Trade
Chinedu Eze writes that despite its huge potential to become a major foreign exchange earner for Nigeria that could exceed oil proceeds, the country has not been successful in exporting its goods and services that have been in high demand overseas. In a recent conference on cargo held in Lagos, experts identified the impediments to the export of local products and the invaluable economic gains that could be realised if the right actions and decisions were taken
With over 15 million Nigerians living overseas yearning and nostalgic about made in Nigeria products and others who long to have organic farm produce from Africa, the country could have been earning billions of dollars from perishable goods if the right environment were created for export.
Largely, Nigeria’s administrative system at the airports is clogged with slow bureaucratic bottlenecks, self-serving personnel at the government agencies, and policies that are not poised to spur economic growth.
On the other hand, the situation under which perishable and manufactured goods are produced in Nigeria is still below the standard such goods can be accepted in various countries where the demand for made in Nigeria goods is high.
These and many others were the key points raised at the recent Aviation and Cargo Conference held in Lagos on August 25 and 26, 2021, where aviation experts, cargo operators, insurance experts, and handling companies brainstormed on how to maximise the benefits of the export of Nigerian made products.
Export Process
The CEO of ABX World, a cargo airline, Captain John Okakpu in his presentation said one of the primary failures of the export process in Nigeria is the inability to match exports to markets, especially in the areas of documentation and certification requirements. He said exporters in Nigeria continue to rely on the country’s own bogus documentation and certifications standards, which are mostly not recognised anywhere in the world.
“The first step in engaging in export is to identify, properly analyse, and conform with the requirements of the proposed importing countries. Thus, the exporter has to provide the commodities needed, their satisfaction, and documentations. Then a seamless export can be carried out.
“It has been severally identified by economic experts that agro-export is the surest and fastest way to shore up the increase in forex inflows and as such our government has spent a huge chunk of resources to initiate this process, but today, we are almost at the brink of economic collapse as a result of serial failures by the government agencies that have been mandated and economically empowered to drive the process,” Captain Okakpu said.
He observed that due to the continuous dwindling of revenue accruing from crude oil sales and the failure to increase Nigeria’s export activities, especially agro-export activities, the country’s currency “is continuously degenerating into worthlessness”.
On the other hand, he noted that Nigeria, with proper adherence to export market requirements, have the innate capacity to rake in $250 billion per annum on only agro-export commodities.
He said the only way to resolve this anomaly is to strictly comply with the primary export markets requirements, which are to provide the following: GAP certificate for the agro produces to be exported; Phyto Sanitary/ Veterinary Certificates and Custom Certification.
Obstacles
“The major obstacle preventing Nigerian exporters from having a seamless export experience are: GAP Certifications (Good Agricultural Practice) and our exit points choked up with multiple/multiplication of agencies and too many MDAs (relevant and irrelevant) positioning themselves to drive agro-export! The Agro-Export program is 100 per cent private sector driven and will forever remain so. For almost five decades, Nigeria has had about five different policies on the agro program. Each of them died immediately after that regime is over. So. what does that tell you, private sector is the answer, and the public sector to be the enabler.
“Another critical part and one of the most important aspects part of our agro-export woes is government fees and taxes which is about 90 per cent higher than our nearest competitor. So, in most cases, it is cheaper for most freighter aircraft to depart from Nigeria empty than carrying cargo.
Okakpu said it is known that the foreign exchange rates go up every day and all aircraft spare parts are imported and most of their maintenance checks are done abroad. This, he said, eats into the revenue of airline operators. This situation, he noted is exacerbated by the Covid-19 pandemic, which has made income generation by airlines very lean that most of them barely survive now.
“We import almost everything for aircraft operations including fuel. Then we are now looking at heavy government fees/taxes and expect our agro products to be competitive in the world market, not possible.
“For example, 2kg of pineapple from Costa Rica about 12 hours flight to London is £0.95 – £1.10 in most supermarkets. 2kg of pineapple from Nigeria about six hours flight to the same London, logistics cost, I mean logistics cost alone is about £1.75 without production. Now tell me how are we going to compete?
