Post by Trade facilitator on Aug 7, 2011 0:30:40 GMT 1
Rising from the neglect of the post-oil boom era, the Nigerian non-oil export sector got a renewed attention about a decade ago. LAYI ADELOYE writes on how employment generation and revenue base diversification in the sector are being obscured by policy somersault and the way out.
The non-oil export sector of the economy has undoubtedly assumed a new tempo in terms of focus and activities in the last one decade, owing chiefly to government’s attempt at diversifying its economic base. Of course, with the renewed focus came prospective benefits, which have further heightened hopes of a successful restructuring of the nation’s earning sources. More importantly, the new relevance assumed by the sector emanates from the bouquets of its imbued multiplier effects on the economy, especially in the area of employment generation.
However, leading stakeholders in the sector believe that despite the immense hopes and prospects raised by the new focus, some factors, including a series of policy reversals and lip-service commitment in terms of funds, have continued to impede its growth, thereby stalling the realisation of its potential as a top revenue earner and a leading provider of employment opportunities.
Notwithstanding the constraints, the sector contributed significantly to the growth of the economy pre-oil boom era. Indeed, the recognition of this fact has fuelled the clamour by stakeholders for a refocusing, especially in the quest for revenue base diversification.
In the area of agro-allied linkages, the sector has much to offer in view of the fact that the country’s export basket consists of semi-processed and processed agricultural products, such as cocoa, cashew, sesame, ginger, Gum Arabic, shrimps, cotton and rubber. Nigeria is known to be a major exporter of finished leather, which has direct linkage to the livestock growers. By providing market linkages to agricultural products, export in this realm is known to have boosted the incomes of over 10 million farmers in rural areas across the length and breadth of the country, according to the Ibadan-based International Institute for Tropical Agriculture.
It is also worthy of note that during the global financial crisis, Nigeria’s non-oil sector continued to grow, thereby helping to absorb the shock caused by the sharp fall in oil revenues.
To stakeholders in the sector, government policies have a great role to play in determining the tempo of activities.
Essentially, government policy may encourage the diversification of the Nigerian economy to do otherwise. To achieve this, several policy incentives were put in place. However, none has been as effective as the Export Expansion Grant scheme, which operates under the legal context provided by the Export (Incentives and Miscellaneous Provisions) Act 1986.
The EEG policy as a fiscal policy instrument is implemented under the guidelines issued by the Federal Ministry of Finance. Nigerian Export Promotion Council is the apex agency responsible for the administration of the policy, in conjunction with other key implementation agencies, such as the Central Bank of Nigeria and the Nigeria Customs Service. The export grant is given to exporters to cushion the impact of infrastructural disadvantages faced by Nigerian exporters and make the country’s exports competitive in the international market.
Interestingly, the present EEG Policy underwent a reform in 2006 during the first term of Dr. Ngozi Okonjo-Iwela as finance minister. With technical assistance from international consultants, PriceWaterHouseCoopers, the scheme was streamlined to make it more effective by categorising the export products according to degree of value addition and processing and rewarding those companies, which generated higher export growth and new investment in export capacity building.
Export incentive claims are subject to 100 per cent pre-shipment inspection, factory inspection and audit of all transactions to ensure transparency and prevent abuse. As one industry expert says, the growth in non-oil exports from $1bn in 2006 to $2.3bn in 2010 remains a testimony to the strict policy compliance criteria and due process introduced during Okonjo-Iwela’s first term in office as finance minister.
Investment in processing and value addition comes as a key collaborator of policy incentive.
As a result of the government policy that encourages value addition, exporting companies embarked on forward integration and made heavy investment in plant and machinery to add value to indigenous commodities. Consequently, there followed a clear shift towards export of processed, value added products. From an exporter of raw cocoa until a decade ago, Nigeria now exports cocoa products, such as cocoa cake, cocoa liquor, cocoa butter and cocoa powder. Nigeria also banned the export of wet blue (leather in semi-finished stage), which led to huge investment in tanneries to export finished leather, and recently, even articles of leather. From an exporter of raw cashew, Nigeria now exports processed cashew. The industrial trawling industry invested in highly capital intensive trawlers for on-board processing of wild shrimps and cold chain to embark on export of highly perishable products.
