“If Nigeria is able to capture only 5% of the international market share in these five sectors, the country could earn an additional US$8.25 billion. As more and more states and government agencies key into the vision of the Zero Oil initiative, especially now that it has been included in the national Economic Recovery and Growth Plan, I am optimistic we will see steady growth in the percentage of non-oil revenues in the coming quarters.” – Olusegun Awolowo, CEO, Nigeria Export Promotion Council
Nigeria is the largest crude oil producer in Africa, and has largely depended on oil export proceeds for its revenue. Though rich in other natural resources, Nigeria, is yet to maximise the full potential of its endowments, including exportation of its local produce.
Following the crude oil price slump, the country has been inadvertently forced to enhance its non-oil exports for increased revenue. The responsibility for this falls on some ministries and parastatals, such as Nigerian Export Promotion Council (NEPC), which was established in 1976 by the Federal Government of Nigeria to make the world a marketplace for Nigerian non-oil products, with a mandate to spearhead the diversification of the economy by increasing non-oil exports for sustainable economic growth.
The objective of the council is to diversify the productive base of the Nigerian economy away from oil and foster a market-oriented, private sector-driven economy.
Its responsibilities include promoting the development and diversification of Nigeria’s export trade, promoting the development of export related industries, promoting the implementation of export policies and programmes of the Government, spearheading the creation of appropriate export incentives, coordinating and monitoring export promotion activities in Nigeria.
Our Interview with the Chief Executive Officer of NEPC, Olusegun Awolowo sheds more light on the role of the organization in improving non-oil export revenues, its plans in achieving the objectives, and the successes so far.
What has NEPC done in achieving its mandate? What are the Councils programs to actualize them? And what impact have the programs made?
Our role is integral to government’s diversification efforts in fulfilling the mandate of the Nigerian Export Promotion Council, which is to promote the development and diversification of Nigeria’s export trade.
NEPC began to develop strategies to accelerate the diversification of the Nigerian economy through exports long before we experienced economic challenges through the fall in oil prices. As the number one agency for the promotion of non-oil, our flagship program is the “Zero Oil” plan.
The “Zero Oil” plan provides a roadmap to replace oil as the major national foreign exchange earner through carefully conceptualized interventions. The plan is one of the key components of the country’s recently released Economic Recovery and Growth Plan. The goal is to grow national earnings from non-oil exports first to US$8billion and eventually US$25 billion.
The “Zero Oil” plan also aims to diversify the country’s export base away from exporting raw commodities to value added products, increase participation of SMEs in export trade by 50%, achieve $706 million in non-oil export to the West Africa Sub- region and create 1.5 million new jobs in the SME sector by 2020.
The plan includes
· Selecting export products (Palm Oil, Cocoa, Cashew, Sugar, Rice, Cement, Iron ore/metals, Auto parts/cars, Aluminium, Petroleum products, fertilizer/Urea, Petrochemical and Methanol) to ensure that sufficient income can be earned to replace lost national revenues within a reasonable investment cycle.
· The One State One Product initiative, OSOP is an essential part of the “Zero Oil” plan, whereby, all states of the Federation identify at least one strategic export product based on their comparative advantage from which Nigeria can earn foreign exchange. It’s important to note though, that states are not limited to choosing only one item. For example, Enugu continues to successfully export pineapples into the European market, despite choosing other products for OSOP.
· The Nigeria Diaspora Export Programme, NDEX is another key component of the “Zero Oil” plan, meant to leverage on the opportunity provided by the huge population of Nigerians overseas, by promoting commercial, cultural and social development of our people. NDEX has plans such as, Nigerian Heritage City, NHC (a business and cultural enclave akin to Chinatown, a venue where national cultural values can be projected and visitors can experience/purchase Nigerian goods and services across global cities.), Nigerian Cuisine Beyond Borders, NCBB (will promote Nigerian Cuisines at restaurants in major cities around the world for the purpose of attracting export-oriented investments by Nigerians in the diaspora.)
Since inception, which export related industries have the council assisted?
NEPC encourages and assists in the development and promotion of all non-oil exports from Nigeria. An example in the agricultural sector is cashew production. Nigeria is one of the world’s top 10 Raw Cashew Nut producing countries and it is grown in commercial quantities in 17 of our 36 states. There is high international demand for cashew, though our commercial viability is enormously untapped.
NEPC targeted interventions are aimed at improving quality standards and safety, training local farmers on planting and harvesting best practices, the provision of jute bags for farmers, marketers and exporters, providing assistance with market linkages. In the past three years we have seen a steady increase in our cashew production.
