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Tag: Bumpy road

  • Bumpy road to financial inclusion

    The Federal Government’s plan to narrow the 80 per cent gap of those financially excluded by next year may remain wishful thinking if challenges such as data privacy, security, lack of transparency as well as limited financial education and literacy, are not tackled, reports LUCAS AJANAKU.

    During  the first quarter (Q1) of last year, the Central Bank of Nigeria (CBN) identified that, to reach the goal of 80 per cent inclusion by 2020, an additional 7.6 million adult Nigerians would need to be financially included.

    Factors such as illiteracy, security challenges and slow penetration of financial services in rural areas had slowed the pace of inclusion.

    General Manager of Mobile Financial Services at MTN Nigeria, Usoro Usoro, said by the end of the year, Enhancing Financial Innovation and Access’s (EFInA) biennial results illustrated that the progress made towards this goal had been modest, with only an additional 3.5 million individuals included between 2016 and last year.

    As the nation draws closer to the 2020 target for financial inclusion, he said it was imperative to look at the developments that brought about some progress – albeit limited and provided a strong indication of what to expect from the various industry players, as well as the most suitable next steps to help realise the goal.

    According to Usoro, the establishment of agent networks served as proxy channels for banks, to enhance their reach of marginalised communities. Yet, despite having up to 10,000 agents in 2017, the impact of this reach was yet to be felt, as most of these agents delivered their services in semi-urban or urban areas. The slow growth of this initiative led to the launch of the Shared Agent Network Expansion Fund (SANEF) Initiative – it was designed to introduce an extra 500,000 agents by 2020, to cater to an additional 60 million Nigerians in rural and underdeveloped areas.

    According to him, with the limited time, there was some skepticism about how quickly the agents could be trained, on-boarded, licensed and begin to operate, especially as the process of establishing 10,000 agents had taken up to seven years. This initiative, while capable of enhancing access for the financially excluded, lacks the required trajectory that will enable Nigeria to meet the 2020 target.

    KYC

    On the matter of Know-Your-Customer (KYC) Requirements, the 2015 rollout of the Bank Verification Number (BVN) had provided a way to achieve the primary objective of creating a unified national financial database; enhancing e-payments and reducing fraud risks.

    However, even in 2018, the effective implementation of the Tiered KYC Requirements still required an additional review – the challenges remain for customers based in rural areas, who have limited access to physical bank branches, and the capital intensive nature of BVN registration also reduces the ability for banks to ease this challenge. The enforcement of BVN registration for these groups of customers (usually Tier 1 account holders with the lowest verification requirements and account limits) potentially reduces the rate at which financial inclusion is achieved.

    ALTON intervenes

    He said with banks dominating the activities of the financial inclusion agenda, key stakeholders in other industries identified the need for collaboration to accelerate efforts. In this vein, Nigeria’s largest telecoms operators – MTN, Globacom, 9mobile and Airtel – formed a coalition under the aegis of the Association of Licensed Telecommunications Operators of Nigeria (ALTON) and collectively, resolved to leverage their vast reach and resources to deliver access to financial services to 90 million customers by 2020, and deepen financial literacy across the country. This readiness for participation by non-financial stakeholders was timely, as it coincided with the CBN’s launch of the Payment Service Banking (PSB) licence months after.

    This development was significant, considering that the licence would enable non-banks – including telecommunications companies, retail chains, postal and courier service companies, mobile money operators, and FinTechs – to obtain a licence to operate in the financial sector.

    Banks kick

    Guaranty Trust Bank (GTBank)  has said the decision of the apex bank to license telcos for payment services is a threat to banks’operation.

    In a report, Nigeria Macro-Economic and Banking Sector Themes for the year, the banks PSBs will compete with commercial banks for earnings.

    “A more compelling threat, however, relates to the recent decision by the CBN to license PSBs to facilitate transactions in remittance services, micro-savings and withdrawal services in rural areas,” it said in the report.

    Though it’s a positive move for customers, the report said it would improve customer service and digitalisation of banking services while enhancing financial inclusion.

    Last year, MTN Nigeria and Airtel  announced plans to delve into mobile money services with the former expressing hopes that it would get the CBN’s approval and launch in Q2 of this year.