In terms of market diversification, the persistent efforts of Nigerian exporting companies and NEPC appeared to have paid off, leading to the acceptance of their products in some of the quality conscious markets.
Ten years after African Growth and Opportunity Act was passed by the United States to allow duty-free access to products from sub-Saharan Africa, Nigerian exports seem to have achieved a breakthrough. Today, Nigerian products, such as cocoa beans and butter, dried-split ginger, leather, woven sacks and technically specified rubber are being exported to the US. Hibiscus flowers are also being exported to US.
Nigerian de-hulled sesame seeds are exported to Japan. Interestingly, Nigeria appeared on world sesame map only a decade ago, as a result of aggressive marketing efforts by Nigerian exporters
Having achieved success in Italy and Spain, the Nigerian leather industry made forays into the world’s most competitive export market via China. Likewise Nigerian processed shrimp exporters also succeeded in achieving export orders from China to reduce their dependence on traditional Western markets
According to NEPC, European Union accounts for 56 per cent market share of Nigeria’s non-oil exports, followed by the regional ECOWAS with 11 per cent share.
Importantly, employment generation is key derivative of all these developments. There are over 200 exporting companies in Nigeria. According to industry experts, the direct employment in the non-oil export companies is estimated at about 200,000, while indirect employment in the agriculture sector which gains from the market linkages provided by the exporting companies is estimated at over 10 million. A large cashew processing plant set up in Kwara State directly employs 1,500 people, mostly rural women. The cashew kernels are processed and packed, direct for shipment to developed countries such as USA and Europe.
An interesting feature about export supply chain is that it cuts across Nigerian geographical zones, as sesame, gum arabic, ginger and cotton are produced in the north, cocoa, cashew products and shrimps are grown and processed in the South-West, while rubber comes from the east. Income from exports has uplifted many a rural family from below the poverty line.
Another major development, out of the new focus, is cluster development. A very positive fall out of the non-oil export expansion has been the emergence of export processing clusters. Challawa industrial estate in Kano has emerged as a major export cluster with modern tanneries situated in this zone. Annual exports from this industrial zone which has an integrated textile mills are estimated over $700m. Likewise, cocoa processing clusters have emerged in South-West; rubber processing in Sapele in Delta State and large scale shrimp processing in Lagos. The private companies located in these clusters have invested in plant and machinery and infrastructure, almost substituting the role of the government, to meet international quality standards and provide employment to hundreds of thousands directly and indirectly.
Boosting foreign exchange earnings, a major focus of the drive, has been on the positive side.
Export earnings raise becomes even more pertinent today in view of weakening exchange rate of the naira and the shrinking foreign exchange reserves. An NEPC official, who is deemed a leading authority in export records said, “A positive feature of the EEG scheme has been the tendency on the part of exporters to operate through official channels, which complements the CBN efforts to discourage the unofficial forex market in Nigeria”.
Of course, there have been challenges trailing the incentive and its implementation.
It is generally believed that the biggest impediment to achieving investment and export earnings growth is policy somersault and lack of compliance with due process by government agencies. At a recent forum, the Manufacturers Association of Nigeria lamented the non-compliance by implementing agencies to accept the Negotiable Duty Credit Certificates issued by the Federal Ministry of Finance. At a recent meeting between the new Minister of Trade and Investment, Mr. Olusegun Aganga, and the Organised Private Sector, the President of MAN, Chief Kola Jamodu, listed several factors that had been affecting the performance of the real sector and non-acceptance of the export certificates was key among them. The MAN boss presented a blueprint for the manufacturing sector to the new minister, including the various impediments that needed to be addressed. He said unless policy constraints were addressed, unemployment problem among Nigerian youths might get worse.