NEPC has also assisted the Nigerian textile and garment sector. Globally, the fashion industry is estimated to be worth US$2trillion by 2020. Yet despite Nigeria’s abundance of excellent designers and creative talents, we are yet to make a significant mark on the export of textiles and apparels. Our challenges range from weak production capabilities and lack of proper coordination among operators in the sector to limited knowledge of market requirements and challenging operating environments. NEPC has embarked on some key initiatives such as the rehabilitation of the Human Capital Development Centre (HCDC) in Lagos to enhance capacity for the sector; improve market understanding by supporting designers to participate at the world’s largest apparel sourcing event, Magic Fair, Las Vegas (2014, 2015 and 2016); entered strategic partnerships with multi lateral (UNIDO, USAID) and private (Style House) sector stakeholders on capacity development for the sector. We also collaborate with relevant government agencies and State governments on Common Facility Centres as a basis to attract investment to the industry.
What is the percentage of non-oil revenue to total revenue of the economy from 2014 to 2016?
According to the National Bureau of Statistics (NBS), in the third quarter of 2014 non-oil exports to total exports was 3.0%. In the 3rd quarter of last year (2016) this had increased slightly to 3.3%. Although crude oil still accounts for a significant proportion of our exports, we at NEPC are committed to improving these statistics through non-oil export growth diversification.
Under the “Zero Oil” plan, we have identified 22 countries that have demonstrated a consistent capacity and high demand for purchasing Nigerian products. Our “Export 22” countries are those that have a proven track record of importing our strategic export products in large quantities. These countries are the primary target markets for Nigerian goods and services abroad.
We have also gone an additional step further by mapping out the specific products these countries need from Nigeria. For example the Netherlands, one of Nigeria’s largest trading partners, is experiencing increasing demand for oil palm and cocoa. In the U.S.A, there is a growing need for nitrogenous fertilizer and ammonia in addition to agricultural products such as sugar, rubber and cocoa. In South Africa, another of Africa’s largest economies, there is increasing need for rice.
Each of the “Export 22” nations presents an opportunity for Nigerian producers and exporters. Oil palm, cocoa, sugar, rubber and rice sectors are worth US$165 billion annually.
"If Nigeria is able to capture only 5% of the international market share in these five sectors, the country could earn an additional US$8.25 billion. As more and more states and government agencies key into the vision of the Zero Oil initiative, especially now that it has been included in the national Economic Recovery and Growth Plan, I am optimistic we shall see steady growth in the percentage of non-oil revenues in the coming quarters."
What incentives are there for the development of the export market in Nigeria?
A myriad of incentives exists from various government agencies to support and promote Nigerian exports. At NEPC, there are two primary incentives -the Export Expansion Grant (EEG) and the Export Development Fund (EDF).
The EEG and EDF are post and pre-shipment schemes respectively, for the purpose of helping all businesses in the export space from SMEs to large corporations. Additional incentives run by other agencies include the Manufacturer Exporter–in–Bond Scheme, the Export Processing Zone Facility, Pioneer Status, the ECOWAS Trade Liberalization Scheme the Export Credit Guarantee facility and the Tax Relief Inducement programme. One must also remember that incentives are only one of the ways to attract and encourage the development of exports from Nigeria. Nigeria has a large domestic market of over 170million people, it is also the manufacturing hub for the greater ECOWAS region, a market size of over 300 million people!
Illegal export businesses are thriving across the border, and how is the council tackling it?
Illegal exports cost Nigeria large amounts in lost revenues every year. In 2016, the government actually sued oil companies for upwards of US$12.7 billion as a result of illegal exports. In the non-oil sector there is a similar trend. For example, in 2016 several fertilizer companies were accused of illegally exporting fertilizer in large quantities and causing domestic shortages that affected our local farmers. Of course all of these is in addition to the smaller scale informal cross border trade that occurs daily.
One of the ways the Council addresses these problems is by raising awareness. We are able to introduce and encourage the use of proper documentation and procedure through regular capacity building, sensitization, and enlightenment seminars for existing and aspiring exporters.
Many SME producers in Nigeria engage in informal export not by choice; this is the only way they know. Our capacity building programs, often developed in collaboration with international institutions, are organized to empower producers by showing the benefits of formalized business practices. For example, our STDF Project 172 was a training program that focused on local Shea and sesame industries.;it was in collaboration with the International Trade Center (ITC) and 13 other partners.
They were able to improve and expand Nigeria’s Food exports of sesame seed and Shea nut/butter, through improved SPS capacity building for Private and Public Sector Organizations and improved quality control along the supply chain of both products.
During the project over 600 women sheabutter processors were trained on international best practices within the sector. Shortly after completion of the program an American company placed an export order from Nigeria. This is just one example of what can happen when our small-scale producers are encouraged to enter the formal economy.
Countries such as, Ghana export produce, like yams to the USA with good price, quality control, and packaging, whereas, Nigeria produce is being rejected. What is the council doing to ensure international quality, standards, and good perception of Nigerian exports?
