Despite efforts to increase dollar inflows, Nigeria has been unable to significantly increase non-oil exports through foreign exchange over the past five years.
The country’s non-oil exports accounted for 9.65% of total exports in the first half (half) of 2024, down from 15.30% in 2020, down 5.65% over the period, according to data from the National Bureau of Statistics (NBS).
Chairman of the Manufacturers Association of Nigeria Export Promotion Group (MANEG), Odili Erewa Meggison, said the non-oil contribution to the country’s exports was low due to multiple issues, with manufacturing exporters operating under high production costs. He pointed out that .
“High borrowing costs, inflation, depleted infrastructure, anti-business regulations by Ministries and Agencies (MDAs) that cover manufacturing and export value chains, and high electricity costs are some of the key issues restricting non-oil exports. “There is a possibility that it has become a division,” Megison said in response to a question.
He added that soaring logistics costs due to rising costs of diesel and PMS, widespread security insecurity and delays in implementing incentives were also factors contributing to the decline in non-oil exports.
Uchenna Uzo, a marketing professor at the Pan-Atlantic University Lagos Business School, said growth in non-oil exports was hampered by an underdeveloped regulatory environment, as well as incomplete tax policies and legal requirements for non-oil trade. He pointed out that this is an important factor inhibiting growth. factor.
He also said that a lack of understanding among non-oil exporting countries about the knowledge and networks needed to export successfully is also hindering non-oil export growth.
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Mr Uzo, who is also a consumer expert, said: “Many of the laws governing trade and export of non-oil products are still not well developed in terms of taxation, legal requirements, trade arrangements and agreements.” .
He noted that despite challenges, Nigeria’s non-oil products are in high demand across the West African region as they have become cheaper due to price devaluation.
Despite the recent devaluation of the naira, the share of non-oil exports in Nigeria’s total exports over the past five years has remained low.
In value terms, the country’s non-oil exports appear to have increased by 283.7 percent from N964.2 billion in 2020 to N3.7 trillion in 2024. However, due to the devaluation of the naira, this does not necessarily mean that export volumes have increased compared to the previous year. period.
“With low non-oil exports, we have not been able to benefit from the devaluation of the naira. The country should benefit from the Central Bank of Nigeria’s naira float, but that is not the case as we speak.” said Obiora Madu, CEO of Multimix Group.
“Countries sometimes decide to deliberately devalue their currencies to increase exports, but we have not benefited from the recent devaluation. This is due to the lack of competitiveness of our products,” Madu said. It’s for the sake of it.”
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According to him, Nigerian products are more expensive than other products in the international market. Local producers and exporters have always struggled with poor infrastructure, which means their products are often priced higher than their global peers.
The availability of appropriate infrastructure is a key determinant of the success or otherwise of a country’s industrial sector. However, Nigeria lacks the infrastructure needed for business growth, especially a well-developed transportation system such as roads and railways that connect to the country’s ports.
Central Bank of Nigeria (CBN) Governor Olayemi Cardoso has said Nigeria needs to fix its fundamentals, diversify its economy and promote import substitution to achieve a stronger exchange rate system.
“Until the fundamentals are fixed and entrenched, we will continue to sub-optimize. Non-oil exports, and we talked about the sad situation we face today as Nigerians, is that we are monolithic. economy,” he said after the recent Monetary Policy Meeting (MPC).
“As long as we remain a monolithic economy, constraints will continue to prevent us from achieving the strong exchange rate that we all desire.
“We need to diversify our economy. There is only so much a central bank can do. If the fundamentals are not in the right place, we will continue to support and optimize. Again, As Nigerians, we have to find ways to substitute for imported goods. We cannot just import, import, import. Our taste for foreign products must be adjusted accordingly. No.”
