For Nigeria to diversify its economy through agriculture, it must add value to its agricultural commodities to help accelerate the development of the sector while boosting the country’s foreign exchange.
According to experts, it essential for non-oil exporters to process their raw materials, rather than push them out in raw forms, in order to boost their value and competitiveness in the global market.
Also, it is important for local manufacturers’ increases its level of value addition in its production and export processes
In 2018, the global economy business and economic data for manufacturing value-added ranks Nigeria 40th out of 153 countries with 38.32 percent which is below the average mark of 50 percent signifying that more efforts need to be made in growing the value addition culture.
According to the Nigerian export promotion council (NEPC), Nigeria is the fourth-largest producer of cocoa worldwide covering 6.5 percent share of global production with cocoa beans accounting for almost 90 percent of the $804 million of Nigerian cocoa exports.
Speaking at a trade forum held recently, Ebenezer Onyeagwu, group managing director and chief executive officer, Zenith Bank, says that it is necessary for manufacturers and farmers as well to incorporate value addition into their export processes in order to fully utilize and enjoy the substantial benefits.
“We need to improve our primary production so we can increase and expand the value chain. We are not generating enough income from exports, and we need to explore research and incorporate value addition in our export in order to effectively utilize it. We also need to change our taste buds,” Onyeagwu said.
He noted that beyond processing cassava for cassava flakes, other products like starch, glucose, sorbitol can be exported for more income.
Data from the Nigerian Export-Import Bank (NEXIM), shows that Nigeria’s poor engagement in value-addition activity is causing Nigeria to lose from the global chocolate market as the country continues to export mainly raw cocoa beans instead of cocoa cakes and butter.
Globally, the market for cocoa beans is valued at $10billion while the total value of all finished goods from cocoa annually is $200 billion with chocolates alone having $100billion.
This implies that despite providing 73 percent of global cocoa production, Africa is simply scratching the surface in terms of profits as it enjoys less than 5 percent of the wealth gotten from the value addition process.
Similarly, Nigeria’s has a large leather industry with Italy and Spain as the largest destinations of Nigerian leather in total, covering over 71 percent of total Nigerian exports, In 2013, Italy, known widely as producer of quality shoes and leather products, spent $355.63 million on purchasing sheep and goat skins from Nigeria. However, LeatherMag International revealed that Nigeria imports around $500 million worth of leather products every year, including 80 million pairs of shoes.
Experts are of the opinion that including value additions to exports in the country will contribute to the country’s economic development and GDP, it will generate more income and also provide jobs, thereby reducing the high unemployment rate.
Oluwasegun Osidipe, director, economics & statistics department, MAN said told BusinessDay in 2019 that the country’s uncompetitive production environment, poor value addition culture, and low capacity utilization will push Nigerian to an unfavorable position in the African Continental Free Trade Area (AfCFTA), stating that the most traded products among African countries which include crude oil, gold, and non-industrial diamonds, among others also produced in Nigeria.
“Nigerian manufacturers need to be innovative and different by incorporating a high level of value addition, because many of the countries involved in the trade agreement have the same products and resources,” he said.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
