Nduka Udeh is the Managing Director of Simplified Corporate Logistics, a wholly-owned Nigerian firm, committed to driving the country’s non-export portfolio through opening up the US market to non-oil exports from Nigeria with a view to growing the country’s forex earnings away from oil. In this interview Olaseni Durojaiye, he discusses issues bedevilling non-oil export business in the country and proffers panacea, believing there is rapid growth in non-oil export business with the right policies in place
What is your perception of export business in the country?
I think the business environment has come to realise the importance of non-oil export to the economy. I believe the sector will grow rapidly. However, no sector can grow appropriately without the right government policies and enabling environment.
When you’re filling your Form M for imports, the manufacturing company is mandated to charge for cost and freight, what then happens is that the freight for that good is given to a foreign company and by so doing we’re losing money; why can’t we have a policy that ensures that the freight is handled by Nigerian businesses that way Nigeria logistic companies will grow. There is no reason why Nigeria shouldn’t have a local cargo airline or ocean liners if you consider the volume of our imports. Toyota alone brings in many millions of cars into Nigeria every year; all of it is being shipped into the country by foreign liners.
The current administration is working to improve ease of doing business in the country. What are the challenges confronting your sector?
The biggest challenges that non-oil export business face and which most small businesses face is the multiplicity of agencies. When we started this business, I told my team to go out and collate a breakdown of how export business is done; with what they came back with you’d think you were trying to send rocket to space, the process had so many layers. Sometimes you find out that some of the agencies that are supposed to inspect the goods before they are exported do not have functional website, you go to their websites and some of the addresses on their websites are not where they are.
Getting the Export Proceed Form is also another challenge. Intending exporter will go to several banks’ branches and they will tell them that they have no clue where to get the form. When they go all over the place and couldn’t get the form they give up.
The Nigerian Export Processing Council (NEPC) deserve some praise, they’re doing a lot in the area of trainings for intending exporters but they’re not the only agency involved in the export chain. As a matter of fact, there is poor coordination among the other agencies involved with export business.
How can the processes be simplified?
Government is the only one that can simplify it. They need to bring all the agencies together. I believe there should be a centralised export agency that handles everything that has to do with export. It is possible for all the agencies to be in one centralised location, so that if for example I am an exporter of yam, if I take my yam to this centralised location, preferably near the port, where the various agencies that I need to deal with, from documentation to inspection are all gathered. While there, I meet the NEPC and get the required forms, I meet the Customs and get the required forms, I meet NAFDAC that has to check and I get the required forms, Standard Organisation of Nigeria (SON) is also there.
So there is need to get all the agencies in one centralised place and have a coordinating body to handle the whole export processes so that if I take my goods there it is done in one place and by one body, that is what we need to do.
Do you not think the country’s vastness may make that model impracticable?
That’s the Chinese model. When the Chinese wanted to position Huawei as a leader in the telecoms industry they came out with a policy that no Huawei goods should be at the ports for more than 24 hours. The policy ensures that they must have their export clearance within 24 hours; so when companies were negotiating for deals, whilst a Siemens will tell you that it will take a month for your goods to arrive, in a week or thereabout, Huawei has delivered the same goods. That is the kind of process that we need to put in place to grow our non-oil export and truly diversify the economy away from over dependence on oil.
Can you put a figure to what Nigeria loses, revenue-wise, due to the challenges that mentioned?
It is difficult to quantify because I don’t have the data and government doesn’t have the figure either; but it is massive. One of my friends is the biggest seller of African foods in Houston, Texas, and has chains of African food outlets; sometime ago he tried to export yams to the US, it took him more than three weeks to get all the documentations done with, all along the yams were in the container and by the time they got to Houston half of the yams were rotten. What he does now is to go to Ghana, in two days the documentations are ready and he exports. That’s how lack of coordination among our agencies is killing export business.
The country also loses money through the forex regime. An exporter is unable to source forex in the official market but when he wants to bring back his proceeds the CBN insists that they will pay for the proceeds at N375 (to a dollar) whereas I spent N445 (to a dollar) to import raw materials that I need to process my goods, then I export it and when I want to bring back the proceeds the CBN will only pay at the official rate; that means I have already lost about 25 to 30 per cent. So what happens is that a lot of people are finding other ways to bring that money into the country.
Government is talking about diversifying the economy, and emphasising growing non-oil export, how well is your sector keying into that vision?
