Exporters divert N388bn of non-oil exports into informal sector

Exporters have pushed non-oil export activities worth N388 billion into the informal sector in other to take advantage of the higher value of the naira in the black market, half-year analysis non-oil export data by BusinessDay Research and Intelligence (BRIU) shows.

BRIU examination of the non-oil export data to the top ten countries in the first half of this year revealed a sharp decline in values at a time when the prices of our commodities have become competitive overseas due to the recent devaluation.

Analysts who have been monitoring this development have attributed the trend to a desire by exporters to earn more naira. This has resulted in some of them routing their goods through the informal sector as selling them through the official channels means that they would be expected to exchange their proceeds at the official rate instead of at the black market rate.

“It is not that Nigerian non-oil exporters are not making money. But rather than sell their goods through the normal channels where their earnings will be exchange at the official rate, they are selling them through the informal routes so that they can sell their dollars at the more attractive exchange rates in the parallel market rate”

More activities would have been pushed to the informal sector save for increased exports to Germany, which was the topmost non-oil export destination in the three months to March 2016. Apart from that, exports to Canada also boosted the revenue made through the official channels.

By half year 2016, non-oil exports to almost all the nation’s traditional top destinations such as India, Japan, Brazil, France, USA, Spain and the Netherlands declined by between 14 percent and 82 percent when compared with figures on the same items for similar period in 2015.

Japan’s non oil imports from Nigeria declined by 82 percent within the period translating to N34.86 billion imports from Nigeria as against N198.41 billion worth of commodities it bought in the first year of 2015. Exports to the United States of America (USA) also declined by 54 percent to N37.87 billion compared with N82.13 billion worth of non-oil export goods it procured from Nigeria in H1 2015.

Exports to India within the period also fell by 38 percent to N67.17 billion as against N109.04 billion worth of goods it bought from Nigerian exporters. Exports to French firms and individuals declined by 21 percent to N45.45 billion compared with N57.32 billion goods they imported from the nation in 2015.

Another intriguing trend is that Ivory Coast which was on the list of top ten export destinations in first half of 2015 having bought non-oil goods worth N116.1 billion suddenly disappeared from this list of top ten export destinations in the corresponding half of 2016.

Apart from that, exports to Spain and the Netherlands fell by 14 percent each to N74.42 billion and N74.05 billion in H1 2016 in contrast to N86.59 billion and N86.15 billion worth of goods they bought from Nigerian exporters in the first half of last year.

Sources familiar with the export trade say some exporters are also not repatriating their export proceeds due low confidence in the stability of the Nigerian naira. Non-oil exports through official channels are expected to continue to suffer for the rest of 2016 due to the persistent widening gap between the official and unofficial exchange rate of the naira.

TELIAT SULE