Sunday, May 17, 2015 10.18AM / Olufemi Boyede, CITP|FIBP
It is no longer news that retired but not tired General Muhammad Buhari and his team of fervent patriots in the APC canvassed for the 2015 elections with a singular agenda as promise to the Nigerian electorate. That agenda - CHANGE - which was sold to the electorate and for which they set aside all differences and made personal commitments to overwhelmingly vote in the internationally respected retired General, while expected to cut across all aspects of governance throughout the lifetime of the incoming administration, would be most tangibly felt by the average Nigerian if the economy can take a positive direction, early in the life of the administration. On the other hand, a feeling of non-fulfillment or inability of the new Government to fulfil its pre-election promises, is also bound to push Nigerians to speedily begin to complain.
A few days ago, I was reading about a man, albeit of religious conviction, who warned the in-coming Government of the dangers of “testing the patience of Nigerians” if, within the first six months, nothing seems to be happening. I know a lot who would want to crucify Prophet Suleman as a Doomsday Prophet. However, let us remember that Moses had the mandate to free the children of Israel from the oppression of the Egyptians and the unholy Lordship of Pharaoh. They were all excited especially when Moses overcame all of Pharaoh’s intrigues to not “let my people go” and got them out of their land of oppression and bondage. However, just shortly after they left Egypt and, faced with the first hardships of the desert, they actually started blaming Moses, complaining that he should have left them “jeje” in Egypt where, at least, their feeding was guaranteed. May this fate not befall Nigerians in the life of this incoming administration from which so much is being expected.
In order to avoid the above scenario, GMB and his team would be best advised to watch out for a few critical landmines and, wherever possible, make adequate preparations to avoid such. One of these areas is, of course, the non-oil export sector.
The story of this sector under the outgoing administration is actually the reason why this writer considers it as one of the landmines being bequeathed to GMB. In the five years when Ngozi Okojo Iweala was effectively in charge of Nigeria’s economy as its Coordinating Minister, she appears to have prepared the non-oil export sector for certain death. It is on record that before she took over, Sen. Jubril Martins Kuye, as Minister of Commerce, had been mandated by the Federal Executive Council to review the Export Expansion Grant Scheme, the only functional incentive out of the eighteen that were earmarked to ginger the then Government’s vision of a diversified economy in 1986. Before his departure, the Distinguished Senator had, after a series of Inter-Ministerial Committee meetings with ample input from the Private Sector, prepared the requested review and proposed a new operational guideline.
However, under the new administration of GEJ, the baton fell on the Minister in charge of equally “new” Ministry of Industry, Trade and Investment, Dr. Olusegun Aganga, to conclude and implement. To the eternal damage of the Nigerian economy, Ngozi and her team bluntly refused to allow the review to see the light of day throughout the lifetime of the administration. This writer is well aware that under the strict instruction of the almighty CME, all of Aganga’s efforts were frustrated. In fact, for almost a complete two-year stretch, EEG was technically suspended.
The result was a drastic fall in the performance of Nigeria’s non-oil exports, with a drop of almost 40% between 2012 and 2014 (forget the self-praising reports of non-oil export growth, which are an absolute fabrication). And when, eventually, our almighty CME decided to want to “slightly open the window” for the utilisation of the Negotiable Duty Credit Certificates, it was so ridiculous that it was worthless. In fact, the newspaper advertisement issued by the Nigeria Customs Service gleefully announced that the utilisation of the NDCCs being temporarily allowed (for a number of selected exporters – no one knows the criteria adopted) was because “the Hon. Minister of Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo Iweala had GRACIOUSLY approved...”. What did she graciously approve?
A 4% redemption that ensured that companies holding up to N5Bn worth of NDCCs were only allowed to utilise less than N200m. Meanwhile, some of these companies were already under AMCON’s hammer as a result of huge debts owed their commercial banks. The questions that came to my mind at that time was, “is it her money that she has to be graciously dashing it out? As a World Bank Expert, was it too much for her to understand that EEG is only a competitiveness tool and efficient enabler of the country’s aspiration towards a diversified economy? Isn’t it perilous that she sees EEG as a dash rather than what it is, a hedge to help exporters to reduce some of the other indirect costs that Nigerian exporters face as a result of obvious deficiencies and inefficiencies in trade infrastructure, high cost of borrowing (when you are lucky enough to get access), etc?”
