Non-oil export: How Nigerian firms lost out in 2015

As reported exclusively by BusinessDay, the value of Nigeria’s non-oil export in 2015 fell by 59 percent, from $2.71 billion in 2014 to $1.10 billion. When compared with $2.97 billion earned in 2013, this would represent a 63 percent drop.

Several Nigerian firms played key parts in the non-oil export sector in 2015.  They exported commodities and products such as cocoa and sesame seeds, tobacco, flower, noodles, footwear and other agro-allied goods within the period.

Olam Nigeria Limited topped the chart with an export value of $87.6 million. Olam, a major food and beverage firm, exported cocoa, cashew, sesame, noodles, juice and other beverages.

However, Olam’s 2015 value was a downgrade of 66 percent when compared with $259.2 million exports reported in 2014, according to the non-oil export data compiled by Colbalt International Services, one of the agencies that monitor and capture Nigeria’s exports.

Following Olam is Bolawole Enterprise Nigeria Limited, which exported goods worth $61.04 million in 2015. Bolawole is an agro-allied firm that deals mainly in cocoa beans.

The firm’s export value, however, represents a 52 percent drop from $127.52 million worth of exports in 2014.

The British American Tobacco Nigeria Limited, a major producer of tobacco products, exported products that were worth $40.85 million. Just the previous year, this company had shipped out goods worth $100.5 million. Hence the 2015 export value represents a 59 percent crash from what was obtained in 2014.

AIS Trades& Industries Limited was also a force to reckon with, as it came fourth on the table.

AIS, which deals in sesame seeds and hibiscus flower, exported commodities valued at $40.6 million, as against the 2014 value of $63.2 million. In other words, the firm fared 36 percent lower in 2015.

Next is Fata Tanning Limited, a major leather dealer and shoe maker based in Kano, exported products estimated at $37.8 million within the period. Like others, the company lost 42 percent when compared with $65.4 million worth of products shipped out the previous year.

Similarly, Mamuda Industries Nigeria Limited, a major distributor of leather, agro-allied materials and sacks, had an export value of $31.5 million in 2015. The company’s export in 2014 was, however, valued at $116.4 million, implying that this company had its export fall by a whopping 73 percent in 2015.

Metal Africa Steel Products Limited exported steel products valued at $28 million last year. This, nevertheless, represents a 57 percent drop when compared with an export value of $65.4 million reported in 2014.

Also, Notore Chemicals Industries, Nigeria’s chemicals and agro-allied company, shipped out fertilisers worth $25.8 million to Africa, Europe, the Americas and other parts of the world in 2015.But this was a downgrade of 58 percent when juxtaposed with $61.9 million export value of 2014.

Notore currently operates the only urea plant in the Sub-Saharan Africa.

Notore is followed by West African Tannery, a major dealer in leather and shoes. West African Tannery moved goods worth $25.6 million to several countries in 2015. Like other firms, West Afrcan Tannery’s export represents a 58 percent slip from $61.2 million obtained in 2014.

Last on the list of the top ten exporters is  Sun and Sand Industries Africa Limited, a key player in steel, solid minerals and aluminium. Sun and Sand exported products estimated at $24.2 million in 2014. This represents a whopping 79 percent crash from $112.7 million of 2014.

Other exporters shipped out goods estimated at $789.2 million, representing 53 percent lows from $1.68 billion reported by this category of exporters in 2014.

Questions have arisen as to why Nigerian exporters fared badly in 2015. All the exporters who spoke with Real Sector Watch pointed fingers at one direction: Absence of incentives for the export business.

Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG), said this was not unconnected with the suspension of the Export Expansion Grant (EEG), which had reduced the competitiveness of Nigerian commodities and products in the global market.

The EEG was established in 2005 with a view to reducing production, distribution and logistics costs for non-oil exporters so as to enable them compete effectively in the global market.

But between 2005 and 2013, the scheme, managed by the Nigeria Customs Service (NCS), was suspended eight times. The final lap of the suspension was in August 2013, when the NCS stopped honouring NDCCs from non-oil exporters.

“If we are serious with the diversification, we have to resuscitate the EEG because exporters are seriously suffering. As it stands today, we are the ones to save the economy from its current crisis because we can bring in foreign exchange. But you can see the impact of lack of incentives on non-oil export since 2014,” Oyelola said.

Ede Dafinone, an exporter of crumb rubber and CEO of Sapele Integrated Industries, said the situation might go from bad to worse except the government resuscitated the scheme to boost export.

Dafinone said the uncertainty in the scheme would not help Nigeria’s export business.

Apart from incentives, prices of some commodities fell in the global market in 2015. Also, absence of improved seedlings policy clarity, and stoppage of fertiliser supply after the 2015 general election were equally fingered.

“Lack of policy direction affected us too in 2015. We didn’t really know what to expect, so some of us adopted a wait-and-see disposition in our export,” said an agro exporter in Lagos, who did not want his name in print.

Worse still, there were challenges relating to production of some agricultural commodities. Cocoa, for instance, was badly affected by weather and aging trees, which did more harm than good. This was happening at a time global cocoa prices were rising.

“There was a serious weather problem,” Rabo Adhuze, chief operating officer, Centre for Cocoa Development Initiative told Real Sector Watch.

“Most of the crops in the south west of Nigeria were affected. It was only in Cross River that we had some respite, but yields in the south west dropped,” Adhuze said.

Daniel Adewale, former crop scientist at the Cocoa Research Institute of Nigeria (CRIN), said at the USAID/ Nigeria/ NEXTT training recently, that Nigeria currently produced less than 500kg of dry bean per hectare.

“This very low level of cocoa production has made it necessary to change protocol of production,” Adewale said.

“The country is no longer getting full economic benefits from growing cocoa because most cocoa fields are old and small as well as the poor genetic qualities of the planting materials used,” he added.

Africa’s largest economy has had its revenue plunge by as much as 60 percent, owing to oil price lows. The country has put a number of control measures to protect the foreign exchange market and reduce penchant for foreign goods.

Its legislators recently passed a N6.07 trillion budget targeted at propping up the economy and stimulating economic activities. But there are still key structural issues.

According to Adedapo Adelegan, president and chairman of council, Nigeria-British Chamber of Commerce (NBCC), said the federal government must create the right environment for investors.

Adelegan said there should be support for non-oil exporters, adding that the government should make agriculture attractive to the youth in the country.

“We need to have an economy. We believed a lie on oil for a long time and now is time to change,” he said, while addressing select journalists in Lagos, recently.

Jaiyeola Olarewaju, executive secretary, Organised Private Sector Exporters Association (OPEXA), said the root cause of the decline in non-oil exports was a legacy of the past administration inherited by the present government.

Olarewaju said government should clear the backlog of unutilised Negotiable Duty Credit Certificates (NDCCs) under the extant policy (EEG) to sustain about 11 million Nigerians employed directly and indirectly in the non-oil export sector.
“It is paradoxical that one sector that has the potential to cushion the commodity shock has been paralysed due to lack of inter-ministerial coordination,” he lamented.

 

ODINAKA ANUDU