• Tuesday, March 05, 2024
businessday logo

BusinessDay

Poor value addition culture limits Nigeria’s export benefits

Poor value addition culture limits Nigeria’s export benefits

Nigeria’s export benefits despite its potentials are limited by poor value addition culture in the country, as focus is placed more on the instant profits received from exporting raw materials alone, data has shown.

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.

However, data from the Nigerian Export-Import Bank (NEXIM), shows that Nigeria poor engagement in value addition activity is causing Nigeria to loose from the global cocoa and chocolate market as it shows that the global value of raw cocoa export is $10 billion while the total value of all finished goods from cocoa annually is $200 billion with chocolates alone having $100 billion.

This means that despite providing 73 percent of global cocoa production, Africa (Nigeria inclusive) is simply scratching the surface in terms of profits as it enjoys less than 5 percent of the wealth obtained from the value addition process.

Read also: FG approves N375bn expansion grant for non-oil export exporters

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 in a forum 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, etc. 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.

Efforts are ongoing to bridge the value addition deficit in viable sectors like mining. Olamilekan Adegbite, Nigeria’s minister of Mines and Steel Development has revealed in a forum recently that the country was losing a lot as it maintained its export of raw resources.

“we realized that a lot of raw ore is being exported from Nigeria abroad and we are losing money , so we started the downstream policy and when it is finalized and approved, it is going to discourage totally the export of raw minerals, because it is will enforce the payment of premium to export it raw,” he said.

He added that if value addition cannot be carried out, explorers are advised to sell to processing companies locally.