Nigeria: The Need to Overhaul Non-Oil Export Sector

James Emejo writes that the economic diversification agenda requires an emergency declaration in the non-oil export sector that is plagued by regulatory lapses among other limitations

Although the government’s regulatory agencies are primarily set up to among other things ensure orderliness and sanity in all fields of endeavour and to fast track the development of their relevant sectors by removing encumbrances to growth.

For example, the Standards Organisation of Nigeria (SON) regulates the activities of companies and their products in terms of setting the operating standards and quality administration for the manufacturers and importers. But the regulations and rules put in place are expected to also encourage the growth of the players in that sector and not strangle them out of existence.

This is because it is when such industries and manufacturers record growth in their respective businesses that the government also makes money in terms of revenues from taxes among others.

Therefore, such regulatory agencies are expected at all times to craft policies that facilitate the progress of the sectors they supervise; while also ensuring that they comply with laid down guidelines for healthy competition and public safety.

Regulatory gaps

In recent times, however, regulatory agencies have been found wanting in living up to their primary responsibilities and have helped to make the business atmosphere in the country unbearable for new and existing players.

In the country’s non-oil export sector in particular, the segment had been struggling for decades owing to its continued neglect by successive administrations as the dearth of infrastructure and expertise had rendered the sector uncompetitive on the global stage. The issues of multiple taxation and duplication of processes are some of the vexing concerns.

Yet, experts are of the view that for the country to surmount its current economic predicaments increased local production and a vibrant non-oil sector remained critical.

The present administration’s agenda to diversify the base of the Nigerian economy also has its success tied to a vibrant export base to among other things improve foreign exchange inflows into the economy, thereby strengthening the local currency, aiding job creation and helping to correct the current trade imbalance.

Poor Export Facilitation

More than anything, operators in the non-oil export sector are overwhelmed by the challenges of the sectors most of which they attributed to the roles played by government regulatory agencies who become a clog in the development of the export segment, rather than regulatory strive to support the expansion of the industry in the general interest of the economy.

Yet, according to Vice President Yemi Osinbajo, it is the responsibility of the government at all levels to lead the charge towards unlocking the potential of the non-oil sector.

He admitted that the challenge facing the non-export economy remained huge, especially in the light of what had transpired in the last eight years.

The Vice President, at the maiden “National Conference on Non-Oil Export,” which was recently organised by the Nigerian Export Promotion Council (NEPC), said, “The country must seek to achieve a situation where regulators see themselves as facilitators of business,” noting that the non-oil sector had been lagging behind other sectors namely tech and services in its contribution to economic growth.

Further reiterating the role of regulators in shaping a vibrant non-oil export sector, Osinbajo said, “This has been the focus of the ministry of Industry Trade and Investment, especially with the MSME clinics where we try to show that the very best approach is for regulators to see themselves as those that must promote business.

“Our jobs as government is to assiduously enable businesses, especially with the regulatory policies with its procedures and processes. This must be coupled urgently with the supporting infrastructure needed to aid production distribution and network.”

The VP also said, “The commitment to deepening our production and export capacity in the coming months and years is also evidenced by the national development plan 2021-2025. The strategic objective of the National Development Plan shows clearly where we are headed to in terms of the non-oil export which includes the establishment of a strong foundation for a diversified economy to invest in critical infrastructure enabling human capital, improving governance and strengthening security all of which we expect will contribute significantly to achieving the national development aspiration.

“We have to focus all our attention on being productive, local investment is more important than foreign investment, once we show that our sole focus will be on productivity which will be a guiding focus for local regulatory agencies. What we are interested in is productivity, which will bring jobs. We are determined to accelerate our efforts through holistic stakeholders’ input.”

The Minister of State for Industry, Trade and Investment, Mrs. Maryam Katagum, acknowledged the efforts of the NEPC in organising the programme pointing out that it was in line with the federal government’s economic diversification drive, adding that the country can no longer depend on oil as its major source of foreign exchange earnings.

