Manufacturers explore export markets to beat FX crunch

 The foreign exchange (FX) crisis has pushed a number of Nigerian manufacturers who hitherto had an entirely domestic focus into the export market, as they seek to earn more money and have FX with which to import raw materials.

Even manufacturers that are in the export business are now registering more products for export, as dollar earnings become more attractive as the naira depreciates.

Business Day findings show that these players are looking more into the ECOWAS market than any other market, with a view of cutting down logistics cost and exploiting the 360 million population potential of the region without many hassles.

“Indeed many manufacturers are looking into the export market,” Ede Dafinone, CEO, Sapele Integrated Industries, a crumb rubber exporter, told BusinessDay.

“Importers are recognising that dollars will be scarce for a long time to come. You can imagine a situation where a manufacturer cannot source enough FX to import. So it is a logical progression for a manufacturer to look to export. I know a lot of them that are moving into this space,” Dafinone said.

Last month, Flour Mills concluded the registration of its Daily Delight and Semolina in the ECOWAS Trade Liberalisation Scheme (ETLS).

The ETLS is a necessary registration that enables products to be moved from one ECOWAS country to another without payment of duties/tariffs.

The flour miller’s Rom Oil also registered its Spread and Margarine brands for export, while another subsidiary Northern Flour Mills enrolled Massa Flour and Massavita for export.

Guinness Nigeria plc has enrolled its Orijin drink for export into the regional market, just as Mamuda and Nasco registered new sacks and biscuit brands respectively for export.

Erisco Foods Limited has fully joined the new crop of exporters, having registered its tin tomatoes in the ETLS.

Royal mills and Foods Limited has also expanded outside the Nigerian shores with its noodles and spaghetti, while Mapleleaf Press is now in the ECOWAS market with some of its exercise and textbooks.

Others that started exporting last month or registered new products for exports include Emos Best Industries (cosmetics), Dangote Agro Sacks (sacks), Aristocrat Industries (shrink films and stretch films), Grey De Koroun Nigeria Limited (Balila body cream, Balila body lotion, Balila petroleum jelly and Tony Montana powder).

Louis Dreyfus Commodities Nigeria Limited, Deekay & Sons (Nig) Limited, Dag Motorcycle Industries Nig. Limited, and Givanas Industry Nigeria Limited.

“I think companies that go into export need to be encouraged,” said Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group and vice chairman of PZ Cussons Nigeria plc.

“Export business needs some certainty and the government has to resuscitate the Export Expansion Grant (EEG) to help these exporters become competitive in the international market,” Oyelola said.

Nigeria’s oil revenue has nosedived by more than fifty percent in the last 18 months, piling more pressure on the naira, as importers need FX to import foreign products. The naira is exchanging at close to N340-N345 in the parallel market today, as against N197-N199 in the official market.

The central bank’s delisting of 41 items in the official market and other monetary tightening measures have put the Nigerian economy under severe pressure, as manufacturers struggle to get FX with which to bring in raw materials.

“The fact is that any government would have encouraged non-oil exporters in a situation like this. But we exporters are having it very rough now. The CBN’s directive that exporters should repatriate dollars and then get their money in naira at the official rate is discouraging exports. How can you buy your raw materials at N320 and then export and get N197-N199? It’s not realistic. And again, we need incentives,” said Jon Kachikwu, CEO, Jon Tudy Interbix, food exporters to the United States, and chairman of MSME Group of the Lagos Chamber of Commerce and Industry (LCCI).