Export of Nigerian aluminium products declines 22%

Export of made-in-Nigeria aluminium products and articles declined from $144.65 million reported in 2013 to $113.36 million at the end of 2014, data collated by Cobalt International Services but released by the Nigerian Export Promotion Council (NEPC), have shown.

Real Sector Watch’s analysis of the data shows that comparatively, aluminium exports had a 21.63 percent slump in 12 months.

Nigeria is an exporter of aluminium products to the Economic Community of West African States, Southern Africa, Eastern Africa and Europe.

Industry players may not be surprised as they have always said peculiar problems in the industry are clogs in the wheel of exports of products.

Robin Neville, managing director, First Aluminium plc, told Real Sector Watch that high cost of energy, unbridled influx of aluminium products and lack of incentives in the industry were key issues that will continue to put the sub-sector in a tight corner.

“We had to close down operations in December 2012, because production was and still is uneconomic owing to high energy cost,” said Neville said, in an exclusive interview. “We lost 200 employees in 2012 as a result. We had a situation before we went off. Our gas was cut off for six weeks, and we could not do anything. That was in 2011. In 2013, 22.7 percent of our costs went to power. We spend N20 million every month on power,” he said.

He said First Aluminium’s cost had been reduced by 75 percent because his firm had to stop the rolling side of the business, which often consumed much energy, as the cost of labour had equally risen.

Some industry watchers have attributed the situation to the absence of incentives in the export sector, stressing that exporters have to source their own funds at double-digit rates from banks, take care of transport and logistics as well as pay multiple taxes.

According to them, stopping of the Export Expansion Grant (EEG) since August 2013 have been a disincentive to the export sector and have given an undue advantage, especially to importers who evade duties.

“The uncertainty in the scheme is really affecting the performance of non-oil exports in the country. With the ongoing non acceptance of the Negotiable Duty Credit Certificate (instrument used for EEG), manufacturing exporters are incurring high cost on duties payment that the NDCC is meant to cover for their raw materials. And to a large extent, this is impacting on non-oil exports negatively,” said Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG).

“The potential of the EEG’s contribution to export growth is very huge and government must exercise caution with the ongoing suspension of the scheme and the outcome of the policy reversal may ultimately become disincentive for current and potential exporters as well as discourage those already in the scheme,” Oyelola said.

He said the Federal Government, through the ministry of finance, had paid N5 billion worth of unutilised NDCC, representing 4.8 percent of all the outstanding NDCCs owed non-oil exporters, and asked the Federal Government to further encourage non-oil export at this time when oil was depleting and economic diversification was paramount.

ODINAKA ANUDU & HARRISON EDEH