As the Naira continues to totter and depreciate against the US dollar, the need to begin to explore, fund and promote other sources of foreign exchange has been attracting solemn attention from all concerned stakeholders particularly those of the maritime sector. Considering the available indices which show that $1 is over N700, inflation rate is almost at 19 percent and interest rate on borrowing now pegged at 14 percent by the apex bank, the timing for this discussion cannot be overemphasized especially if it sincerely addresses the issues. For donkey years, Nigeria has been depending so much on oil export as the only source of earning foreign currency, so in many cases what is obtainable in non- oil export is more or less a snake concealed in the grass.
The disastrous effect of this age-long tradition is what the country is experiencing now. Only recently the Excess Crude Account has been grossly depleted while the debt profile continue to rise, every aspect of Nigeria’s economy is suffering.
In other to gain insight into why the non-oil sector has been docile and not getting the attention it deserves considering the huge investment constantly channelled to oil export, MMS Plus had an exclusive chat with an authority in the Logistic and Supply Chain Industry, a Researcher and expert in Global Trade, Chairman, Multi-Mix Academy and Director-General, African Centre for Supply Chain (ACSC),Obiora Madu,PhD, who shared professional insights on the predicaments of Exporters and steps that government must take to address the non-oil export to rake in foreign currency. He spoke with Sabastine Mbah. Excerpts:
More than 40 years since the establishment of the Nigerian Export Promotion Council (NEPC), Nigeria is still doing badly in export particularly in non-oil export, what are the reasons for the low export?
Government has always been paying lip-service to export; we have never taken any strategic position. We have only been talking about it, so that’s what happened to our export; unlike other countries that have taken strategic steps to identify products where they have strength and then put investment in it. So we have not done that, and then all that we are doing is complaining that export is low, export is low; and what is responsible for all that is oil. The only time you see us get worried and start talking about non-oil export is whenever oil price goes down, when it returns up; we ignore non-oil exports.
If we are talking about total exports it includes services export. What efforts have we made in this particular director? So, the thing is, what you sow is what you reap. The day we do investment in export and give it the attention it needs, we will see the result.
Well, export promotion council is doing its best but then what of other things because it is not just all about promotion. If you have to promote it and you get the market, then you export it before getting the money.
You don’t get money by promoting export, it is by exporting. But the fact is that in situations where the local price of some commodities are higher than international market price, there is no control and then logistics cost. Today, it will cost you almost N800, 000 to move a container truck from Kano to Lagos. So at the end of the day, we are not even competitive when we find the market. Let me give you an example, when Nigeria and Malaysia were competing for the Portugal market for Palm Oil. You know we had a distant advantage because we are closer to Portugal; their government stepped in, since the cost of freight was the major issue. The government decided to absorb 50 percent of the share. That is what I called being strategic about targeting the market. Let’s take for example, Shell Nut; Nigeria produces 60 percent of world’s Shell because the bulk of world’s Shell is in West Africa; are we listed in the export market? Do people want to buy Shell Butters and the rest of them from Nigeria? So it is a multi-ferrous problem, it is not only about the promotion, it is also about creating the necessary environment and ease of doing business. Talk to those who are into export, they will tell you what they are going through.
Can you list some of these barriers militating against export trade?
I talked about logistics; it seems to be the biggest right now. Again, the non-functional nature of the commodity exchange, we don’t have a functional commodity exchange that is also part of the problem. Also, compelling exporters to sale their foreign exchange in a particular window,before it was actually to sale to bank or sale at bank rate. But now, there is another window where export proceeds can be sold but it is still not the best. Exporters are having problem, for example, if an exporter is doing a cost and freight transaction, to pay the freight even though he has foreign exchange in his account, the bank will not agree to give him in its rate. So how does he do the transactions? Then finance, forget about what you hear on television and radio; finance, talk to the exporters they will tell you.
There are a lot more but these are the key ones. There is nothing wrong with our commodities at all but because of too many road blocks and the rest of the people are looking for how to cut corners and that’s part of the problems. The moment they said they no longer have access to their foreign exchange, people started cutting corners. People started opening auxiliary accounts in the West and other Africa countries they could reach so that they could sell their export proceeds there and then bring the foreign exchange back to Nigeria and sell in black market. So you really have to show good faith, you really have to invest in the area, you really have to provide the necessary enabling environment then you can reap.
