1.60 billion and $981.44 million recorded in the first half of 2021 and 2020 respectively.
The NEPC boss pointed out that the country’s non-oil export sector recorded significant growth as about 4.15 million metric tons of products were exported during the period in spite of the global economic recession that affected most businesses in 2021.
Further citing pre-shipment inspection data, Yakusak, said half-year non-oil export performance was the highest since 2018.
This development is particularly heart-warming given that over the years, the government’s efforts towards earning foreign exchange through non-crude oil sources appeared not to have yielded positive results.
This is particularly worrisome, as the government had initiated several incentives to boost the non-oil export sector without commensurate outcomes.
According to stakeholders, the segment was riddled with corruption, bureaucracies by regulatory agencies, lack of innovations, and dearth of funds as well as lack of awareness among other limitations.
Role of NEPC
Essentially, the NEPC remains the apex institution for the promotion, development, and diversification of exports, and has worked over the years to achieve its mandate.
The council is among other things, saddled with the responsibility of coordinating and harmonising export development and promotion activities in the country, taking the lead in all national export programmes, as well as interfacing with international trade agencies on cooperation and capacity building.
Export Incentives
However, since his appointment as chief executive of NEPC in 2019, Yakusak had launched various initiatives towards promotion of non-oil exports, as well as partnering with all stakeholders to eliminate barriers in the sector.
There is no better time to drive the development of the non-oil sector amidst the volatility in the continued reliance on fossil fuels as the main source of government revenue – given that the world is fast transiting from fossil fuel to renewable and clean energy alternatives.
Crude oil revenues still account for about 80 per cent of government revenues, subjecting the economy to consistent external shocks resulting from global prices and economic crisis.
Nonetheless, the NEPC boss, while presenting the First Half Year Progress Report 2022, also disclosed that the Federal Executive Council (FEC) approved the sum of N375 billion to settle the backlog of claims for 285 beneficiaries under the Export Expansion Grant (EEG) Scheme.
The EEG is a post-shipment incentive managed by the council under the Export Incentives and Miscellaneous
Provision Act, CAP E19 LFN 2004.
The scheme has facilitated the further integration of the informal sector into the mainstream economy through the proper documentation and repatriation of export proceeds by beneficiaries, while the use of value addition as one of the criteria for accessing the fund has contributed to significant investments in the processing of raw produce.
Among other things, Nigerian non-oil products like processed leather articles, cashew, cocoa; ginger, rubber, sesame seeds and textiles have earned a distinction in several quality-conscious markets like the European Union (EU) and the USA.
New Era
Yakusak said, “I am optimistic that our vision to make the world a market for Nigerian non-oil export is not just lip service but a commitment to the people. This commitment is borne out of the desire to build a prosperous future for our people through diversification of the Nigerian economy by increasing the basket of exportable products from Nigeria.”
He insisted that the country’s survival largely depended on its ability to boost its non-oil exports, and enjoined Nigerians to embrace the council’s “Export4Survival” initiative in order to build a virile economy driven by the sector.
The Export4Survival campaign, which was unveiled on his assumption of office earlier in February, is a strategic initiative to increase awareness of opportunities in the sector and to highlight the benefits of exporting Nigerian goods and services to the overall growth of the gross Domestic Product (GDP).
The NEPC boss, also maintained that the current challenges confronting the local currency – Naira – could be simply resolved by strengthening non-oil exports in order to earn foreign exchange to beef up the external reserves, adding that one of the key priorities of his administration was to encourage value addition to raw material exports to be able to earn foreign exchange.
The NEPC boss added that during the period under review, different Nigerian products were exported to 112 countries, adding that of the 15 top exported products, urea/fertiliser recorded 32.49 per cent of total exports while cocoa beans, sesame seed, and aluminum ingots contributed 12.65 per cent, 7 per cent and 5.07 per cent respectively within the same period.
According to him, 572 companies participated in exporting Nigerian products during the half-year, adding that to facilitate the ease of doing business and seamless documentation processes, the council during the first half of 2022 registered 2,000 companies under its fully automated online registration platform.
He said, “I am also elated to inform you that processing time for applications is now 24 hours while 17.3 per cent of applicants were recorded to be women-owned businesses (WOB). The South West recorded the highest figure of exporters’ registration of 851, while the North Central came second with 417 registered exporters.”
He added that the NEPC is currently working with the Federal Ministry of Industry, Trade and Investment and other relevant agencies of government to end the rejection of Nigeria’s products in the international market.
To this end, he said the NEPC had concluded arrangements to embark on an inter-agency working/fact-finding visit to the United Kingdom to ascertain specific causes for the rejection of imported commodities from Nigeria.
He said, “This mission is to provide Nigerian export regulatory/facilitating agencies the opportunity of observing the processes of agricultural commodities import procedures and to also interact with port health and food import regulatory agencies at the border control points in the UK.
He said, “We, at the NEPC firmly believe that our survival as a nation depends on non-oil export. We therefore urge Nigerians to join our Export4Survival campaign train with a view to building a virile economy driven by the non-oil export sector.”
Improved performance
According to statistics, over 200 different products ranging from manufactured, semi-processed, and solid minerals to raw agricultural products were reported to have been exported within the first six months of the year.
Yakusak said, “It may interest you to note that unlike what was applicable in the past, the trend of products exported from Nigeria is gradually shifting from its traditional agricultural exports to semi-processed/manufactured goods.
The pre-inspection data revealed that manufactured products accounted for 36.28 per cent, raw agricultural products 33.35 per cent, precious stones 13.22 per cent, and others 17.15 per cent.
appetite for exports
The implementation of the exporters’ e-registration as part of reforms in the sector had further facilitated the ease of doing business and seamless documentation processes.
During the first half year of 2022, the council registered 2, 000 companies under its fully automated online application platform.
He said, “I am also elated to inform you that processing time for applications is now 24 hours while 17.3 per cent of applicants were recorded to be Women-Owned Businesses (WOB). The South West recorded the highest figure of exporters’ registration of 851, while North Central came second with 417 registered exporters.”
Also, there were lots of trade enquiries/complaints during the period under review.
According to the NEPC boss, a total of 1, 800 phone calls were received with Lagos State accounting for 800, Kano 350 and other states 650 respectively.
He said 32.5 per cent of the walk-in-enquiries was on the requirements for obtaining Exporters’ Registration Certificate, 5.37 per cent for grants (EEFP) and the Export Expansion Grant (EEG) while 17.15 per cent were for quality standards for products and how these products can be certified.
He said, “A total of 18.9 per cent of e-mails were on supplies of products such as sesame, ginger, turmeric, cashew, peanut oil, soya beans, charcoal, hibiscus flower, ogbono, melon, crayfish to name a few.”
The period also recorded significant interest in export activities, as 7.2 per cent of inquiries centered on the African Growth and Opportunity Act (AGOA), Exporters’ Registration 45.6 per cent, Training opportunities/Export Guide 20.34 per cent and 7.5 per cent on office address respectively.
Accordingly, the activities and reforms implemented by the council in recent times have stimulated growing interest in exporting activities around the non-oil segment.
To achieve greater success, the federal government must be committed to funding and supporting the sector in the interest of economic diversification and job creation for Nigerians.