Logistics is key to every business. But a lot needs to be done before export can thrive; we need good road infrastructure, we need to have storage system in some of these locations to at least store the products before they’re shipped out to the various local and international markets. I read an article about a village in Imo State where they harvest plantain but a lot of it rots away because the roads from the farms in the village to the markets are not good.
Government needs to work with the private sector and when I say private sector I don’t mean the multinationals, the billion naira companies that have the capacity to take care of these challenges from A-Z. Government should engage with operators of small and medium sized businesses. In any economy, those that grow the economy are the small and medium-size companies, if you look at the distribution of labour in the economy, you have more of them; those are the people that government needs to consult. So logistics play a major role in boosting non-oil export because if you have the goods and cannot get it out to the markets in good time it becomes a waste.
Government plans to scale down on the number of agencies operating at the seaports, how do you see this impacting export business?
That will be a welcome development. When it is done it will help to fast track doing business at the port.
However, we have been talking about reducing the number of agencies at the port for some time without actually achieving it. Dr Ngozi Okonjo-Iweala as Finance Minister and Coordinating Minister for the Economy tried to reduce the number of agencies at the port to about three but she didn’t succeed. It is like a case of always having a plan but never getting to actualise the plan.
Today, we have Anti-bomb Squad, Department of State Security, NAFDAC, of course you have Customs, you have SON; you have so many other agencies. The typical process of import and export in any country is that Customs is the key agency, when they see an item that requires them to bring in another agency then they bring in that agency.
Private sector players are expected to key into the drive to increase the country’s receipts from on-oil export, how involved is your company in the drive?
One of the challenges facing some of the people who want to go into export business is that they don’t have buyers. For example, you have a company in Aba, Abia state producing quality shoes and you ask why the company is not exporting these shoes, the answer that we often get is that they don’t have buyers.
We plan to host an exhibition in the US where at least 100 Nigerian companies will attend and we have approached the about the exhibition. The Exhibition will hold in May or June and it will showcase serious minded Nigerian companies that have products to exhibit. We will invite several companies from all over the US to come and take a look at what Nigerian companies have to offer, that way, we open up access for them to be able to have buyers and trading partners.
One of the reasons why we’re doing this is because believe that the way to attract forex through non-oil exports is to aggregate all the pockets of forex that individual companies bring in so that the whole can amount to something substantial and impactful.
How can the country harness its vast potential in the agriculture and agro-processing value chain in return for foreign earnings?
The way forward requires that a lot of agencies need to work together including Bank of Industry. Cote D’Ivoire is one of the world highest producers of Cocoa, they earn about $3 billion yearly from cocoa export; they sell it to some of the companies that make chocolate, the companies convert it into chocolate and ship it back to Africa selling it at profit. The three biggest chocolate companies combined together made about $35 billion from exports worth less than $6 billion.
The learning here is that if we’re serious about export we need to move away from just exporting the raw materials to having some small industries that will pre-process some of these items for more money. It makes no sense for me to export raw yam when I could process it into other items like yam flower and earn more proceeds.
There is a huge demand in Africa that Nigeria should actually fill. There is no reason for Mars to be exporting chocolate into the African sub region; Nigeria should actually take the lead in that area. We’re doing pretty well in cocoa export, we’re actually doing about $800 million in cocoa export, but if we process that raw cocoa into processed chocolate we could be making about $4 billion yearly. That is where agencies like Bank of Industry has a role to play by funding these industries and reduce the amount that the industries need to pay to access funding.
The US market appears to be the new destination for Nigeria’s agricultural products, how is your company helping Nigerian exporters to explore the market?
We are in the process of setting up a portal in the US where Nigerian manufacturers can list their goods. The key strength of SCL Solutions is we have a 23, 000 square feet warehouse in Houston; with that warehouse we’re going to be offering Nigeria manufacturers and exporters opportunity to export their goods, store it in the warehouse and as people buy, we dispatch to them from the warehouse.
That is what the Chinese are doing. If you look at the Chinese model for export in the US, the Chinese will set up a big warehouse in the US, then a lot of their manufacturers will ship products into the US and store it in the warehouse, then the companies will list the products on e-Bay and Amazon, and when you order, it dispatched from the local warehouse and it is delivered two to three anywhere within the US. These are some of the strategies that we also need to introduce to grow our export portfolio.