As the discourse to diversify the economy lingers, Olaseni Durojaiye writes on a tripartite collaboration that may turn out to be the intervention that the non-oil export sector needs to contribute to economic growth
The nation’s current economic challenges largely caused by the southward dive of oil price which the ongoing forex crisis and double-digit inflation signpost has, no doubt, continued to engage the attention of observers and analysts just as a few options have been touted as possible solution. Among the panacea that has been thrown up are import substitution, forex liberalisation, devaluation or revaluation of the naira as well as diversification from over dependence on oil.
While the tempo of debate over whether or not to devalue the country’s currency, which trended for weeks appeared to be receding, that of diversifying the economy in the way of non-oil export appeared to be gaining traction just as its proponents cut across diverse sectors of the economy. These include operators in the real sector to financial analysts and capital market operators among others.
Observers were in agreement that the nation’s non-oil exports have great potential. They insisted that the sector had the potential to boost employment generation and gross domestic growth through foreign exchange earnings, among others.
“Diversification of the economy”, according to a Lagos-based economist, Rotimi Oyelere, “is of paramount importance if the economy must shift from its over dependence on oil sector as the mainstay and the largest contributor to the total government revenue and GDP. Agricultural, manufacturing and industrial sectors all have great potential that should be adequately funded and equipped to ensure good outputs and contributions,” he posited.
However, THISDAY findings revealed that a lot of encumbrances have continued to bedevil the non-performance of the non-oil export sectors of the economy.
THISDAY investigation identified infrastructure, funding and know-how among others as challenges bedeviling the non-oil sector of the economy. Another challenge borders on compliance issues with destination which led the European Union to suspend food exports from Nigeria to European countries. This is as they also noted that there is huge market for Nigeria’s agricultural produce especially in Europe and North America.
THISDAY gathered that government is not oblivious of some of the challenges. That was why the government came up with the now suspended Export Expansion Grant (EEG) scheme.
President of the Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, in a recent interview told THISDAY that, “the EEG scheme was introduced to provide incentives and rebates needed to reduce the high cost of production in Nigeria, boost production, stimulate and diversify non-oil exports. EEG will reduce the burdens of the high operating costs.”
Oyelere also added that, “Federal Government should strengthen and revise the credit guarantee scheme as well as reinforce legal and supervisory framework so as to track the use of these funds as well as identify loan defaulters.”
Analysts argued that doing this will boost the productive capacity of the economy and enhance export both in the non-oil and oil sectors. Relevant agencies overseeing the non-oil sectors should institute mechanism that will ensure good corporate governance among managing directors in the industry.
NEPC’s Giant Ambition
The Nigerian Export Promotion Council (NEPC) is however not discouraged by the myriad problems facing the sector as it recently disclosed that it had come up with plans to increase the country’s earnings on non-oil export to $30 billion from the current $2.7billion.
Executive Secretary and Chief Executive Officer (CEO) of the agency, Olusegun Awolowo, had revealed the plan during a courtesy visit to the office of the Minister of Agriculture, Chief Audu Ogbe, in Abuja.
According to him, ”the plan identifies 11 strategic products/sectors, and 21 countries, for Nigerian goods, to grow non-oil foreign exchange from $2.7 billion today, to $30 billion in five years. It will be recalled that the country’s total non-oil export volume in the first three-quarters of 2015 was 612.73 million dollars.”
He also disclosed that, “statistics of non-oil exports dipped a little in 2015, when compared to the preceding year. This can be attributed largely to two major reasons, which are – 2015 being an election year, there were plenty of uncertainties surrounding political activities and that of the insurgents in the North-east.
“However, some marginal impacts were made though only statistics of the first three-quarters are captured for now. For the first quarter, we have gross weight of 516, 428. 63 metric tonnes with export value of $664, 638. 89. The second quarter has gross weight of 368, 529. 64 metric tonnes with export value of $391, 602,161. 02, while for third quarter we have gross weight of 311, 769. 10 metric tonnes with export value of 220, 460, 728 dollars respectively,’’ he said.
Awolowo stated further that the council was working on a Zero Oil Plan that would enable it to achieve its objective in the current year. He said the plan was “in addition to implementing the National Strategic Export Product (NSEP) targeted at replacing oil and to shore up the country’s foreign exchange earnings.
A Welcome Intervention
It is against the backdrop that observers described the tripartite intervention between Fidelity Bank, Nigerian Export Promotion Council (NEPC) and the Lagos Business School (LBS) which birthed the Export Leadership Institute as a welcome development. THISDAY learnt that while Fidelity Bank will provide the needed funding, LBS will provide the capacity building for prospective exporters while NEPC compliments with the needed government backing being the agency saddled with the task of promoting export in the country.
Speaking at the launch of the initiative in Lagos, Managing Director and Chief Executive Officer of Fidelity Bank, Nnamdi Okonkwo, explained that the bank had seen the need for the diversification of the economy and the opportunities it portend for MSMEs and to that end long before the global oil price debacle and had renewed its focus on the MSME segment. He noted that Nigeria’s economy is facing severe headwinds on account of the falling crude oil prices and the direct consequence of increasing value erosion of the Naira.
Speaking at the launch on Tuesday in Lagos, Okonkwo stated that, “foreign exchange earnings in Nigeria are largely from oil exports which account for over 90 per cent of total export receipts. The current currency debacle hinges on supply side dynamics as we have lost over 70 per cent of our US$ revenues in the last 18 months due to the falling crude oil prices. Hence, it is quite obvious that the key to growing the value of the Naira is the diversification of Nigeria’s United States dollars revenue base via non-oil exports.
“As further proof of our strong commitment to the growth of the Nigerian economy, we are collaborating with the NEPC and LBS to establish the Export Leadership Institute, a flagship export capacity development programme, the platform under which the Export Management Programme will run. To this end Fidelity Bank has earmarked N30 billion export finance line to support Nigerian exporters. The goal of the programme is to deliver impactful and world-class export management education to equip Nigerian MSMEs with the knowledge and business know-how required to compete effectively in international markets,” he explained.
Speaking further, he added that, “beyond this, we will also support MSMEs that have gone through the programme with appropriate financing solutions to enable them meet their export financing needs. We will also assist them in the area of market access through our expansive linkages and partnerships with various Multilateral Institutions. Our choice of LBS as strategic partners in this project is deliberate as the institution is the undisputed centre of excellence for enterprise development in Nigeria. In the same vein, our choice of NEPC as a partner to this initiative is informed by the overarching role it plays in export promotion in Nigeria,” he stated.
Also speaking at the event, representative of LBS, Dr. Frank Ojadi, said: “The EDC which is an arm of Lagos Business School is the leading centre for support and development of export businesses in Nigeria.