Improving Nigerian export sector
The Nigerian export sector is bedevilled by a number of woes. It is a well-known fact that power cost in Nigeria occupies 40 percent of the entire expenditure in agro and manufacturing value chain.
Annual self-generating capacity in the manufacturing sector is 13,223 megawatts. Expenditure on alternative energy in the sector totalled N117.38 billion in 2017 and N129.95 billion in 2016, the Manufacturers Association of Nigeria (MAN) said. The only reliable railway in Nigeria at the moment is Abuja-Kaduna, and broadband penetration is just 30 percent.
These are not good signs for struggling manufacturers. But beside this, some of the problems are self-inflicted or caused by other internal factors.
For example, a Nigerian businessman exported cans of 35cl malt drink numbering into hundreds of thousands to Kenya. The products were on display in the East African country until they caught the attention of the Kenya Bureau of Standards (KEBS), which subjected them to measurement tests. The products were subsequently found to be 32cl, rather than 35cl. The KEBS withdrew them from the Kenyan market, banning the malt drink—including its supplier—from the country for good.
Also, some Nigerian exporters have been victims of fraudulent freight forwarders who inserted banned substances into their containers during product re-packaging process. There have also been cases where products stayed on containers for one month because the exporter could not get certification from regulatory agencies, exporters say.
The state of Apapa roads and Nigerian ports are also big hiccups.
“Nigerian exporters thank God whenever they are paid at all for their products. This is because products from Nigeria are always downgraded,” Fred Uwheraka, CEO of Frijay Consult Limited, an export firm, said at a recent Lagos Chamber of Commerce and Industry (LCCI) symposium held in Lagos.
Uwheraka explained that exporters need to get proper information about the needs of each market before going in.
For full year 2017, total exports were N13.598 trillion, 59.47 percent higher than N8.52 trillion in 2016.
Out of N4.69 trillion export done in the first half of 2018, crude oil export stood at N3.58 trillion, accounting for 76.3 per cent of the total exports. Non-oil exports amounted to N1.1 trillion, according to data from the National Bureau of Statistics (NBS).
Low oil price and Niger Delta militancy sent Nigeria into recession in 2016, with its attendant dollar shortages. Manufacturers and importers were hurt as they scrambled for the greenback to import inputs and products respectively. Nigeria’s economy is vulnerable as oil remains 75 to 90 percent provider of foreign exchange and revenue, despite contributing only 12-14 percent to the Gross Domestic Product. Inflation is dropping but has remained double-digit for at least 20 months.
“The challenges of exporters have to do with quality and exportation of primary products. The quality issues are mainly due to knowledge gap on the part of exporters, dubious practices among exporters and local suppliers, inadequate quality inspection agents, inadequate lab for testing and sometimes unprofessional and dubious inspection agents,” said Bamidele Ayemibo, chairman of Export Group of the LCCI.
Ayemibo explained that paperwork in international trade is critical, given that the buyer will likely pay for the goods before receiving them.
Experts stress the need for exporters to understand the market they want to play in. Realities often confront exporters when they get to new markets to discover that their textbook information or knowledge is different from reality.
ODINAKA ANUDU