You need to active Javascript on your
BusinessDay
Nigeria's leading finance and market intelligence news report.

Poor quality produce, ports keep non-oil exports in limbo

Nigeria’s failure to deal with recurring export rejection, port congestion and high cost of product registration is putting the country’s diversification quest at risk, experts have said.

Africa’s biggest economy has had the opportunity of quelling a ban on its agricultural produce and addressing lingering issues in the last five years when it turned to agriculture for economic diversification, but the government has instead allowed it to recur year after year.

The ban placed on Nigeria’s beans, hibiscus, smoked catfish and groundnut, among others, owing to poor standards has shrunk market access for exporters, and slowed investment and threatened export drive targets amid acute foreign exchange (FX) shortages, according to experts.

Similarly, the lingering congestion at the port, infrastructural deficits and high cost of product registration have made the country’s agricultural products uncompetitive, thus making proceeds from agriculture exports abysmal.

While Nigeria earned N165.3 billion ($403,170) from its total agricultural exports in Q2, 2021, South Africa earned $626, 585 from citrus export alone in the same period, data from both countries’ statistics office show.

Read also: Nigeria urged to increase non-oil exports to Germany

This indicates that Nigeria’s total export for the period is still lower by 35.7 percent when compared with South Africa’s proceeds from citrus export.

“The structures to drive growth and diversify the economy through agriculture are lacking,” said Kola Adebayo, professor of agricultural extension and rural development at Federal University of Agriculture, Abeokuta Ogun State.

“If we are truly serious about our non-oil and proceeds from agriculture, the government will ensure that every encumbrance to international trade is resolved quickly,” Adebayo said.

In 2020, the European Union extended its ban on Nigeria’s dried beans export till 2022 for the third consecutive time over poor standards. Similarly, the US and Mexico are yet to lift their bans on hibiscus and smoke catfish over quality issues as well.

Currently, Nigeria does not have a food safety plan that controls and streamlines food production as well as a strengthened legal and regulatory environment that can build the fundamentals for quality production of food products, according to experts.

“The Federal Government is lacking in the area of food safety in the country and the situation is getting worse daily,” noted James Marsh, managing director, James Marsh, and Associate.

“There are no regulations on the use of agrochemicals and pesticides on the farms; even products banned in other countries are found in the hands of farmers in Nigeria,” Marsh said.

Nigeria’s non-oil export has come under serious threat owing to the congestion at the Apapa and Tin Can ports. The government is yet to find a lasting solution to the problem, despite its implication on export.

It cost an average of N1.5 million for the movement of a twenty-foot equivalent unit from Tin Can Port to Mile 2, according to a February communiqué issued by the African Centre for Supply Chain.

Obiora Madu, former chairman, president/CEO of Multimix Group, said, Nigeria does not have effective agricultural infrastructure, stating that the country’s export drive can only be successful with adequate infrastructural facilities such as storage, good road networks, among others, stressing that the lack of it has made cost of food production higher.

“The costs of logistics are also very high. It is cheaper to transport a commodity to Europe than to transport the same commodity within the country,” Madu said.

Similarly, Prince Samuel, chairman and managing director, Vegefresh Group, said the country’s food products are not competitive globally owing to high production costs.

“Farmers are not producing at the price processors are willing to buy to be able to compete favourably with imported products. This is why there is high importation of agricultural products into the country despite local production,” he said.

According to experts, diversifying Africa’s largest economy away from oil would require paying more attention to establishing agriculture, which constitutes the bulk of the country’s non-oil exports, and value-addition.

“Our diversification focus is just talk and no action,” Rotimi Oloye, president, Catfish and Allied Fish Farmers Association of Nigeria (CAFFAN), said from his Ibadan farm in a telephone response to BusinessDay.

Agricultural growth slowed to 1.22 percent in the third quarter of 2021 – the lowest since the second quarter of 2018, according to data from the country’s GDP report.

Get real time updates directly on you device, subscribe now.