Commenting on some of the initiatives by the government to reposition the non-oil export sector, the Minister noted the recent Ad-Hoc Committee on Agro-Exports set up by the Vice President, under PEBEC, had come up with recommendations which are currently being implemented under the National Action Plan (NAP) 7.0 as well as “strengthening and expansion of our National Agric and Agro-Products Development Initiative (NAADI) offices throughout the federation. This is aimed at the identification of new commodities and improving the value chain for agricultural products.

Katagum further encouraged the Organized Private Sector to deepen its partnership with the government for the sustained growth of the economy.

On his part, the Executive Director/Chief Executive, NEPC, Dr. Ezra Yakusak, said the conference could not have come at a better time considering the plethora of challenges bedevilling the non-oil export sector including the adverse effect of the COVID-19 pandemic on export operations, the distress calls of practitioners on regulatory constraints and restrictions on export business, and the dire need to strengthen the diversification agenda of the federal government.

He said, “Of greater concern is the Nigerian non-oil export performance in recent times in comparison to import. Report from Pre-shipment Inspection Agencies (PIA) revealed significant growth in export proceeds in the last 5 years 2017-2021 from $1.2 billion to $3.4 billion as against an annual average of $22 billion in food importation alone into the country.

“To close this gap, concerted efforts are required from all practitioners in the non-oil export value chain… .We at the NEPC believe firmly that our survival as a nation depends on non-oil export.

“We have therefore scaled up efforts to mobilise citizens to engage meaningfully in the sector which is the nation’s next line of defense.”

Manufacturers’ Concerns, Recommendations

As stakeholders sought solutions to the non-oil export challenges, the Manufacturers Association of Nigeria (MAN) said it is imperative for Nigeria to address the perennial challenges confronting businesses in the country.

It said the manufacturing sector was particularly hit and deliberate action must be urgently taken to boost its competitiveness.

MAN further highlighted the need to review and re-energise the vision of NEPC (Export For Survival) & CBN (RT200 FX Programme) in the light of the forgoing presentation, adding that if the way forward and proposed solutions offered are favourably considered, it will encourage and empower the exporter, expand their market, enhance the inflow of non-oil export proceeds into the country as well as ameliorate the disruption of Nigerian non-oil export potential.

The association had pointed out that export trade is generally considered as a veritable instrument for sustainable economic growth and facilitates improved foreign exchange earnings, strengthens the balance of payments, encourages the development of export-oriented industries in the manufacturing sector, increases the profitability of firms, creates jobs and increases government revenue through taxes, levies, and tariffs -all of which will cumulatively accelerate economic growth.

It said, “Historically, the economy of Nigeria was buoyant during the pre- and post-independence years because of huge earnings from non-oil export like cocoa, cotton, groundnut, palm oil etc. The economy was so strong that it financed an appreciable number of capital projects without borrowing and the export market of the country was reasonably developed.

“However, the discovery of crude oil brought a shift that made the country to majorly depend on the oil sector to the neglect of other sectors. This made the economy susceptible to fluctuations in revenue, occasioned by the usual instability associated with the prices of crude oil in the international market.”

Also, speaking on “Sustainable Market Access for Nigerian Non-oil Export”, Nigeria’s Ambassador to the World Trade Organisation (WTO) Dr. M. A. Abdulhamid, among other things, said the negative impact on Nigeria’s external reserve had exerted unprecedented pressure on the Naira, exceptional reversals in capital flows and weakened Nigeria’s ability to finance its import, undermine its balance of payment position.

According to him, “The fact that Nigeria is only able to take up less than 1 per cent of the global market share of most products it exports is a sign that all is not well.

“Apart from the perennial macro-economic, infrastructure and policy environment challenges, there are emerging challenges that have compounded the situation and led to a declining volume of the meagre exports from the country.”

The WTO scribe however, described the CBN RT200 FX programme as a good initiative designed to stimulate the growth of non-oil export in the country adding that the “programme has a pillar for the non-oil export Fx rebate scheme. However, the N65 to $1 offered by CBN is not covering the FX rate gap between the official and parallel market.”

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