• Tuesday, May 28, 2024
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Nigeria lags peers in non-oil export earnings as poor infrastructure hurts manufacturers


Nigeria lags behind a number of countries in non-oil export earnings as Africa’s biggest economy faces poor infrastructure slump that continues to hurt local manufacturers.
South Africa, continent’s second-largest economy, earned 164.9 billion rands (about $13bn) from exporting automobiles alone in 2017, according to the 2018 Automotive Export Manual. Bangladesh, often regarded as one of the poorest countries in the world, rakes in $28 billion just from textile export annually.
In 2016/17, Brazil, with almost Nigeria’s demographic size (209m), exported 28.15 million metric tons (MT), earning over $38 billion just from sugar.

Sugarcane contributed $43.8 billion to Brazil’s gross domestic product (GDP) – equivalent to almost 2 percent of the entire Brazilian economy. Even India, which was projected to grow as fast as Nigeria by the Goldman Sachs in 2012, is set to produce 35 million tons of sugar next year.
For Nigeria, data from the National Bureau of Statistics (NBS) show that the country earned N577 billion from total export in the first quarter of 2018, and N218.98 billion in the second quarter (if you factor out Other Oil Exports). This is about $2.20 billion for the half-year of 2018.

READ ALSO: Nigeria’s central bank eyes $12bn non-oil export earnings amid FX crunch

“The key issue is competitiveness. Unless we have an environment that positions the economy for competitiveness, we cannot make any headway,” Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), said in Lagos on Wednesday.
“Today, diesel is N260 per litre. So, how will those in the manufacturing sector survive? Export is not just about cocoa, shea butter and other primary products,which make up 90percent of our export portfolio today. Export is about industrialisation, value-addition and manufactured products,” Yusuf, who was a keynote speaker at a book launch by Bala Yesufu, Cadbury’s director of corporate communications and governmental affairs (West Africa), said.
He explained that Nigerian manufacturing and export sectors cannot make headway without strong infrastructure, citing the case of Apapa ports roads as one key reason why exporters were struggling today.
Nigeria needs to spend 3 to 5 percent of its GDP on infrastructure annually. A 2018 Financial Derivatives Company analysis shows that the country needs to spend $15 billion annually for 15 years to develop its infrastructure.
A 2016 research by BudgIT using data from Indexmundi, the United States Department of Agriculture (USDA) and Vetiva Research found that Nigeria had a 45 percent share of world’s palm oil market in 1960.

The numbers showed that if Nigeria maintained its 45 percent share in 2016, it would be earning $17.5 billion annually from just one product – palm oil in 2016. As of October 2018, one ton of palm oil was about $499.15, using Malaysian prices.
Total palm oil output was 58.84 million metric tons. Assuming Nigeria was still controlling 45 percent of the global palm oil market last month, the country should be producing 26.48 million metric tons. Local demand is about 2.1 million metric tons, meaning that Nigeria would be able to satisfy local demand and still export 24.38 million tons, earning $12.17 billion.

Frank Aigbogun, publisher of BusinessDay, said, “Nigeria only scratches 900,000 metric tons of palm oil per annum, which represents just 1.52 percent of global production, despite having a 45 percent share of the product in 1960.”
Aigbogun, who was the book reviewer, lamented the state of Apapa roads and how Nigeria’s lack of seriousness led to the withdrawal of GE’s railway arrangement, which could have ended Apapa woes, stressing that the country needed to do more to drive non-oil export earnings to serve as a buffer to the economy.
According to Bala Yesufu, the government needs to resuscitate the Export Expansion Grant and pay back billions of backlogs to help exporters compete.
Yesufu said there was a need for total impact assessment of the African Continental Free Trade Area before Nigeria sign onto it.