Source: www.punchng.com/Articl.aspx?theartic=Art201108052281373
Learn more about commodities export in Nigeria from THE THY GLOBAL INVESTMENT LTD
exportfromnigeria.proboards.com/index.cgi?board=general&action=display&thread=78
The non-oil export sector of the economy has undoubtedly assumed a new tempo in terms of focus and activities in the last one decade, owing chiefly to government’s attempt at diversifying its economic base. Of course, with the renewed focus came prospective benefits, which have further heightened hopes of a successful restructuring of the nation’s earning sources. More importantly, the new relevance assumed by the sector emanates from the bouquets of its imbued multiplier effects on the economy, especially in the area of employment generation.
However, leading stakeholders in the sector believe that despite the immense hopes and prospects raised by the new focus, some factors, including a series of policy reversals and lip-service commitment in terms of funds, have continued to impede its growth, thereby stalling the realisation of its potential as a top revenue earner and a leading provider of employment opportunities.
Notwithstanding the constraints, the sector contributed significantly to the growth of the economy pre-oil boom era. Indeed, the recognition of this fact has fuelled the clamour by stakeholders for a refocusing, especially in the quest for revenue base diversification.
In the area of agro-allied linkages, the sector has much to offer in view of the fact that the country’s export basket consists of semi-processed and processed agricultural products, such as cocoa, cashew, sesame, ginger, Gum Arabic, shrimps, cotton and rubber. Nigeria is known to be a major exporter of finished leather, which has direct linkage to the livestock growers. By providing market linkages to agricultural products, export in this realm is known to have boosted the incomes of over 10 million farmers in rural areas across the length and breadth of the country, according to the Ibadan-based International Institute for Tropical Agriculture.
It is also worthy of note that during the global financial crisis, Nigeria’s non-oil sector continued to grow, thereby helping to absorb the shock caused by the sharp fall in oil revenues.
To stakeholders in the sector, government policies have a great role to play in determining the tempo of activities.
Essentially, government policy may encourage the diversification of the Nigerian economy to do otherwise. To achieve this, several policy incentives were put in place. However, none has been as effective as the Export Expansion Grant scheme, which operates under the legal context provided by the Export (Incentives and Miscellaneous Provisions) Act 1986.
The EEG policy as a fiscal policy instrument is implemented under the guidelines issued by the Federal Ministry of Finance. Nigerian Export Promotion Council is the apex agency responsible for the administration of the policy, in conjunction with other key implementation agencies, such as the Central Bank of Nigeria and the Nigeria Customs Service. The export grant is given to exporters to cushion the impact of infrastructural disadvantages faced by Nigerian exporters and make the country’s exports competitive in the international market.
Interestingly, the present EEG Policy underwent a reform in 2006 during the first term of Dr. Ngozi Okonjo-Iwela as finance minister. With technical assistance from international consultants, PriceWaterHouseCoopers, the scheme was streamlined to make it more effective by categorising the export products according to degree of value addition and processing and rewarding those companies, which generated higher export growth and new investment in export capacity building.
Export incentive claims are subject to 100 per cent pre-shipment inspection, factory inspection and audit of all transactions to ensure transparency and prevent abuse. As one industry expert says, the growth in non-oil exports from $1bn in 2006 to $2.3bn in 2010 remains a testimony to the strict policy compliance criteria and due process introduced during Okonjo-Iwela’s first term in office as finance minister.
Investment in processing and value addition comes as a key collaborator of policy incentive.
As a result of the government policy that encourages value addition, exporting companies embarked on forward integration and made heavy investment in plant and machinery to add value to indigenous commodities. Consequently, there followed a clear shift towards export of processed, value added products. From an exporter of raw cocoa until a decade ago, Nigeria now exports cocoa products, such as cocoa cake, cocoa liquor, cocoa butter and cocoa powder. Nigeria also banned the export of wet blue (leather in semi-finished stage), which led to huge investment in tanneries to export finished leather, and recently, even articles of leather. From an exporter of raw cashew, Nigeria now exports processed cashew. The industrial trawling industry invested in highly capital intensive trawlers for on-board processing of wild shrimps and cold chain to embark on export of highly perishable products.
