I don’t know anyone who will dispute the fact that trade is an all-important economic lever for many countries across the world. Whether advanced or developing, international trade enables countries to access markets and services that may not have been available domestically, thereby causing a boost in revenue for the exporting nation, options in good and services for consumers of the importing nation, and allowing both improve the economy and standard of living of the people.
The World Bank confirms that countries that embrace international trade tend to grow faster, innovate rapidly, provide higher income, and create more opportunities for their people.
For Nigeria, trade is critical to the national economic makeup. In 2021, Nigeria exported $57.7 billion of goods, making it the world’s 52nd most exporting country. Nigeria’s top export during this period was crude oil which netted the government $41.8 billion.
Other top-selling export products were special-purpose ships and cocoa beans. Nigeria’s top export destinations during the financial year of 2021 included India, Spain, South Korea, China, Netherlands, France, and the United States of America. While Nigeria remains a modest exporter of goods—the importance of which continues to be hinged on the sale of crude oil, the country still has a lot of potential to fulfil concerning trade exports.
It has been reported that existential trade-related challenges like lack of access to foreign exchange, high cost of doing business, the vast gulf in the shortage of essential trade infrastructure, the threat of crime and persistent security lacunae, corruption, lack of effective judicial process, slow and bureaucratic ports process, arbitrary governmental decision-making process, logistics constraints, limited market access, and many other minor challenges continue to deprive Nigeria of its full export potentials.
The consortium of trade constraints affecting Nigeria’s export processes means that Nigeria’s non-oil exports need to catch up to reach the level of many of its African peers. However, regardless of the dire nature of the situation, there remains a glimmer of hope within Nigeria’s export industry.
In January 2023, the Nigerian Export Promotion Council (NEPC) reported that Nigeria generated $4.82 billion from non-oil exports in 2022, a 39.91% increase in non-export revenues from 2021. This trade statistic shows that Nigeria’s trade industry can reach greater heights if the country’s non-oil export base is fully harnessed.
These are some of the methods I believe Nigeria can use to secure its export base and supercharge its economy in a way that will lift millions of Nigerians out of multidimensional poverty.
1. We need to reduce the cost of doing business
The exorbitant cost of manufacturing goods in Nigeria remains a reason Nigeria’s trade export has not grown to higher levels. In a survey conducted by the Manufacturers Association of Nigeria (MAN), between 2018-2021, it was discovered that close to 400 big businesses collapsed in Nigeria because of rising business costs.
Further, in recent funding conducted by BusinessDay, it was found that manufacturing firms listed on the Nigerian Stock Exchange expended more than N207 billion naira as energy costs within the first half of 2022 alone.
This was N45 billion higher than the N155 billion energy costs incurred by the firms within the first half of 2021. The manufacturing firms in question included Dangote Sugar Refinery, BUA Foods, NASCON Allied Industries, Dangote Cement, BUA Cement, and GlaxoSmithKline Nigeria, amongst many other publicly listed companies.
If we look at it deeply, we find that the two primary reasons that contribute to the rising business costs include the volatile exchange rate in Nigeria and the skyrocketing energy prices. For instance, BusinessDay noted that the price of diesel, which traded at N288.09 per liter on average in January 2022, rose to N774.38 per liter in July. This alone represents a 168.8 percent surge in the price of diesel.
The Nigerian government must address the general economic issues at the source to boost Nigerian exports by stemming the rising cost of doing business for Nigerian manufacturers. Chief Olusegun Osunkeye, a former Chairman of Nestlé Nigeria PLC, has advised the Nigerian government at all levels to embark on a cross-cutting venture to provide Nigerians with the basic amenities needed to carry out business activities, some of which include stable electricity, potable water, durable roads and operational efficiencies at Nigerian ports.
He stressed that without the ‘basic’ infrastructural efficiencies, it would be nearly impossible for any entrepreneur to do business in Nigeria, talk less about exporting goods to other parts of the world.
To this end, the Nigerian government must reduce the cost of doing business for Nigerians.. It must be noted that the Companies and Allied Matters Re-enactment Act (CAMA) 2020 which reduced the incorporation cost for Nigerian startups, and the recent $618million tech fund are right steps in the right direction for supporting the business environment but it must as well do more to reduce the limitations, hurdles, and costs of doing business in the country.
2. We need to improve market access for Nigerian exports
In a report by the Africa International Trade and Commerce Research (AITCR) conducted in partnership with the Nigerian Export Promotion Council, it was reported that Nigerian shea butter and ginger have significant export potential in various international markets across Asia, Europe, and the United States.
While the initial question over the business viability of many Nigerian products like shea-butter and ginger has now been settled, the ultimate question remains the market access for these goods. We should take cognizance of what we must do to allow Nigerian exporters to gain access to a wider global market with goods that meet the required standards across the world.
To improve market access for Nigerian goods, the Nigerian Export Promotion Council (NEPC) has tasked Nigerian exporters to embrace food safety systems that enable their products to gain market access to many export domains worldwide. The NEPC has sounded the alarm that with the coming of the African Continental Free Trade Agreement (AfCFTA, it has become imperative for non-oil exporters in Nigeria to acquire additional certifications to enable them to compete effectively in global markets.
Some of the certifications and training programs provided by the NEPC to build the capacity of Nigerian exporters and improve the market access of Nigerian goods include the National Cashew Certification Programme, NEPC Common Facility Centre (CFC) for Leather and Leather Products, NEPC Human Capital Development Centre for Apparel and Garments, amongst many others.
Read also: Dismantle trade barriers to sustain growth, Dangote to African countries
3. We need to harmonise policies at all levels
PwC maintains that inconsistent government policies wreak far-reaching havoc on export activities in Nigeria. The report claims to have found that implementation of government policies is lacking in accountability and transparency. It also reveals that ineffective citizen engagement affects many exporters’ trade activities.
We have seen incongruent government policies like the closure of the Nigerian border in 2029, the restrictions of FX for milk and corn importation and many more that have had adverse effects on manufacturers in Nigeria.
I call on the government at all levels to assiduously harmonize its policies to enhance Nigeria’s trade and manufacturing industry. Only then can trade exports in Nigeria receive a massive boost.
Conclusion
I believe that the provisions above will significantly boost Nigerian trade exports. If we can create an environment that attracts investment, provide support through adequate amenities, improved market access to Nigerian exporters, and well-aligned policies, Nigerian exports can advance and become valuable export goods in the global market.
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