How Nigeria can promote agriculture through export competitiveness
For Nigeria to diversify its economy through agriculture, its products must be competitive enough to compete with other products in the international market.
This will help accelerate the development of the agricultural sector and provide foreign exchange for the nation.
Diversifying the Nigerian economy away from oil would require paying more attention to the making of agriculture and value-adding manufacturing export more competitive.
Agricultural products constitute the bulk of Nigeria’s non-oil exports. The shares of these products both processed and unprocessed in total value of non-oil exports is as high as 70 percent, according to analyst.
The non-oil sector grew by 3 percent in real terms in the Q3 of 2015. This was 4.5 percent points lower from the corresponding quarter in 2014 and marginally lower from the Q2 of 2015. In real terms, the non-oil sector contributed 90 percent to the nation’s GDP.
Growth in the non-oil sector was largely driven by the activities of crop production, financial services, telecommunications and trade, among others.
Good market penetration and effective packaging on the part of the exporter, as well as adequate financing from banks and government among others would be key to achieving export competitiveness, industry watchers said.
Several Challenges needed to be addressed in order to expand the country’s export for it to contribute to structural change and help promote agric sector growth, which are vital for sustaining economic growth and development. These challenges are:
Value addition
For a product to be export competitive, the non-oil exporters should add value to their products, embrace innovation and technology, while ensuring that their product are desirous of competing favourably in the international market.
According to analysts, it is very essential for non-oil exporters to process their raw materials, rather than push them out in raw forms, in order to boost their value and competitiveness in the global market.
Packaging
The world of product marketing is the world of appearance. Like the typical physicalist or materialist, the consumer believes in what he sees, feels, touches or perceives. The consumer tends to look at the physical attributes of a product first before considering whether it meets the standards or not.
“The international market is based on standard. You must meet the standard before your goods can go far, packaging is the key in export business”, according to Fidel Anyanna, programme director, Dalehan Limited said at a BusinessDay event.
Competitiveness is being able to give a project that can beat your competitors and the capacity to cope with the standard and strenuous demand of the international market, he adds. Nigerian exporters use to have their products rejected at the borders of almost all the countries a few years back. It was not only too expensive to repatriate products already exported but also embarrassing and discouraging.
According to Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG), packaging incentive had become necessary because meeting the taste of the European and American markets would require efficient packaging, which often could ramp up costs by between 20 percent and 30 percent, adding that this had the capacity to increase international market access for locally made products.
“Through the Standard Organisation of Nigeria (SON) and the National Agency for Food and Drug Administration and Control (NAFDAC), the Nigerian government can set up incentives to drive exports. Packaging is expensive, and if left in the hands of the exporters alone, it can increase their cost and reduce competitiveness of their products in the international market”, he further said.
Access to market
Good market penetration on the part of the exporter is important to export competitiveness by providing products that can beat that of other competitors.
Access to the international market is very challenging due to variety of potential differences in culture, political and economic environments and regulations between domestic market and international markets. Taking business global can provide numerous benefits including new opportunities and increased sales.
Finance
Increasing difficulties in accessing loans among micro, small and medium scale enterprises (MSMEs) have been a major problem for those who are in the export business.
To be able to meet the standard in the international market, adequate finance is needed.
According to Anyanna, Export finance is considered high risk by banks because export cut across two sovereign states and there are unrealistic assumptions by traders and the financiers.
“In export business, the need for up front fixed cost is high and incidentally, the large number of export firms in Nigeria are small sized firms”, he adds.
Josephine Okojie