‘Un-competitiveness remains biggest challenge facing Nigerian exporters’

Ede Dafinone is the newly elected chairman of the Manufacturers Association of Nigeria Export Group (MANEG) and CEO of Sapele Integrated Industries Limited. In this interview with ODINAKA ANUDU, he says his group will help Nigerian exporters to overcome the challenge of un-competitiveness in the global market and will support the country’s diversification drive.  

What would you like to be remembered for by the end of your tenure?

This year, 2017, is critical for the country in terms of growing the non-oil export. The role MANEG can play to assist the government diversify revenue away from oil to non-oil exports is paramount in our objectives. In specific terms, we currently have 200 members of MANEG  but approximately 60 are active. So it’s to convert non-active members to active and also bring on board members of MAN, our parent body, who are exporters to be members too. So we are looking at growing the membership base but members must get value for their membership. One of the things we did recently was to offer free training for completion of the Export Expansion Grant (EEG) application forms and also free training for the completion of ECOWAS Trade Liberalisation Scheme (ETLS) forms.

We had noticed at the closure of deadline to submit baseline data that some of our larger enterprises had the problem of completing their forms on time. So we offered our members training on the completion of the forms. In terms of EEG, the government has started to conclude on the reforms that were started some time ago. Several meetings have been held and government seems very likely to announce a new EEG regime, a more robust regime that will not allow abuse of the programme and would give government the confidence to know that the EEG has been collected by deserving exporters. We are participating with government in this programme and we encourage our members to participate in order to grow the non-oil export base.

What are you expecting in the new EEG regime?

I should say that government is yet to formally announce the new EEG programme, but I can give you the thinking on where the programme is going. Government is considering reduction on its rates. A finding from the technical team at the Nigerian Export Promotion Council (NEPC) is that average rates offered in countries on the same level of development as Nigeria is significantly lower. So government will try to reduce that to benchmark it with countries of the same level of development. Also, certain key sectors are identified as those that need the grant more. So one of the things government is doing is to emphasise value addition, trying to reward companies that add value to their production, trying to encourage companies to industrialise and try to use our raw materials locally, instead of exporting raw materials abroad. The other aspect is on the Negotiable Duty Credit Certificates (NDCCs) certificates previously used as settlements for grants. A lot of our members are holding these certificates which are exchangeable for import duty payments but could not utilise them before the EEG was suspended. Our understanding with government shows modalities have been put in place to replace the NDCC certificates with instruments that are transferable. We hope that within six to nine months, exports holding the certificates will realise the value.

Do you think export numbers are rising?

I would say definitely not, even though there has been shift to non-formal export. I don’t think that the total numbers have gone up. Regardless of the EEG, Nigeria is still going through recession, which has put pressure on manufacturers, exporters and shrunk the profits we were making before. In fact, some of our members have ceased operations in the past two years.

Is there any record of members who have shut down in the last two years?

It’s very hard to say because sometimes a company may operate five income streams of which one is export. They may have stopped that but the other four are still continuing. Also, sometimes a company may seize operation but still retain membership of MANEG. We have started contacting members to see how they are faring and what they are doing, but that survey will be ready in third quarter this year.

Does it mean exporters cannot do without EEG?

The EEG was introduced to redress some imbalance in costing, to compensate Nigerian exporters for the poor infrastructure available in terms of roads and power, to help exporters become more competitive in production of their goods. For example, the additional cost of running a power generating set adds 10 to 20 percent to cost of production, which, in some countries, don’t happen. That was the thinking behind the EEG and many countries around the world also offer export incentives to allow manufacturers penetrate markets. That is what the EEG is designed to do. There are lots of countries having difficulties breaking into new markets and the EEG allows them to offer their products at lower costs in order for them to have a market share and compete. We talk about EEG as if it is the only intervention of the government. Think back to government’s intervention in airlines, agriculture and others. These are governments identifying special attention to make exporters more competitive or allow them grow and stand. EEG is just example of one such policy of government.

Most of Nigeria’s exports are still agro products, mostly raw. How do we ensure that manufactured products take the centre stage in exports?

You have to look at the Nigerian economy for what it is. Our advantage lies on growing a wide variety of crops. We have a large range of vegetation and good climatic conditions. So the starting point for development is to invest in areas you have strategic advantage. I strongly support the economic theory that government should encourage agric production at a level the success of agric production will lead to manufacturing until it finally arrives at the consumer goods. The profits of the initial venture will lead to backward and forward integrations, which will lead to the final aim, which is value addition for the final consumer market. So if we invest in agric, that is because that is the point we are at in our strategic development.

What are the key challenges facing exporters?

The key problem still remains competitiveness with other countries’ products. The cost of power, whether it is from distribution companies (DisCos) or from private power generated in terms of diesel is still a significant burden on companies. There are also costs of security and others. The export community had problems in the last few months trying to get value for their exports. The CBN rule says exporters will have unfettered access to their money but this has been guided by changing set of rules, which has dented the confidence of exporters.