In need of a boost in non-oil exports


Wednesday, June 10, 2015 9:52AM / FBN Capital Research   

The latest monthly Economic Report from the CBN puts non-oil exports provisionally at US$513m in February. This marks an increase of 20% from the level recorded in the corresponding period in 2014.

However, when compared to the previous month (January) it declined by 33%. This was particularly due to a sharp decline of 44% in export receipts from the industrial sector. Proceeds from the industrial, agriculture, manufacturing sectors stood at US$369m, US$84m and US$37m respectively.

The drop in oil prices has reinforced the need to diversify the economy, which would inherently increase non-oil exports.

The export expansion grant (EEG) aimed at encouraging exporters of non-oil products, by reducing cost of production and increasing competitiveness of Nigerian-made products in the global market, have assisted in boosting exports. However, the suspension of the scheme is stifling non-oil export growth.

Recently, the Nigerian Export Promotion Council (NEPC) devised a strategy aimed at promoting non-oil exports. This involves encouraging States to concentrate on products in which they have comparative advantage.

In Q1 2015, the Nigeria Export-Import Bank (NEXIM) supported non-oil exporters with N5.73bn (US$28.6m). The agric sector received N912.37m, 56% of the total amount, while manufacturing received N327.73m, equivalent to 20% of the sum total.

The previous administration tried recorded some successes in trying to boost non-oil exports. However, the latest statistics show that much work still needs to be done before the economy reaches a point of diversification where it can withstand external pressures as the one currently being experienced.

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