Omolabake Fasogbon
Promoting non-oil export remains the surest way to diversify the Nigerian economy so as to overcome the shocks associated with crude oil.
However, operators in the business must ensure that they guard against risks to ensure the continuous existence of the business.
To guard against risks, the Chairman of Multimix Group, Dr. Obiora Madu particularly stressed that a potential would-be investor must be familiar with the sector.
“By this, they can be able to overcome any shocking situations that may come around”, he said.
According to him, while the challenges of finance and market are quite visible, they may just be a tip of the iceberg where there are other grave constraints within the export chain.
“Therefore a potential investor must be ready to face and overcome other headwinds, including longer receivable time, distance, information gap as well as skills and technicalities challenges,” he said.
On movement of goods, the expert said this is less a challenge as far as goods are going outside the country.
Albeit, Madu said that logistics accounts for why Nigeria’s exports are not competitive.
He maintained that knowledge of the business remained sacrosanct.
“At this stage, an exporter does less other than to hire the service of a freight forwarder who will book a space in the ship if the goods are bulky. Light and perishable are lifted by air but of course, lifting goods by air is more expensive.
“Ninety per cent of world cargoes are moved by sea,” he added.
But beyond products, Madu revealed that there are untapped treasures in service export, which to him, is the way to go to improve non-oil export in the country.
By service, it includes areas as transport, tourism, financial and insurance services, amongst others.
“Unfortunately, this area is not being targeted in the country,” he lamented.
According to data and business intelligence platform, Statista, Nigeria’s value of service exports as of 2021 totaled to around $3.62 billion.
Continuing, he enlightened, “That efforts and hassles you put in products is limited in service export because this time around, you are selling your brain which is the capability and capacity. In service, you do not need capital, inventory and all that.”
He enlightened that the popular impression about export is around products or commodities, adding that the opportunities are massive but constrained by unwillingness in the system.
He said, “An investor can look to export process, services, manufactured items, apparel, arts and craft and even cars like Innoson is doing in West African countries at the moment.
“We also have transports that are traversing the entire continents, there are financial institutions, outsourcing companies and educational institutions across Africa.
“It is that simple that you may not even own a company since you are only selling intellectual property. It’s about having a service that can sell internationally”.
He disclosed further that existing African trade agreements even tend to favour service than products export.
“For instance, to benefit from African Continental Free Trade Area (AfCFTA), one must have a service to render. In other words, there must be a value addition to any products being exported.
“While you may not be able to export some products to some countries, your service will sell you to any country of choice. Product like raw cocoa cannot be exported to Ghana or cotedI’voire, but your service can have you in,” he clarified.
“Service is where we should be now. I see more future in AFCTA on services for Nigeria,” Madu asserted.
He identified other pre-existing trade agreements that can be harnessed by an exporter as the European Union- West Africa Economic Partnership Agreements (EPA) and the African Growth and Opportunity Act (AGOA), which was signed into law by former United States President, Bill Clinton. This provides preferential duty-free access to U.S. markets for nearly 6,400 product lines from sub-Saharan Africa.
The operator further lent his voice to the argument around creation of export ministry in the country.
“This may not be necessary. All we need is to be deliberate and intentional about service export. This is very key to diversification”, he submitted.
