With the fall in the global price of crude and the naira’s poor performance against the dollar, policymakers and the private sector have begun a gradual shift towards non-oil exports. However, the sector has not fared well over the years due to some challenges, Niyi Adekoya writes.
When the European Union banned the exportation of several agricultural produce from Nigeria last year, the pronouncement made headlines. The affected items include beans, sesame seeds, melon seeds, dried fish and meat, peanut chips, palm oil and leather.
Since then, stakeholders across the value chain have held countless conferences and seminars to educate people on the importance of improving the quality of the production processes. However, the problem of agricultural exports and indeed the entire non-oil sector has been made more complicated with the influx of importers, customs agents and all manner of businessmen seeking to raise foreign exchange or generate income through exports.
An export consultant and Chief Executive Officer of MultiMix Academy, Mr. Obiora Madu, described the rush for non-oil exports as a delicate situation for Nigeria, which must be handled carefully.
He said, “Government and its agencies must get ready to checkmate fraudulent people who in this race for forex are going to export rubbish out of Nigeria and worsen the situation.
“It will get worse; every one you meet now – transporters, freight forwarders – is asking for information on non-oil export. As an export consultant I get these calls very often.”
He listed one of the basic factors for the success of non-oil export trade as building capacity. To him, building capacity is a specialised activity, which involves both holding seminars and practical demonstrations on the field.
He said everyone in the non-oil export value chain right from the farms or mines up until the point of exports would have to be sensitised to international standards.
Although he acknowledged the efforts of the Nigeria Export Promotion Council in the development of non-oil exports, he added that the council was unable to build capacity as it had no structure for it.
He said, “Exports thrive on a tripod: development, promotion and capacity building. As their name implies, NEPC’s key function is promotion. It has tried though to cut across into these other areas but the fact is that structure-wise, there must be changes.
“If we want to take non-oil exports seriously, we need to review the entire process and policies. It is not solely the business of NEPC and Ministry of Trade and Investment. But it also includes the Ministry of Agriculture, Immigration and Foreign Affairs; all these people have something to do with exports. When government agencies are working in different directions, you can’t get a positive result.”
Madu called for a critical look at export policies and restructuring after goals have been determined.
He stressed the importance of creating policies with a lifespan of not less than five years so as to enable business owners to plan and make investments.
He said, “Government should create Key Performance Indicators that will be used in judging stakeholders across the export chain. They should make it impossible for anyone who wants to create bottlenecks for exporters.”
Meanwhile, more and more investors rush daily into Nigeria’s non-oil export trade. The Federal Government last week said over N500m had been raised as licensees and leaseholders in the solid minerals sector.
It had previously threatened to revoke at least 1,500 mining licences and leases due to dormancy, resulting in a struggle by the licence holders to activate their operations.
The President, Miners Association of Nigeria, Alhaji Sani Shehu, had in February listed some of the factors militating against the sector as lack of adequate funds and inadequate mining equipment.
He accused commercial banks of frustrating indigenous miners in their quest to access the Small and Medium Enterprise intervention fund.
“Normal commercial lending conditions should not be applied to the SMEs fund. Most commercial banks prolong the process and the miner gets frustrated after three or four months of chasing a loan facility. The intervention fund is meant to be a solution and so we should access it. We are competing in a disturbing scenario; other miners from Asia get their loans at two per cent with over 20 years to repay.
“We are happy to have it at nine per cent but at least let us have access to it. Presently, only about 10 per cent of the miners in the country have accessed that fund,” Shehu said.
He had also called for the restriction on the importation of solid minerals used as raw materials by industries in the country.
Shehu said, “In many cases, we have the industrial minerals that can be used as raw materials for our industries, which are still imported. We appreciate the fact that we do not have the capacity to give the industries 100 per cent of what they need.
“However, we are advocating that government compels the industries to source for their raw materials from us and only purchase the amount that will bridge the gap of what we are unable to satisfy. Allowing these industries to import minerals only leads to job creation overseas while we battle unemployment here.”
The Shippers Association of Lagos had also indicated the interest of importers in the export trade, mainly timber and solid minerals.
The President of the association, Jonathan Nicol, had in an interview with our correspondent said the development had risen due to the current unprofitable nature of importation business.
He said, “What many of us are simply doing is going into some aspects of export to cover for the period of lull in imports. There was a time when many importers were moving into the timber trade; that is the exportation of untreated wood.
“They invested so much in the purchase of untreated logs, which were being exported until the Customs stepped in. You know the exportation of untreated wood is prohibited in Nigeria. Those involved were caught and the Comptroller-General of Customs warned them. After that incident, I expect things would be slow in that area.”
Nicol added that the solid mineral sector was another area of interest for importers, some of who had already applied for prospecting licences.
Earlier in the year, leather makers in the country had said about N1bn was needed to upgrade the value chain in the sector to international standards.
They had decried the loss of a huge chunk of the international market following the EU ban on Nigeria’s leather exports.
The National Secretary, Association of Leather and Allied Industrialists of Nigeria, Mr. Ken Anyanwu, said the improvement in the quality of Nigeria’s leather products had become imperative.
He said, “We don’t have the kind of equipment that can help us manufacture products of international standard. Unfortunately, the Federal Government has not come out with strong support for the industry.”
Anyanwu said the leather products’ makers had sought the assistance of the Abia State Government, in addition to the support from their cooperative societies for the purchase of vital standard equipment to meet the EU deadline.
“The facilities are expensive; they cost between N500m and N1bn. Already, sensitisation to the National Quality Infrastructure spearheaded by the EU and the United Nations Industrial Development Organisation has begun. The entire value chain of the leather sector is in need of overhaul, right from the rearing of livestock to the tanneries and the leather factories,” he said.
Anyanwu also lamented that the restrictions posed by access to foreign exchange and the fluctuations in the value of the naira had discouraged investors.
He said prospective investors were sceptical about making any commitment and would rather wait to see some stability in the value of the naira and the economy as a whole.
Presently, over one million pairs of shoes are exported every day from Aba, reaching an estimated 51 million pairs annually. The shoes are said to be purchased by traders from African countries, mostly Cameroun and Congo Democratic Republic.
Other leather items such as bags and belts are also exported from Aba and other places informally on a weekly basis to other African countries with Cameroun as the major transit market.
