By Chinwendu Obienyi
Nigeria’s low export capacity continues to be one of the major issues hampering its economic growth in recent times.
The above challenge is due to the country’s export output which has been increasingly low over the years and the fact that the oil and gas sector is major ly driving exports (at about 76-78 per cent), reveals there is an imbalance.
This development, according to economic experts, is due to the COVID-19 pandemic, posing a new challenge particularly to small businesses. The extent of disruption posed by the pandemic has further weakened the country’s balance of trade and payments.
According to the National Bureau of Statistics (NBS), Nigeria recorded N1.94 trillion foreign trade deficit in 2021 as against N7.37 trillion recorded in 2020.
“In 2021, the value of total trade stood at N39.75 trillion, which is 57.60 per cent higher than the value recorded in 2020. The value of total imports in 2021 stood at N20.84 trillion, which is 64.11 per cent higher than the value recorded in 2020, while total exports were valued at N18.91 trillion, showing an increase of 50.99 per cent than the value recorded in 2020. Overall in 2021, merchandise trade recorded a deficit of N1.94 trillion”, the NBS revealed.
This implies a negative trade balance as the Nigerian economy is still import-driven and depends largely on exports of petroleum products and some agricultural products to meet foreign exchange earnings.
To provide insight, what a trade balance does is that it looks at the value of a country’s exports and compares it to the cost of one’s input and so when a country has a negative trade balance, this can only mean it has spent more money than it has made in international trade with the rest of the world.
The true picture
According to the report, the top five traded export products during the period under review included; petroleum products obtained from bituminous minerals and crude oil valued at N4.02 trillion or 78.48 per cent of total export.
Similarly, the country’s top traded import products included Premium Motor Spirit(PMS), popularly called petrol which gulped N1.05 trillion or 12.91 per cent of imports; durum wheat (not in seeds) N315.17 billion or 3.87 per cent; gas oil N225.63 billion or 2.77 per cent; used vehicles, with diesel or semi-diesel engine of cylinder capacity less than 2500cc, N185.41 billion or 2.27 per cent and cane sugar meant for sugar refinery valued at N135.37 billion or 1.66 per cent of imports.
“Export in the fourth quarter of 2021 was still oil-dependent. Crude oil exports recorded N4.27 trillion, and it remained the major product in total exports (74.04 percent), while non-crude oil was valued at N1.49 trillion or 25.96 per cent of total exports of which non-oil products contributed N810.88 billion, representing 14.06 per cent of total exports during the quarter under review”, the NBS report said.
Thus, the future of the country’s non-oil exports looks bleak, enhanced by poor port infrastructures as well as logistics constraints and as the government continues to pursue its diversification agenda, stakeholders have continued to call for a sharper refocus to the non-oil export sector.
When Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, at the first meeting of the Bankers’ Committee this year, unveiled the intervention scheme codenamed “Race to $200 billion in FX Repatriation (RT200 FX Programme),” which is aimed at helping the country attract $200 billion in FX repatriation, exclusively from non-oil export transactions over the next three to five years, he explained that the scheme was anchored on five pillars.
According to him, the five pillars are; Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Bi-annual Non-Oil Export Summit — were all critical in ensuring that the RT200 programme, which is an initiative of the Bankers’ Committee, fulfils its goal of significantly curbing Nigeria’s dependence on crude oil exports.
Speaking at the maiden edition of the biannual RT200 Non-oil Export Summit, which took place in Lagos recently, Emefiele in his opening remarks at the summit, themed: “Setting the Roadmap towards Achieving RT200 and Non-Oil Export for Development,” announced that CBN recorded a significant increase in non-oil export repatriation in the first quarter after the take-off of the RT200 programme and confirmed that the apex bank had released over N3.5 billion through Deposit Money Banks (DMBs) in rebates to eligible non-oil exporters in the first quarter of 2022.
Whilst calling on stakeholders in the non-oil exports space to collaborate with CBN and DMBs to ensure enhanced export operations which will result in foreign exchange inflows into the country, Emefiele lamented that most of Nigeria’s current sources of foreign exchange inflows were unreliable, and controlled externally.
According to him, in order to insulate the Nigerian economy from such external shocks, stakeholders need to focus on strategies that can help the country earn more stable and sustainable inflows of foreign exchange.
“I want to appeal to the NPA and the Nigerian Customs that we establish a working group comprising the bankers’ committee, NPA, the Nigerian Customs, and maybe a shipping line to resolve two issues; we have heard of people who want to export their goods queuing for weeks or months before their goods can go out.
We need those export proceeds badly. It is sad that because of the problem of finding an easier route for goods to be exported out of the country, Nigerian exporters prefer to transport by road or sometimes barges from Lagos to Accra or the Republic of Benin to export from there. Doing these we lose the opportunity to earn export proceeds”, Emefiele said.
According to him, there should be a dedicated route where exports can go out easily. “The Infracorp is ready to fund that if we can yield in”, he said.
Delivering a paper titled; “Addressing the logistics constraints to improve Non-oil exports”, the Group Chief Executive Officer, Access Bank Holdings Plc, Herbert Wigwe, noted that the massive challenge is that to actually export goods takes so much more time than importing while adding that to grow the economy, there is need to generate or stabilize the nation’s own FX sources.
Wigwe said, “We are suffering a major infrastructure decline as far as exports are concerned. If you look at where the country is ranked, it is a complete disgrace, given our size or population and it just looks like nothing is happening in terms of infrastructure and this shows that even if we want to export our goods today, we have a massive challenge ahead of us. Hence we need to take steps even if it means “baby steps” to address this challenge.