Data, logistics stall Nigeria’s non-oil exports push

For Nigerian businesses looking to export, the road is anything but smooth. This is because lack of data, inconsistent supply chains, poor standards and financing hurdles have become major roadblocks.

Urena Iheme, chief executive officer of Fefereti Group, said breaking into international markets has been tough.

Iheme shared her experience during the Export Management Programme (EMP) 18, a training programme backed by Fidelity Bank and Lagos Business School in Lagos on Friday.

She attended a trade fair in Houston last year and secured repeat orders for her ‘chin chin’ but quickly realised that scaling was a different battle.

‘Chin chin’ is a small, sweet crunchy fried Nigerian snack that comes in different shapes.

“The biggest challenge is supply chain stability,” she said.

To Iheme, it is Africa first. She already supplies in-flight snacks to Nigerian airline, Air Peace, with ‘chin chin’ as her main product. She now eyes European and other African markets but has found penetration harder than expected.

“Who is eating ‘chin chin’ most? It’s Africans. Africa is my major market but has been one of the most difficult to penetrate. Moving goods is a problem,” she said.

Iheme raised concerns about how Nigerian goods struggle in global markets. “Europe rejects our palm oil but takes Ghana’s. Why? Quality and processing standards.”

Her proposed idea is an export processing centre to help Nigerian food products meet global benchmarks and sustainability.

“I am going to explore more to set that up for rural farmers, for palm oil producers,” she said.

Read also: As Nigeria’s non-oil export rises to $5.5bn, student export development scheme opens in PH

Show me the data

Her concerns relate to those of Patrick Ulayi, managing director of Alliance & Frontier Limited, a construction firm looking to balance import needs with export revenue. For him, access to data is the missing piece.

“One of the biggest challenges here is data,” he said. “With data, you make better decisions.”

Without data, businesses like Ulayi’s remain unable to scale or even secure financing, making informed business decisions nearly impossible.

Lenders and investors rely on concrete figures to assess risks and opportunities before providing capital. If exporters cannot present accurate records of trade volumes, transaction histories or market forecasts, banks may hesitate to offer loans, limiting growth opportunities.

“You can even make better contributions to your end product. It could be your foreign partners or your local partners,” Ulayi said.

Government policy, financing problems and knowledge are his major roadblocks, exacerbated by protectionism in the West that has hindered penetration.

“There are certain things you can’t take into the EU space. They require that a whole lot of those transactions are kept in that space,” he said.

But he believes it opens opportunities for regional supply.

“We’ve always been exporting raw materials. We need to start processing those things.”

The FX debacle

Beyond knowledge gaps, the ability to manage foreign exchange (FX) demands through exports is critical and the financial burden of exporting heavy. FX liquidity challenges persist due to limited foreign exchange inflows to the country.

Emmanuel Nwalor, team lead for export and agriculture at Fidelity Bank, noted that the FX challenges are as a result of ‘balance of trade issues.’ He said a lot of ‘import abuses’ have led to insufficient FX inflows.

“So if you have more exporters, you are going to have more export proceeds coming into the country,” he said.

The Central Bank of Nigeria (CBN) has implemented various strategies aimed at attracting FX inflows, which include the continuous clearance of FX backlogs, revision of international money transfer operator (IMTO) guidelines, reporting harmonisation on reporting requirements for DMBs, and liberalisation of the FX market, among other reforms.

However, top research organisations like PwC have said uncertainty in the FX environment may persist in 2024 if supply challenges are not met.

Nwalor also pointed out that many businesses fail because they don’t fully grasp how export financing works.

“Unlike importers who pay upfront, exporters are at the mercy of international buyers,” he explained. “If you don’t structure your transactions properly, you can ship your goods and never get paid.”

Nigerian banks, including Fidelity, have introduced export financing, but it remains inaccessible to many. According to Nwalor, banks need clear business models before offering capital. “If a bank can see the beginning to the end of your supply chain, they’ll fund you. But if you’re not structured, you’re too risky.”

The logistics problem

Frank Ojadi, a professor of operations management at Lagos Business School, sees logistics as a critical failure point.

“One major thing to fix is the logistics of moving the products, finding the products and moving the products out of the country,” he said, citing accumulated costs and delays from transporting export goods to Nigerian ports.

He said Nigeria’s non-oil exports can be competitive if the self-inflicted logistics problems are addressed.

“The logistical aspect alone is purely man-made,” he said, tracing Nigeria’s export challenges back to the early 1900s during Lord Lugard’s efforts to export groundnuts to Europe.

He explained that the famous groundnut pyramids were not a sign of surplus production but rather a result of poor logistics, as inadequate rail infrastructure prevented timely transportation.

“The rails were not there to move those products out there. And what do you do? So you store it, and that’s how they came by the groundnut pyramids. Truth of the matter was simply that there was a logistic problem,” he said.

Drawing a parallel to the present, he warned that if Nigeria’s logistics infrastructure fails to keep pace with population and economic growth, the export problems will persist.

Why export matters to Nigerian economy

Beyond individual business struggles, the export sector is crucial to Nigeria’s economy. Experts agree that expanding non-oil exports is one of the few ways to stabilise the naira.

The reality is that crude oil still dominates Nigeria’s exports. The latest National Bureau of Statistics (NBS) data show that crude oil remained the strength of Nigeria’s export appeal, generating N13.78 trillion in revenue and accounting for 68.87 percent of the nation’s total exports in the final quarter of 2024. It was followed by liquefied natural gas and other petroleum gases which found their way to America and Europe.

Non-oil exports, mainly driven by agricultural products such as cocoa, seeds, soybeans, cashews and others, including some manufactured goods, has averaged far less than 10 percent of the total trade over the years.

“Our FX crisis occurs because we import more than we export,” Nwalor said. “The more businesses we can help export, the more dollar inflows into the country, reducing pressure on the naira.”