Nigeria’s non-oil export earnings fell by 18 per cent in December 2014, as the suspension of the Export Expansion Grant (EEG) and other economic headwinds weakened export receipts.
Non-oil exports dropped to $2.43 billion in 2014, from $2.97 billion recorded by the end of 2013, data compiled by Cobalt International Services and released by the Nigerian Export Promotion Council (NEPC) has shown.
Some of the commodities exported within the year included cocoa, rawhides, skin and leather, oilseeds, grains, plants, tobacco, aluminium, edible fruits and nuts, among others.
“This is not surprising. This cannot be distanced from near-paralysis of the EEG scheme,” Ede Dafinone, an exporter and CEO of Sapele Integrated Industries, told BusinessDay.
“The EEG has been largely successful in the last ten years, as exports have grown significantly. But the Negotiable Duty Credit Certificates (NDCC) have not been honoured at the ports for over a year. So I would expect such decline in 2014,” Dafinone said.
The Export Expansion Grant Scheme was introduced in 2005 to push Nigeria’s non-oil exports, as the country seeks economic diversification routes away from the oil sector. The EEG scheme operated by the use of the Negotiable Duty Credit Certificates (NDCCs), which served as cheques for non-oil exporters who wished to benefit from the grant.
The essence of the grant was to reduce production, distribution and logistics costs for non-oil exporters, to enable them to compete effectively in the international market.
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The understanding of the initiators of the scheme was that allowing non-oil exporters to bear the brunt of the costs would make their products uncompetitive in the international market, as goods from other countries, where governments provide different grants, would sell cheaper than those exported from Nigeria.
But between 2005 and 2013, the scheme, which was managed by the Nigeria Customs Service (NCS), was suspended eight times, before being indefinitely suspended in August 2013. Ngozi Okonjo-Iweala, co-ordinating minister for the economy, has said that the scheme is under review.
But outstanding debts to exporters have risen to N100 billion under the scheme, out of which about N4.5 billion was paid in December 2014.
“Export business requires planning and certainty. So it is also important that government tells exporters when next to pay the outstanding,” Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG) said.
Apart from EEG, a headwind such as the high cost of funds was a problem for exporters within the year, as banks charged between 20 and 35 per cent interest rates.
The average lending rate banks charged manufacturers in 2014 was 22 per cent, according to the Manufacturers Association of Nigeria (MAN).
“How do you expect Nigerian exporters to compete with the Chinese and the other Asians when the latter obtain credit facilities in their countries at single-digit rates?” asked John Isemede, immediate past director-general, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), in an earlier interview with BusinessDay.
Energy costs also ramped up costs for manufacturing exporters, resulting in a loss of competitiveness in the international market in terms of price and sometimes quality.
“It will be difficult for people to compete favourably in this environment. Nigeria has the lowest per capita energy consumption (40kw/000) compared to some of its peers such as Indonesia (120kilo watts (kW)/000) and South Africa (270kw/000). Manufacturing would have made more impact on the GDP if the power supply had been regular,” Babatunde Odunayo, chairman of, the MAN Apapa branch, said during a luncheon held last year.
Similarly, exporters were cramped by huge transport and logistics costs within the year, as they battled with legal and illegal multiple charges in host countries, as well as theft.
ODINAKA ANUDU & HARRISON EDEH