In terms of market diversification, the persistent efforts of Nigerian exporting companies and NEPC appeared to have paid off, leading to the acceptance of their products in some of the quality conscious markets.
Ten years after African Growth and Opportunity Act was passed by the United States to allow duty-free access to products from sub-Saharan Africa, Nigerian exports seem to have achieved a breakthrough. Today, Nigerian products, such as cocoa beans and butter, dried-split ginger, leather, woven sacks and technically specified rubber are being exported to the US. Hibiscus flowers are also being exported to US.
Nigerian de-hulled sesame seeds are exported to Japan. Interestingly, Nigeria appeared on world sesame map only a decade ago, as a result of aggressive marketing efforts by Nigerian exporters
Having achieved success in Italy and Spain, the Nigerian leather industry made forays into the world’s most competitive export market via China. Likewise Nigerian processed shrimp exporters also succeeded in achieving export orders from China to reduce their dependence on traditional Western markets
According to NEPC, European Union accounts for 56 per cent market share of Nigeria’s non-oil exports, followed by the regional ECOWAS with 11 per cent share.
Importantly, employment generation is key derivative of all these developments. There are over 200 exporting companies in Nigeria. According to industry experts, the direct employment in the non-oil export companies is estimated at about 200,000, while indirect employment in the agriculture sector which gains from the market linkages provided by the exporting companies is estimated at over 10 million. A large cashew processing plant set up in Kwara State directly employs 1,500 people, mostly rural women. The cashew kernels are processed and packed, direct for shipment to developed countries such as USA and Europe.
An interesting feature about export supply chain is that it cuts across Nigerian geographical zones, as sesame, gum arabic, ginger and cotton are produced in the north, cocoa, cashew products and shrimps are grown and processed in the South-West, while rubber comes from the east. Income from exports has uplifted many a rural family from below the poverty line.
Another major development, out of the new focus, is cluster development. A very positive fall out of the non-oil export expansion has been the emergence of export processing clusters. Challawa industrial estate in Kano has emerged as a major export cluster with modern tanneries situated in this zone. Annual exports from this industrial zone which has an integrated textile mills are estimated over $700m. Likewise, cocoa processing clusters have emerged in South-West; rubber processing in Sapele in Delta State and large scale shrimp processing in Lagos. The private companies located in these clusters have invested in plant and machinery and infrastructure, almost substituting the role of the government, to meet international quality standards and provide employment to hundreds of thousands directly and indirectly.
Boosting foreign exchange earnings, a major focus of the drive, has been on the positive side.
Export earnings raise becomes even more pertinent today in view of weakening exchange rate of the naira and the shrinking foreign exchange reserves. An NEPC official, who is deemed a leading authority in export records said, “A positive feature of the EEG scheme has been the tendency on the part of exporters to operate through official channels, which complements the CBN efforts to discourage the unofficial forex market in Nigeria”.
Of course, there have been challenges trailing the incentive and its implementation.
It is generally believed that the biggest impediment to achieving investment and export earnings growth is policy somersault and lack of compliance with due process by government agencies. At a recent forum, the Manufacturers Association of Nigeria lamented the non-compliance by implementing agencies to accept the Negotiable Duty Credit Certificates issued by the Federal Ministry of Finance. At a recent meeting between the new Minister of Trade and Investment, Mr. Olusegun Aganga, and the Organised Private Sector, the President of MAN, Chief Kola Jamodu, listed several factors that had been affecting the performance of the real sector and non-acceptance of the export certificates was key among them. The MAN boss presented a blueprint for the manufacturing sector to the new minister, including the various impediments that needed to be addressed. He said unless policy constraints were addressed, unemployment problem among Nigerian youths might get worse.
Source: www.punchng.com/Articl.aspx?theartic=Art201108052281373
Learn more about commodities export in Nigeria from THE THY GLOBAL INVESTMENT LTD
exportfromnigeria.proboards.com/index.cgi?board=general&action=display&thread=78