As mentioned in one of my recent articles, NOI superintended over the monthly sharing of money in the Excess Crude account as well as distribution of largess to cronies in the name of fuel subsidy that ran into almost trillions but could not authorise the release of the N80bn (at the time) for an incentive that would oil the wheel of Nigeria’s non-oil export. The landmine for GMB now is that the outgoing Government is owing Nigerian exporters about N150Bn in un-redeemed NDCCs and yet-to-be-paid approved grants as well as yet-to-be-processed claims. Ordinarily, this should have been chicken feed compared to the several more billions in hard currency that we are now aware was misappropriated and misused under her Coordinating supervision.
Enough about NOI lest we digress from the main focus of this write up.
What is happening in the Industry/Sector
Over the years, this writer has propagated, via several write-ups and independent memoranda, that the immediate solution to Nigeria’s economic predicament of today is a speedy reactivation and enhancement of the non-oil export sector. There is no doubt that the fight against corruption, and the possible, and direly hoped-for recovery of stolen monies, will provide a short-term pool of funding for Government’s projects, but it is extremely important that we understand that the basic foundation for sustainable economic growth for the new Nigeria, must be a virile non-oil export sector.
The reasons for this confidence are myriad. Stories of the world’s leading economies have shown that sustainable economic development is actually a result of strategic diversification, a clinical separation from the erstwhile over-dependence of crude oil as our main channel of revenue and foreign exchange earnings. In the case of Nigeria, we are aware that for at least two decades after the country became independent, the Nigerian economy was based principally on our agricultural exports. Those in the generations immediately before independence still reminisce nostalgically about the thriving Ground nut pyramids in Northern Nigeria, the lush and profitable Cocoa Plantations in the South-West and the Rubber and Oil Palm Estates in the South-East and the South-South.
The above are some of the key pillars on which a non-oil export-driven Nigerian economy should still rely. Add the bundle of opportunities in the Solid Minerals sector as well as our abundant natural gas, Nollywood and the Entertainment Industry, Fashion, Cosmetics, etc and you would get a slight picture of the possibilities in that sector. However, we also need to understand the vagaries of international competition, which include:
• Economic and Commercial warfare for product market share
• Geographical market conquest and presentation
• Steady product innovation, development and production
• Organized show-casing of national creative capabilities and opportunities
• Creation and deployment of competitive advantages
• Global diffusion of satisfaction and comforts
• Operational simplification of product flows
• Horizontal partnerships for wealth creation
• People-prosperity as a source of new global understanding and democratic stability
• Increased information and knowledge flows leading to increased production worldwide; and
• Global contact & proximity of nations, peoples, markets, products, services
It is in the light of this stiff competition that every country with forward-looking leaders are daily introducing policies and support instruments to increase the competitiveness of their exporters in the global marketplace.
Consequence of Inaction
As it is now, through the inaction (or deliberate negative action of the outgoing controllers of the nation’s economy), many of the exporting Companies have either closed shop completely or been forced to reduce production and thereby throw several thousands of our countrymen into the unemployment market. The leading leather Company in northern Nigeria, which recently expanded its exports to Asia (not a mean feat by all standards) laid off almost two thousand Nigerians in December, 2014.
Another Company in a very specialized segment and well-schooled in international competitive bidding, had to relocate its production to Dubai because the EEG support was no longer forthcoming. Most exporters of agricultural commodities have now reverted to smuggling rather than formal exports. It is faster and they are assured of 100% control of their export proceeds, as against the suffocating policies recently re-introduced by the Central Bank of Nigeria.
Reversing this trend is definitely a gargantuan task that the incoming administration must address almost immediately after inauguration. The reason is quite simple. The story of crude oil is now in its Epilogue scene as it will take a miracle for crude oil to ever go back to $100/barrel. Even if it does, more crude petroleum deposits are being discovered world-wide while technology is helping other advanced economies to develop more viable alternatives. We must understand that our best hope yet is the (non-oil) EXPORT ALTERNATIVE.
Charge to the Incoming Government
Our incoming Managers must realize that countries like the United States of America are so cognizant of the importance of exports that the Government will bend over backwards to provide every support necessary for America to “double its exports to the world within the shortest time”. Same reason why Australia has at least thirty-four different incentives to enhance the competitiveness of Australia’s exports in the world market and South Africa has over thirty-seven Export Promotion Councils (almost creating a separate Export Promotion Council for every sector in which it suspects having comparative advantage).
It is imperative that the limiting impediments be removed and an export-friendly environment be created earliest, in the life of the new administration. If you asked me, I would probably place this as top-three in the priority for GMB. The country can only be the better for it. To rebuild Nigeria’s economy, is a task that must be done!!!
The author, Olufemi Boyede, CITP|FIBP is a Certified International Trade Professional can be contacted vide 3885, Stardust Drive, Mississauga, Ontario, Canada, E-mail: email@example.com