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Exploring Nigeria’s non-oil prospects amidst $4.8bn earnings

Nigeria’s non-oil sector over the last two years have shown prospects to be an alternative source of revenue for the country asides oil which has…

Nigeria’s non-oil sector over the last two years have shown prospects to be an alternative source of revenue for the country asides oil which has failed to sustain the country’s revenue base. In this report, Daily Trust Saturday examines the prospects of the sector amidst surge in non-oil export earnings.

For the first time since the establishment of the NEPC 47 years ago, the revenue from non-oil export rose to $4.8 billion in 2022, an indication of the prospects of Nigeria’s non-oil sector as experts continue to advocate for diversification of the country’s economy.

Recently in its April 2023 Africa’s Pulse report, the World Bank projected that Nigeria’s economy will be driven by the non-oil sector as oil production is projected to remain volatile in 2023 due to several factors.

The report, which dwells on analysis of issues concerning Africa’s economic future, stated that the Nigerian economy is set to grow by 2.8 per cent in 2023, down from 3.3 per cent in 2022, while oil production will remain subdued in 2023.

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Part of the report reads: “The Nigerian economy is set to grow by 2.8 per cent in 2023, down from 3.3 per cent in 2022. It is expected to accelerate slightly to an average annual rate of 3 per cent in 2024–25. This translates into growth per capita of 0.2 per cent in 2023 and 0.4 per cent in 2024–25, which is insufficient to reduce extreme poverty in the country.

“Growth will continue to be driven by services, trade, construction, manufacturing and agriculture. Oil production is projected to remain subdued in 2023, because of inefficiencies and insecurity, and recover slightly in 2024–25. On the production side, growth in 2023 will be supported by industry (with a growth of 5.6 per cent) with the mega-refinery project.

“Country projections show a mixed picture of the evolution of the current account deficit across oil-exporting countries. For example, Angola, Gabon and the Republic of Congo are expected to post current account surpluses in 2022 and maintain a surplus in the coming three years, albeit at declining levels.

“Nigeria, the largest African oil producer, is not expected to reach a current account surplus in 2022. The country’s higher crude oil export revenues are more than offset by higher imports of refined petroleum products, lower remittances, and lower capital inflows. Nigeria’s projected current account deficit will remain at an average of 0.3 percent of GDP in 2023–25 because of declining prices and stagnant oil production.”

Already in the first half of 2023, Nigeria recorded $2.52bn in non-oil export proceeds for the first half of 2023, after exporting 3,944,344.17 metric tonnes of products. The NEPC also revealed that the proceeds recorded was slightly lower by 0.09 percent than the $2.59bn recorded in the corresponding period of 2022.

The then Executive Director/CEO of NEPC, Dr Ezra Yakusak, while giving a performance report on exports between January and June 2023, said data from NEPC have revealed that a diverse range of 224 products, including manufactured goods, semi-processed items, solid minerals and agricultural commodities, were exported.

Top exports included urea, cocoa beans, cashew nut/kernels, sesame seed and soya beans/meal.

Out of the total exports, 1,058,791.27 metric tonnes of products worth 175.476 million dollars, accounting for 6.91 percent of the total export value, were exported to the 13 member countries of the Economic Community of West African States (ECOWAS).

In the same vein, a total of 859 companies participated in non-oil export trade during the first half of 2023. Indorama-Eleme Fertiliser and Chemical Ltd and Dangote Fertiliser Ltd were again notable leaders in terms of value.

Banks had also played a significant role, with 30 banks participating in the issuance of Nigeria Export Proceed Forms (NXPs). Zenith Bank PLC emerged as the bank with the highest NXPs value, accounting for 38.11 percent of the total.

NEPC’s effort in driving growth

One of the major challenges facing the growth of the sector as identified by exporters include poor packaging, funding, as well as knowledge on exportable products to different parts of the country.

However, in the last two years, the Council has taken some steps in addressing these challenges under the leadership of the immediate past Executive Director, Dr Ezra Yakusak, topmost among them being the Youth for Export Programme. The program is intended to involve youths in the non-oil export sector and create employment for youths in line with the Federal Government’s agenda of Youth Empowerment.

Similarly, the Export 774 project which was welcomed by stakeholders is targeted at capturing all exportable products in all the 774 Local Governments in Nigeria and serve as investment guide to be distributed to domestic and foreign investors, especially foreign envoys which was closely followed by the Export for Survival campaign to consider non-oil export as an investment option, which is a panacea to the economic survival of the country.

Also, in 2022, NEPC organised 227 capacity building programmes for exporters nation wide with 28,096 SMEs in attendance. The Council also registered the highest number of exporters in 2022 with a total of 3,986 firms. About 6,301 export enquiries were also made in the same year.

One of the major challenges exporters had faced was certifications of various products to ensure high level of compliance to quality standards and easy access. This was further compounded by the high number for export rejects of Nigerian products.  However, under the Go Global Go Certification initiative of the Council, between 2021 and 2022, a total number of 354 MSMEs benefited from the programme.

This was closely followed by the establishment of Export Trade Houses in China, Egypt, Togo and Kenya. The Trade Houses are set to showcase and increase visibility of Nigerian Products in the international markets. Industry players however say that more strategic steps need to be taken to achieve the desired result.

Exporters speak 

Speaking on the issue, Mr Kola Awe, Exporter and CEO XPT Logistics Ltd, said although there has been significant improvement, critical steps need to be taken to improve exports.

“There has been improvement from revenue generation. Prior to last two years, our revenue was hovering between $1.2 to $2.5bn but today, Nigeria has been able to get to the region of $4.9bn but that is not enough considering our natural resources. We should be doing about $150 or $330bn like Dubai, So, those are the things we should be looking at.

“We are expected to look at the number of strategies on areas we need to improve. We need to bring in more micro small and medium enterprises because their contributions are just 50 per cent involved in exports and it is a key segment for improvement.

NEPC has had a good impact in the non-oil sector, especially the initiatives in youth export entrepreneurship, domestic warehouse initiative, then the export trade houses and support to small companies in the area of certifications so that they can penetrate European and other international markets. There have also been able to support some people in Halal in Asia and the Middle East and then the export for survival capacity building programme has helped youth entrepreneurship, but there needs to be more efforts,” he said.

Another exporter, Sule Isa, noted that Nigeria needs “Strategic innovations to move micro and small medium enterprises from the current six percent which they are contributing to non-oil exports which is quite small.”

He added that “Collaborations with other agencies is required to identify the challenges of exporters in terms of logistics and quality, and access to finance through strategic innovations.”

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