• Friday, May 24, 2024
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BusinessDay

Why Nigeria needs new strategy to promote non-oil export

Nigeria’s $4.5bn export proceeds at risk over poor paperwork, non-compliance

Diversifying the Nigerian economy away from oil and earning the much-needed foreign exchange, especially amid foreign exchange scarcity, would require paying more attention to agro-processing.

Africa’s biggest economy is not exporting much, and the federal government is still doing little to improve non-oil exports, despite its promises of restoring Nigeria to an exporting nation and the foreign exchange crisis that has continued to plunge the country’s economic growth.

Last year, several multinationals and local manufacturers went under and this year, analysts are projecting that the number will be much higher.

Crude oil and minerals have continued to occupy a prominent place in Nigeria’s export chart. In the third quarter of 2023, crude oil and minerals accounted for 93.5 percent of total exports for the period, while non-oil exports accounted for 6.5 percent of total export proceeds for the period.

The total amount of money received by Nigeria from both exports of crude oil and non-oil exports was N10.34 trillion in the third quarter of 2023, which was $ 13.8 billion using N750/per dollar as the average exchange rate as of that time.

Non-oil exports earned N1.8 trillion out of the total $10.34 trillion for the period, which was $2.4 billion.

Brazil, a country whose population is just nine million larger than Nigeria, and with similar agricultural potential, earned $6.3 billion in October alone from just three commodities – sugar, soybeans, and maize, data from the Observatory of Economic Complexity (OEC) shows.

The South American country’s one-month export of three commodities alone is twice as high as Nigeria’s earnings from its total non-oil export for nine months. Brazil earns so much from just three commodities, and this is partly owing to value addition.

The low-value addition in Nigerian agriculture has seen the sector operate far below its potential, where produce that gets sold is valued less than what would have been obtained if some processing was done.

The situation has seen the value of agriculture not only lower than could have been realised but also contributing to high post-harvest losses and low export proceeds.

Experts say that the country must develop a new strategy to promote the export of processed commodities to boost non-oil export proceeds and generate much-needed foreign exchange for the economy.

Nigeria is among the top growers of agro commodities such as cashew, cocoa, sesame, sorghum, and ginger among others.

However, the inability of Nigeria to process a large percentage of these agro commodities before exporting is responsible for the loss of billions of dollars that the country could have earned if they were processed.

Ikechukwu Kelikume, an economist and a lecturer at the Lagos Business School said Nigeria must stop exporting raw commodities without value addition, adding that the greatest opportunities in the agricultural value chains lie in processing.

Kelihume noted that the higher the value chain that is closer to the consumer, the greater the value of earnings for investors.

“Most of the things we export raw, we virtually import them back as finished products,” he said during the July Businessday’s agribusiness conference, adding that it has made the country unable to get value for its export.

Also, experts in the sector stressed that some challenges needed to be addressed to expand the country’s exports for it to contribute to structural change and help promote the sector’s growth, which is vital for sustaining economic growth and development.

They stated that good market penetration and ensuring standards on the part of the exporters, as well as adequate financing from banks and the government, among others, would be key to achieving export competitiveness.