World Bank blames poor logistics, weak infrastructure
MAN, export seek government intervention
National Single Window will bring relief – CPPE
Nigeria’s quest for diversified foreign exchange earnings away from oil not feasible for now as revenue from the manufacturing export sector plunged 166 per cent to N778.4 billion from the N2.1 trillion height reached in 2019.
Operators in the sector blamed poor state of infrastructure, logistics and other binding constraints which they said have worsened the operating environment in recent years.
The trend since 2019 has been downwards recording significant decline to N960.7billion attributed to COVID-19 in 2020, while a minor recovery was recorded in 2021 at N1.15trillion. But in 2022 a huge drop to N781.1billion was recorded and another significant drop to N778.4 billion was recorded in 2023.
Within the same period, the share of manufacturing exports to non-oil exports also dropped to 24.8 per cent in 2023 from 82.4 per cent in 2019.
In its Africa Pulse publication, the World Bank specifically blamed the country’s dwindling foreign trade on poor infrastructure and inefficient logistics, among other factors.
According to the World Bank, the cost of trade in Nigeria and Ethiopia is four to five times higher than what obtains in the United States due to insecurity, higher transportation costs, topography and poor road infrastructure.
“Studies from the Africa region consistently find spatial differences in prices of imported goods (food and non-food) as well as non-traded agricultural staples, indicating that markets are not well-integrated, and retail prices of products are affected by distance.
“For instance, trade costs are four to five times higher in Ethiopia and Nigeria than in the United States, due to poor road infrastructure, low competition in the transportation sector, and topography,” it stated.
The report further noted that the consequences of these distortions include preference of African producers to sell locally rather than export.
In a similar vein, statistics provided by the World Trade Organisation (WTO) revealed that South African manufacturing export value was $46 billion in 2022, which is 15 times higher than that of Nigeria which was $3 billion in the same year.
Manufacturers and operators in the export ecosystem have lamented that the harsh business environment in the country is making local products uncompetitive globally.
They noted that many businesses that are into exports have gone into extinction, even as several multinationals have also exited Nigeria over the past few years.
MAN, exporters seek govt intervention
Giving insights into what is happening in the sector, Director General of the 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.”
Speaking to the development, Chairperson of the Export Group of MAN (MANEG), Odiri Erewa-Meggison, stated: “Indeed, it’s concerning to see exporters not doing as well as they could.
“As you must appreciate, the cost of doing business in Nigeria has increased by more than 300 percent. Just take a cue from the recently increased electricity tariffs.
“How can exporters compete on a global scale without a deliberate intervention from the government? All hands need to be on deck.
“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 harmonized regulatory approach would be preferred.
“Higher costs in electricity make it more difficult to produce. Biggest elephant in the room is the incentives which 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 slicing the cost of production, like NAFDAC registration. “So from 2020, many small businesses emerged into production, and some of them have entered the export market.
“Many of such businesses have gone into extinction because of various policies that are anti-business.
“When people have even found a way to come into business through export, they are confronted with so many bottlenecks, bad policies and insecurity.
“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.
“These, I think are places where the government should pay attention.”
Exporters must adhere to trade norms – NEPC
Meanwhile, the Nigerian Export Promotion Council (NEPC) has charged Nigerian exporters to adhere to the requirements for exporting products to different countries.
Speaking at a recent sensitisation workshop aimed at enhancing Nigeria’s export potential and strengthening trade relations with China, Mrs Nonye Ayeni, Executive Director of NEPC, emphasised the need for exporters to adhere to the General Administration of Chinese Customs (GACC).
Ayeni, who was represented by Mr Samson Idowu, North-Central Coordinator of the council, said that GACC has clear but stringent requirements for exporting products to China.
“Understanding the registration process, documentation and regulatory changes is paramount for successful export. Understanding the requirements set forth by GACC is crucial for Nigerian exporters to ensure smooth and successful trade with China,” she stated.
National Single Window will bring relief – CPPE
In his comment, CEO, 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.
Yusuf stated: “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.
“So, first, there will be an impact in terms of the efficiency because when you bring technology into a space, the value proposition is the efficiency that it brings. And efficiency reduces cost of operation, it reduces the time it takes to conduct the business”.
Nigeria loses $4bn to import-export infractions annually – Tinubu
At the recent launching of the NSW project in Abuja, President Bola Tinubu stated that Nigeria currently loses about $4 billion annually to import-export infractions due to bureaucratic bottlenecks, especially at the ports.
According to the president, the NSW project is expected to ensure 24-hour clearance of goods at the ports and simplify trade by providing a digital platform for all import and export-related activities.
Tinubu said: “This initiative will link our ports, government agencies, and key stakeholders, creating a seamless and efficient system that will facilitate trade like never before. It will reduce the need to deal with multiple agencies in multiple locations to obtain the necessary papers, permits and clearances to complete their import or export processes”.