…time to learn the ropes.
Since the oil prices came crashing alongside the value of the naira, there has been a renewed urge for Nigerians to embrace non-oil export as a means of survival. Right now, everybody wants to export. I have been inundated with requests from all manner of companies from Bureau De Change, Transport companies, companies operating in the capital market, oil and gas companies and then, of course, a battalion of unemployed people who see non-oil export as the way to their destiny.
One fact is that every company cannot export which makes export readiness checking a veritable tool that will save so many companies from disaster. I am writing this article because if we do nothing, we will not only have EU to contend with but the whole world. It is time for government agencies and their associates like the private Inspection Agencies to sit up and save this country from imminent disaster that will come from supplying poor quality produce to the world
Not too long ago, government started toying with the idea of bringing back the commodity boards an issue that is still being discussed. How feasible is it to think of commodity boards at this time? Why did we scrap the boards at the time we did? Should we have scraped it 100%, our neighbour Ghana was wiser and did not follow our footsteps and today, they are not caught in the quality web we are in
Earlier in the country, Nigeria commodity and export trade was built up and managed by private enterprises that purchase, ship, sell and re-import the finished goods back to Nigeria. Later on, the British government undertook bulk purchase of the crops at guaranteed prices, a development that led to the birth of the Cocoa Board in 1940 and subsequently gave rise to the West Africa Produce Control Board embracing Ghana, Sierra Leone, Gambia and Nigeria. Under this arrangement all the established produce Merchants carried on their operations as agents of the Board which major objectives include among others, guaranteeing stable prices, improving standard or quality, the buying, storage, transportation shipment and control, and providing funds for development and research for the benefit of producers.
Because of this central selling scheme and the high tonnage of produce at its disposal, the Nigeria marketing Board stood as strong brokers in World Commodity Markets, especially in London. Besides, they were able to repatriate all the proceeds intact thus enhancing the development of the nation’s economy. This was the setting before the oil boom era and the eventual scrapping of the Produce Board.
The truth is that Nigerian agricultural commodities rank among the best in the world. Notable among these are Cocoa beans, Cashew nut, Sesame seed, Ginger, Spices, edible nuts beans, Palm products etc the list is endless. About 1980/90, the problem was with ginger because some fraudulent Nigerians sent out rubbish and we earned such a bad name. A few years later, it was cashew nut. This was so bad that we had cashew nut worth about N1billion in warehouses and companies were requesting for cashew nut from West Africa countries except for Nigeria. In fact, the association of cashew exporters had to travel to appeal to buyers to look in their direction. These entire problems were as a result of information spillover from our past activities. As stated in a World Bank article recently published, “A developing country’s (good or bad) export performance in one market can affect its future export performance not only in the same market but also in ‘neighbouring’ markets”.
The biggest problem here is that of shipping poor quality produce and this can be taken care of if we can spend the time to study the commodities we wish to export. Agro-Commodity export can be very profitable if we do things right in terms of quality particularly and in other areas such as risk management and finance. We also need to beware of the kind of contracts we accept and also keep abreast with developments in the international market. Our lax system will continue to hamper the economy from appropriating the benefits derivable from a revived export programme. It confounds many that this problem has been with us for some time and nothing strategic has been done to deal with the situation.
Successive administration have acknowledged that if the country must achieve its set goal of becoming one of the top twenty largest economies of the world, Nigeria must embrace and develop the non-oil export sector. It has also been generally observed that the country must develop the non-oil sector with resources from oil. The sustained volatility of world oil prices, the global tendency towards a diversified export-based economy and the urgent need to expedite the process of economic growth and development has made it imperative that we either focus on non‑oil export or we regret it.
What we can do
- introduce initiatives to improve conditions that directly affect the private sector’s ability to export by removing trade barriers abroad, by helping firms — especially small businesses overcome the hurdles to entering new export markets, by assisting with financing, and in general by pursuing a Government-wide approach to export advocacy abroad, among other steps.
- develop programmes designed to enhance export assistance to SMEs, including programmes that improve information and other technical assistance to first-time exporters and assist current exporters in identifying new export opportunities in international markets.
- Promote all export incentive schemes currently available to assist exporters. This is because these schemes will not run alone but will rather serve as the pivot for the success of other incentive schemes already in existence; that is why it is an evolutionary strategy.
- promote services trade, including the necessary policy and export promotion tools. This has become necessary because the former incentives focus on agricultural products and manufacturing to the detriment of outsourcing in which Nigeria has comparative advantage.
MATTERS OF URGENT ATTENTION
- ACTIVATION OF THE COMMODITY EXCHANGE
In recognition of its dire need a commodity exchange was approved for Nigeria years ago, unfortunately, since its establishment the nation has not gained any benefit. This absence of a commodity exchange has robbed the sub sector of growth opportunities. The inactivity of the commodity exchange market leaves all manners of characters in the trade and makes it possible for foreigners to get into the country and move directly to the farm‑gate to procure commodities by‑passing everybody in the commodity trading chain.
- ESTABLISHMENT OF A NATIONAL INSTITUTE FOR EXPORT
The international market is often described as ruthless, selective and fiercely competitive. In the face of the issues and difficulties associated with exporting, the personnel of an enterprise going into export must be trained to enable them handle the export functions effectively. They need to develop the necessary skills, knowledge and confidence to initiate and conclude export transactions.
- ESTABLISHMENT OF EXPORT HOUSES
Export Houses are recognized secondary marketing channels for small and medium enterprises in export. In Canada for example, 40% of their exports outside the United State are contributed by Export Houses. Many developing countries have come to realize the need to have export houses to assist SMEs because of their numerous constraints.
- EVOLVING EXPORT-LED SME POLICIES
Just as recommended in the case of agriculture, it is imperative that SME policies have an export orientation at the point of conception. This would culminate in the entrenchment of a wide-spread export culture in the country. Experiences of industrialized countries have proven that small and medium scale enterprises are the pivot of exports as they account for at least 60% of export activities. With SMEs in the centre of exports, repatriation of proceeds is guaranteed. It is recognition of this type of advantage that UNIDO has supported the Federal Ministry of Industries Trade and Investment in establishing and organizing the Aba leather products-cluster. This strategy should be extended to other products.
- MAKING POVERTY ALLEVIATION PROGRAMMES EXPORT-LED
All the poverty alleviation programmes must have export as part of their strategies for national economic growth. For this to be possible, people at the helm of affairs in these institutions need to be exposed in order for them to see the need to integrate export in their policy formulation. The International Trade Centre has an Export lead Poverty Reduction Programme we can copy from
Nigeria is no doubt one of the most promising countries in Africa and its potential as a net exporter of agro industrial products, manufactures and services has never been in doubt and will continue to attract high interest from the international business community.
Result from the various interactive stakeholders meetings in the past has indicated the preparedness of the Nigerian private sector to accept the challenge of driving the nation’s economy. This acceptance is however, predicated on the ability of government to provide the proverbial enabling environment. It is, therefore, in recognition of this that recommended solutions need to be vigorously pursued.
In doing this also government must accept and act on the fact that a lot of financial investments must go into the creation of the necessary support structures towards making Export the hub of the nation’s economic development and growth.
Dr. Madu is the CEO Multimix Export House; Director General African Centre for Supply Chain and a recipient of the 2014Nigeria National Productivity Order of Merit Award. He can be reached at firstname.lastname@example.org You can follow Dr. Obiora Madu on LinkedIn or on Facebook to gain more insights on the topic.