Quality control is an important area we must tackle in developing our non-oil exports. We lack an internationally recognized quality infrastructure framework that ensures the safety of our products; this is a major hindrance. NEPC is one of the government agencies actively participating with the EU and UNIDO on the National Quality Infrastructure Project (NQIP). NQIP aims to improve the quality, safety, integrity and marketability of Nigerian goods and services, especially those produced by SMEs.
Quality control capacity building programs are held throughout Nigeria, and SMEs are actively encouraged to participate. NQIP has hosted Food Assessment Risk Trainings, Monitoring and Evaluation Workshops, Laboratory Trainings, Quality in industry and Trade workshops; as well as Quality and Standards system improvement trainings, specifically for exporters of several agricultural products including beans and melon seed.
What other challenges are confronting NEPC?
Our challenges are the same as those faced by most Nigerian establishments today. Inadequate access to finance is a major barrier for exporters. Finance is an integral factor for exports and we are in active collaboration with other Nigerian institutions, such as NEXIM, the Nigerian Investment Promotion Commission (NIPC), and the Bank of Industry (BOI) to ease this challenge. Financial institutions can be somewhat hesitant to lend to potential non-oil exporters because of the perceived risks involved, and oftentimes, when lending is available, interest rates are high. This is something the Council is aware of, and working on. Nigerian exporters require improved financial support, and we continually emphasize the importance of financial institutions support to our exporters. Under our new structure, the council has a unit dedicated to sourcing finance, and liaising with financial institutions to provide our SMEs with the adequate resources they need to grow and thrive. We also look for creative solutions to common funding bottlenecks so business owners are no longer forced to rely on personal and family funds to carry out their businesses.
Some other major challenges we face include infrastructural deficits like power, water and poor roads. Our producers suffer from weak logistics and support supply chain linkages as well as poor quality standardization of products (labelling & packaging). To address these challenges, the Council regularly holds capacity building workshops and trainings. We also collaborate with other government agencies both domestic and international, because governments must play a vital role in providing an enabling environment for businesses to thrive.
What are the opportunities for export available for entrepreneurs, and new entrants?
Opportunities for exports available to entrepreneurs and new business entrants abound. Businesses in Nigeria have the ability to play a crucial role as engines of growth in our country. Empowering their development means creating wealth, reducing poverty and creating more jobs for Nigerians. If every single one of our over 17million SMEs was encouraged and supported to hire an additional 1 or 2 staff, over 30 million jobs would be created!
Entrepreneurs in Nigeria should continue to take advantage of the various resources on offer to them from different government agencies such as NAFDAC, SMEDAN, NEXIM, CBN, Federal Ministry of Agriculture & Rural Development, Ministry of Solid Minerals and business friendly commercial banks. The Export Development and Incentive Directorate, (EDI), within NEPC, is available to support those who desire to export. Nigerian businesses must learn from each other, share information and embrace mentorship and the opportunity to grow.
“Nigerian businesses must learn from each other, share information and embrace mentorship and the opportunity to grow.” – Segun Awolowo
· The Export Expansion Grant (EEG), is a post shipment Incentive support scheme for exporters that is provided after the remittance of export proceeds through the Central Bank of Nigeria (CBN). To be eligible, an exporter must be registered with NEPC and must be a manufacturer, producer or merchant of products of Nigerian origin for the export market (i.e. the products must be made in Nigeria). The EEG is a financial credit that is applied on the value of the exported products and ranges from 5% to 30%. The financial credit is not cash funded, but provided in the form of a Negotiated Duty Credit Certificate (NDCC), which is applied against import duties on necessary inputs for exported goods. The scheme was suspended in 2013 due to the impact of duty revenues from NDCC claims. The EEG incentive, which is statutorily administered by NEPC on behalf of the Federal Government, is currently under review. Information on the newly reformed scheme (EEG 2.0) will be forthcoming once the review process in completed.
In 2016, Nigeria’s major non-oil exports were Cocoa, cigarettes, sesame seeds, and cashews.
Under the “Zero Oil” plan, over the next 10 years, NEPC will attempt to gain market share in the following priority sectors: Petrochemicals (worth US$150billion), Soybeans & derivatives (worth US$100billion), Sugar (worth US$60billion), Cotton & Yam (worth US$40billion), Fertilizers & Ammonia (worth US$40billion), Palm Oil (worth US$35billion), Rice (worth US$25billion), Rubber (worth $25billion), Hides & leather (worth US$20billion), Cocoa (worth US$20billion) and Gold (worth US$400billion).
Clearly, NEPC is an integral component of Nigeria's drive to develop non-oil export. Its achievement is important for Nigeria's economic growth as a whole - TSH
For more enquiries contact Nigeria Export Promotion Council
email addresses: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org
Address: Plot 424 Aguiyi Ironsi Street, Maitama. Abuja. Nigeria
Telephone: +234 9 291 0966
Special Thanks to Mr. John-Bede Anthonio, Mr. Olubode Oke, and the rest of the team for their contribution to this Interview.