SEC, Fidelity Bank, UBA Other Stakeholders Explore Ways to Grow Nigeria’s Non-Oil Export

R-L: Principal Manager Trade and Exchange Department, Central Bank of Nigeria (CBN), Anne Nnenna Ezekannagha; Deputy Group Managing Director United Bank for Africa (UBA) Mr. Muyiwa Akinyemi; National Chairman Finance Correspondents Association of Nigeria (FICAN) Mr. Chima Nwokoji; Director Lagos Zonal Office, Securities and Exchange Commission (SEC) Mrs. Hafsat O. Rufai; Head, Strategy and Communication Nigeria Export-Import Bank (NEXIM) Mr. Tayo Omioji and Divisional Head, Agric and Export Fidelity Bank Plc, Mr. Isaiah Ndukwe at the 2022 FICAN annual conference held in Lagos on Saturday

The United Bank for Africa (UBA), Fidelity Bank Plc are among other stakeholders in the export value chain that over the weekend identified various ways to boost Nigeria’s non-oil exports.

Speaking at the 2022 annual conference of the Finance Correspondents Association of Nigeria (FICAN) over the weekend, Mr Muyiwa Akinyemi, Deputy Managing Director, UBA, said Nigeria has the potential to boost major items of non-oil exports which include cocoa, cashew, sesame seeds, hibiscus, fertilisers/chemicals, tobacco, hides & skin which accounted for 85 per cent of total export.

To this effect, he noted that the UBA facilitated $1.34 billion (31 per cent) in non-oil export volume in 2021 financial year (FY), making UBA a top export bank in Nigeria (number one export bank three years running).

He further noted that top 200 non-oil exporters control over 95 per cent/$4.2 billion of the industry volume in 2021.

According to Akinyemi, the recorded industry non-oil export figures excludes informal exports largely in the wholesale trading; IT and entertainment and solid minerals space which are currently unaccounted.

He said UBA has provided a $200 million non-oil export trade financing programme to bridge working capital requirements of SME/commercial exporters at  concessionary interest rate and favourable collateral structure.

The bank, he further observed, has also provided project and structured trade financing to enhance export capacities of manufacturing as well as commodity aggregators, among others.

However, Akinyemi highlighted some industry challenges that hinder export. He said they include “The dearth of skilled manpower and low export capacity of export focused entities, high cost of transportation due to the current state of our road network, inadequate functional rail transportation network, absence of rail line to the port as well as inadequate export port infrastructure, high cost of electricity/power and inadequate supply, duplication of roles by various government agencies including multiple checkpoints.”.

Also speaking, the Managing Director, Fidelity Bank, Mrs Nneka Onyeali-Ikpe, said it can no longer be business as usual if Nigeria is going to navigate itself out of the current trade imbalances.

Represented by the Divisional Head, Export and Agriculture, Fidelity Bank Plc, Isaiah Ndukwe, Onyeali-Ikpe, noted that before now, Nigeria had the luxury of not paying attention to the non-oil export space, but today, it presents an existential threat.

She added that current market headwinds, clean energy rhetoric out of the West and the emergence of electric vehicles is brewing a perfect storm for Nigeria.

Externalities like the African Continental Free Trade Area (AfCFTA) which means freer movement of capital, talent and enterprise compounds the problem.

“It is swim or sink. We either sell to other countries or get buried by an avalanche of imported goods whilst bleeding jobs and associated tax revenues. It is a geoeconomics game, once you cede ground, it is tough to get it back,” she stated further.

According to her, asides the foreign exchange play, another key upside to an export-oriented business is that it makes the enterprise very competitive over time especially in key performance metrics like process improvement, product design, packaging and quality.

“These were some of the opportunities that we saw years ago when we steered the focus of our banking business to exports as a strategic business. And even back then, we realised that while it was important to expand the non-oil exports space, it was even more critical to add value to what we export.

“At 3x increase in revenue, Nigeria can move cocoa exports to $3 billion per annum (currently about $1 billion) and cashew to $600 million (currently about $200 million) in the short to medium term.

“If we then doubled the capacity of our plantations as well as processing capacity, we can exponentially move the numbers,” Onyeali-Ikpe stated.

However, it is important to note that these economic opportunity losses are primarily a factor of Nigeria’s poor competitive advantage levels. From a global market perspective, export business is a game of ‘competitiveness.’

She also listed priority sectors as cocoa, sesame, cashew, tannery, rice and oil palm. The levers to scale capacities in these spaces are increased value addition and supply side expansions e.g. re-generation of ageing plantations and addition of new or greenfield plantations to the national supply grid, Onyeali-Ikpe said.

According to her, ramping up non-oil exports is a matter of economic survival for Nigeria.

“Secondly, the value addition imperative cannot be over emphasised given incremental value-adds to the economy like uplifts in jobs and tax revenues. And finally, export business is a game of ‘competitive advantages’ and policy alignments are key drivers of underlying market performance improvements,” she added.

September 21, 2022