“Furthermore, almost all our farmers are not GAP certified neither do they understand what it is. Instead of the government to be wasting its resources on ventures that would not yield any results in agro-export activities, the government should invest in sponsoring the GAP certifications of our major known farmers who will eventually form the nucleus of GAP certified farmers that will be able to establish our GAP standards as in the case of many advanced countries, Ghana, Kenya, and others,” he said.
Benefits
Okakpu said this process would have multiplier effects on the farmers’ ability to have assured off-takers, prompt repayment of loans taken, increased farm yield per hectare, increased profitability, and little or no post-harvest losses.
“It should, however, be noted that some people are of the erroneous belief that proper packaging or a trade and bilateral agreement between two countries guarantees free flow of agro-products. Yes, such agreements open the doors to free trade between countries for mutual benefits. But there’s a caveat here that ensures that advanced countries will only accept agro products that are traceable with internationally recognised Good Agricultural Practices (GAP) Certifications/Traceability. A responsible country wouldn’t because of trade agreements or beautiful packaging allow poison or sub-standard products into its country to kill its citizens,” he said.
Right Facilities
The CEO of Mainstream Cargo Limited, Seyi Adewale who looked at Growing the Air Cargo Value Chain in Nigeria, emphasised the need for the right facilities to be provided to enhance cargo export in the country.
Adewale said since airports are a critical need for the movement of air cargo, connecting the dots in moving mostly agricultural produce is a veritable need. He said that many agricultural products or farm produce are moved via road transport particularly from the north / middle-belt region of Nigeria to its southern region whereas finished or manufactured goods, equipment, and material resources move in the northern and middle-belt direction.
“So, there is the need to encourage and support these state governments to build this infrastructure to grow affected state economy, generate IGR, create jobs, noting that supply creates its demand.
“To support the needs of the domestic airports, we need good and effective cargo warehouses within and around these airports. We can explore the current opportunity within the airport itself using Lagos domestic airports as an example. Does MMA2 or GAT (General Aviation Terminal) have a good/ large storage, sterile, or temperature regulated warehouses to hold perishables, pharmaceutical products, etc within?
“Secondly, as a guide, the imminent Lagos Airport around Ibeju Axis/ Free Zone axis of Lagos state needs to plan for the construction of a good cargo warehouse with temperature regulated modular storage assets to support the investments of businesses/ entrepreneurs that have invested in an excellent storage centre and warehouses along the Lekki-Epe Axis, Free Trade Zone Axis and Lagos-Ibadan Expressway Axis,” he said.
Adewale regretted that, as of today, Nigeria does not have dedicated air cargo airlines operating within the domestic airports, remarking that Allied Air appears to be the only cargo airline attempting to bridge this gap.
He observed that when airfreight transport opportunities occur, freight forwarders, businesses seek air (cargo) charter but the process of doing so makes it inefficient. In other words, the businessman faces processes that are so cumbersome, costly, and frustrating that he could be discouraged from embarking on the business.
Domestic Cargo Airlines
“If we have at least two approved/ licensed air cargo airlines operating in the domestic side, I trust they will be busy all year round and this could be embedded with West Africa Regional air cargo flight. We need to highlight and emphasise these needs to aviation investors. What even stops any of the handling companies in Nigeria to procure aircraft for this purpose and thus provide this domestic air cargo service? This will even largely benefit their quest of enjoying tax, forex, and other incentives enjoyed by the airlines (especially international) as they could integrate their handling services with this. I understand they have explored this opportunity from a Free Trade Zone, but they have met legal hurdles and challenges that have limited these expectations of benefiting from such FTZ license,” he said.
So, boosting export hinges on two major factors, reviewing government policies to ease the process of export through airfreighting and improving the quality of farm produce, and securing the right certifications. When these are done, Nigeria would be able to earn the projected $250 billion from exports.