On infrastructure, there is a call for a dedicated terminal that will solely address export issues, do you think this is what Nigeria needs and can it change anything?
Will the containers fly to the terminal? The container cannot fly to the terminal, it is good, it is not actually something we should be talking about at this point in time, and it should have been there before now. But it is not about dedicated terminal, what happens to the transport cost, what happens to competitiveness. I hope you understand what I’m saying. It is okay but when you said it was dedicated, it means that the only thing that is done there is export, that is fine. It could make things move faster. But how do you get to that place before it gets attended to? Every other thing that I have mentioned, every other reason that I have listed needs to be attended to not just dedicated port.
What are the key issues that government should urgently tackle or put in place to ease export?
Support exporters, financing, it is not if you are financing me, you are not supporting me; you will be interested in collecting my foreign exchange. Support them, finance them that is very important, that’s one. Improve the infrastructure, in fact the other one that I didn’t even mention is our international integrity quotient. That is the way we are perceived by other parts of the world because if you are exporting to other parts of the world from Nigeria, you have a special problem because you are a Nigeria. Do you know that people move goods to Ghana to export? You find Nigeria yam in USA and they say it’s from Ghana. So people need to see us as a reliable destination, that’s the marketing side of it and it is a government responsibilities. Embassies need to get involved in selling Nigeria, that’s on the marketing side. On the infrastructural side, we must improve on infrastructure. If you have Rail, Cargo Rail and the rest of them, if you buy Ginger from Kano and send by road and I buy and send by Rail, the one sent by Rail will gain an advantage over the one sent by road. Still on the infrastructure, the road is not good that’s what we are talking, how much was used to move a container truck from Kano to Lagos before? It was around 300,000 that as when it increased but right now we are bearing a lot, so government has a lot to do, Nigerian exporters are crying.
As regards financing, are there no international supports grants or incentives Nigeria exporters can leverage on?
Who said so, but the point is that the funds are usually accessed through the banks and considering the high interest rate attached to it; it does not encourage exporters to collect such funds. Most of what they call incentives, where are they?
Are you proposing special incentives for exporters?
That is even a different thing all together, finance is part of incentives. For example, if you check Australian website, you will see that they have a basket of incentives for export. You must understand that Exporters are the goose that lay the golden egg. Today, we are crying that dollar has risen to almost N700 and who is going to bring the foreign exchange? Government is complaining that they don’t have enough foreign exchange any longer, so where will it come from? Oil used to pump the foreign exchange but we didn’t care; now reality is staring at us. So incentives yes, apart from even financing. There is one incentive which is for export transaction incentive; it is called Export Expansion Grant. When Nigerian Export Promotion Council started this in 1976, 12 incentives were approved by the government. How many of them have ever worked? Exporters need incentives; they need to be given incentives if we need to see foreign exchange in the country.
Using available indices or statistics, how do you compare Nigeria export trade with other African countries?
Well, we have not done well. The point is that there is no free lunch any longer even in Freetown. If you do not invest in a particular thing you don’t expect to get returns. You can’t compare us with Kenya; Kenya exports almost 50 percent of all the green beans that are consumed in Europe, Aircraft moving in and out on daily basis, not to talk about flowers, not to talk about Coffee and the rest of them. I don’t think that there is any country in Africa that is more endowed agricultural-wise compared to Nigeria. So, it’s painful why we are where we are. Right now, Ghana is ahead of us; imagine Togo Port becoming a logistics centre for West Africa.
Research also showed that about 70 percent of piracy that occurred in Gulf of Guinea (GoG) took place in Nigeria waterways; do you think it may have contributed to the low export trade of Nigeria?
Not at all, during those period were ships not berthing? It could affect maritime traffic but it has nothing to do with export, if it did, it will be so tiny that it is insignificant. If goods are stacked at the port it is because of traffic, not that there are no ships to carry them. In many cases, the buyers nominate the vessels that should carry the goods. So it’s not part of it, it is just a world maritime challenge that has been there, there has never been a time that ships are not able to come into Nigeria because of piracy.