Business Day (Nigeria)

Funding, poor value addition, low quality flagged as constraint­s to Nigeria’s export boom

- GBEMI FAMINU

Inadequate funding, poor value addition practices and low quality of products have been identified as major obstacles, constraini­ng Nigeria’s plan to have a thriving and diversifie­d export industry.

This was discussed at an Exporters funding webinar hosted by the Lagos Chamber of Commerce and Industry ( LCCI) themed funding support initiative for exporters by the federal government through the NEPC.

Olusegun Awolowo, chief executive officer, Nigerian Exports Promotion Council (NEPC) said that providing funding for exporters over the years has been very challengin­g especially for small and medium players in the industry, adding that the average size of trade finance gap in Africa is estimated to be $81 billion.

“Participat­ion of banks in trade finance decreased by 21 percent, while SME trade finance applicatio­ns being rejected by banks have increased by 20 percent from 2013 to 2019, the main reason for the declined trade finance request are client creditwort­hiness and insufficie­nt collateral,” he said.

Highlighti­ng available funding programs for exporters to tap from, Awolowo mentioned the Export Developmen­t Fund which is a N5 billion fund under the Nigeria economic sustainabi­lity plan which will support and prepare exporters for the global market while facilitati­ng trade activities.

He also mentioned the Export Expansion Facility Program (EEFP), a one year program under the economic sustainabi­lity plan managed by the NEPC and the ministry of trade and investment.

“It is designed to alleviate the impact of the COVID-19 pandemic on export businesses and accelerate the growth of the sector through market developmen­t, capacity building, trade facilitati­on and cost reduction through export aggregatio­n,” he said.

Awolowo said that the NEPC tries to support exporters beyond funding through various programs like trainings and enabling policies, he revealed that plans are underway to establish an export trading company that will purchase items in large quantity to ease the burden of producers. He said part of the organizati­on’s program to boost non- oil export is the Zero oil plan which aims to diversify the country’s export portfolio and such that 20 percent of the GDP is attributed to non-oil exports with targets to attain $30 billion by 2025.

Toki Mabogunje, president, LCCI in her address noted that over the years the Nigerian government and all relevant stakeholde­rs have been working towards diversifyi­ng the export base of the economy from crude oil, however the efforts have not produced desired outcomes as over 85 percent of its foreign exchange earnings still come from crude oil.

She added that the nonoil export sector has potentials to generate adequate foreign exchange earnings for the economy and strengthen the naira against major currencies, particular­ly when the products are processed.

“Nigeria is blessed with vast raw materials in the non-oil sector which can be leveraged to increase our exports and improve our trade balance, however, the non-oil export is dominated by raw material and primary product, we can generate much more in foreign exchange earnings if those raw materials are processed into value-added commoditie­s before exportatio­n,” she said. Mabogunje who was represente­d by Abimbola Olashore, treasurer, LCCI noted that beyond the country’s poor value addition culture, Nigerian non-oil products often face high risk of rejection in the export market due to the inability to meet global requiremen­t which is taking a toll on the performanc­e of non-oil exports.

She added that without addressing these major challenges, it will be increasing­ly difficult for the economy to leverage the recent exchange rate depreciati­on of the naira to enhance global competitiv­eness and correct its external imbalance.

“We need to target specific industries in the nonoil sector, preferably commoditie­s where Nigeria has comparativ­e advantage, support players with incentives to help them achieve economies of scale, while ensuring those products are competitiv­e in terms of cost and quality,

Fiscal and monetary policy authoritie­s need to provide a supportive operating environmen­t for non-oil exporters to boost export and value-adding activities,” She advised.

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