How are Nigeria’s manufacturing exports faring in global market?

In the face of weak oil price and currency crisis, Nigeria’s attention has diverted to increasing its export base to shore up foreign reserves and bring back the glory days of the naira.

A closer look at the country’s export in the first quarter (Q1) of 2017 shows how agro commodities and finished products from Nigeria fared in the global market within the period.

The numbers from the National Bureau of Statistics (NBS) showed that export of manufactured goods in Q1 2017 were 45 percent more than the value attained in the last quarter of 2016 (Q4 2016).

On the flip side, importation of manufactured goods was 3.3 percent lower than the level attained in Q4 of 2016.

Another piece of good news was that agricultural export increased 82 percent in Q1 2017 compared with Q4 2016.

The data show that manufactured goods worth N1160.8 billion (21.93 percent of total) and raw materials valued at N271.2 billion (5.12 percent) were exported within the period.

Similarly, agricultural goods estimated at N230.1billion  (4.35 percent) were shipped out of the country. The agro commodities traded were sesame seeds, soya beans, frozen shrimps, cashew nuts and crude palm kernel.

It is common knowledge that Nigeria’s export is predominantly crude oil or minerals.

This was visible in the trade data, which showed that Africa’s biggest economy exported mainly mineral products worth ₦ 2,860.4 billion, which was 95.2  percent of the total export value within the period.

A comparison with the Q1 2016 shows that Nigeria may not have made progress in its non-oil export drive in the last one year.

In Q1 2016, for instance, mineral products worth ₦1,054.1 billion were exported. But this was only 83 percent of the total export within the first three months of last year.

According to the NBS, total manufactured goods exported within the period were valued at N98.2 billion. This was dominated by refrigerated vessels exported to Spain worth N20.6 billion. Also, good fermented Nigerian cocoa beans valued at N12.5 billion was exported to the Netherlands.

The data likewise showed that urea, computed as raw material, worth N2.4 billion was exported to United States. Double salt and mixture of ammonium sulphate worth N2.5 billion were exported to Brazil. Leather valued at N1.8billion was exported to Italy.

However, this may not tell the whole story considering that a number of products leave Nigeria without being recorded.

Between 2009 and 2013, for example, the cumulative total of these un-captured or un-recorded non-oil exports were valued at $ 46.19 billion, according to BusinessDay calculations from International Trade Centre (ITC) data.

The ITC obtains data on non-oil exports from export destinations whereas recording agencies at the Nigerian ports do so at the point of exit.

Real Sector Watch’s independent findings show that Nigeria exports other items such as bathroom slippers, aluminium and scraps, plastics, beverages, wood, packaged foods such as cooked yams and stew, sausages, biscuits and rice, among others.

Nigeria’s packaged foods are in high demand in Ivory Coast and Senegal, just as its bathroom slippers are needed in Burkina Faso, according to exporters.

But the volumes are small and the most of the exports are done mainly to the West Africa.

However, the first quarter data from the NBS is a reminder that the value of manufacturing exports from Nigeria is still low. For instance, what occupied a great percentage in export of manufactured goods were refrigerated vessels and processed cocoa beans. So, where are beverages and food, which occupy 45 percent of Nigeria’s manufacturing sector? Where are the cables and wires (which are better than the Chinese) or drugs, finished Aba shoes, and fashion products?

Similarly, the goods that dominated the raw materials export section were urea, double salt, mixture of ammonium sulphate and leather, which is turned into pairs of shoes by Italy and brought into Nigeria.

“You cannot export more than you produce,” said Joel Agbiyi, manufacturer in south-eastern part of Nigeria.

“Your products first of all need to compete locally before exposing them to outside competition. Let me tell you, with the cost of production in Nigeria, only few manufacturers can take the risk of export. When the government says ‘export’, I laugh because many Nigerian exporters are really struggling in the global market due to poor competition,”Agbiyi said.

Jon Tudy Kachikwu, CEO of Jon Tudy Interbiz, an exporter, wondered how export of finished goods would improve when multiple agencies would collect money from exporters.

Kachikwu said until exporters were allowed to take their proceeds at the market rate, the country might not make headway.

Ede Dafinone, chairman, Manufacturers Association of Nigeria Export Group (MANEG), told this newspaper that one of the reasons for the country’s low non-oil exports was the Export Expansion Grant (EEG) implementation.

“Without the EEG most exporters are reluctant to go into the global market,” Dafinone, who is also the CEO of Sapele Integrated Industries, said.

“The EEG was meant to reduce the cost of exports for products going outside the country, but since its suspension, exporters have been reluctant. It has just been reinstated and things could change once its implementation begins in full,” he said.

Manufacturers who spoke with Real Sector Watch identified high energy cost, weak naira-dollar exchange rate, low local patronage, and lack of good infrastructure as reasons why manufacturing exports were not doing well in the global market .

“The Manufacturers Association of Nigeria (MAN) believes that given the reality of today’s world and the current stagflation in the economy, our nation can ill-afford to rely on exporting raw commodities such as crude oil and natural gas, solid minerals and unprocessed agricultural products. We need to break this cycle and invoke deliberate efforts to industrialise our economy, which is consistent with government policy on improving ease of doing business,” MAN says in a recent statement.

 

ODINAKA ANUDU

 

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