    The PSB license will, however, not allow the telcos to offer lending services and participate in the foreign exchange market.

    In the report, the tier 1 lender said the capacity of FinTech firms to gain a significant market share would be limited in the absence of collaborations.

    But Usoro said these developments set the pace for the years ahead. While optimistic about the progress made so far, there should be an increased alignment between the need and the delivery of the required services. By ensuring that more seamless approaches to BVN registration and account opening processes are established expediently using agents, industry partners, and other available networks; and providing an enabling structure and environment for the participation of payment service banking licensees.

    “As we approach the 2020 deadline for achieving the financial inclusion targets, our current position is prime for making significant headway towards 80 per cent financial inclusion.

    ‘’The CBN recently launched a revised National Financial Inclusion Strategy, which will tackle the challenges that have thus far hindered a quicker pace of inclusion – data privacy and security; a lack of transparency; and limited financial education and literacy. There might be need for additional policies to support these new entrants that are mobilised to address these challenges and bridge the gap in financial inclusion.

    “The feasibility of a 20 per cent financial exclusion rate over the next 11 to 20 months may appear doubtful; but if the participating stakeholders are able and encouraged to effectively leverage their positions in the national financial inclusion agenda for the ultimate good of the Nigeria populace. We just might be closer to seeing the needed changes that would enhance our economy and society,” Usoro said.

  • Bumpy road to economic recovery

    The Economic Recovery and Growth Plan targets to grow the economy by seven per cent and reduce unemployment to 11.23 per cent by 2020, among other ambitious targets. But, despite being in the second half of its implementation period, key deliverables of the four-year plan (2017-2020) are yet to manifest. Inadequate infrastructure particularly electricity supply, lull in economic activities ahead of next month’s elections, among other risks, are said to be threatening to scuttle its realisation. Assistant Editor CHIKODI OKEREOCHA reports.

    It was long awaited, but when President Muhammadu Buhari finally unveiled the Economic Recovery and Growth Plan (ERGP) in April 2017, the much-anticipated economic recovery roadmap held promises of changing the economy’s growth trajectory.

    For instance, the ERGP, which is a medium term plan, covering a period of four years (2017 to 2020), specifically set an ambitious target to grow the economy by 2.19 per cent in 2017 and subsequently, seven per cent in 2020.

    The 140-page document also seeks to reduce unemployment from 13.9 per cent as at Q3 2016, to 11.23 per cent by 2020. This translates to the creation of over 15 million jobs or an average of 3.7 million jobs per annum.

    The ERGP, which is a medium-term structural reform to diversify the economy, including expanding the nation’s power sector infrastructure, also envisaged that electricity supply will continue to grow, hitting 10, 000 megawatts (MW) by 2020.

    It was also hoped that the ERGP will return the economy to sustainable, inclusive and diversified growth, and transform Nigeria from an import-dependent to a producing economy; a country that grows what it eats and consumes what it produces.

    On the strength of ERGP’s implementation, Nigeria ought to have reduced petroleum product imports by 60 per cent in 2018. And by 2020, Africa’s largest economy is expected to become a well-diversified economy having multiple streams of revenue.

    The economic recovery plan broadly targeted the restoration of growth, human capital development and a globally competitive economy. This was in an effort to combat recession and reposition the economy on the path of sustained growth.

    It aimed to achieve these by focusing on five execution priorities namely, stabilising the macroeconomic environment, achieving agriculture and food security, and ensuring energy efficiency (especially in power and petroleum products).

    Other execution priorities include improving transportation infrastructure and driving industrialisation, primarily through the Small and Medium Enterprises (SMEs).

    But, with Nigeria already in the second half of ERGP implementation period, most of its key deliverables are yet to manifest. Rather, a number of formidable risks may have been tossed on its path, fuelling fears that the plan’s strategic targets may not be realised.

    Some of the risks includethe persistent crisis in the Electricity Supply Industry (ESI); inflation rate, which might slightly increase due to electioneering spending resulting from heightened political activities and lack of proper policy coordination.There is also the fear over late passage of the 2019 budget.

    The ERGP, which exited both the government and members of the Organised Private Sector (OPS), projected that inflation rate will trend downwards to a single digit by 2020. But with government spending expected to go up this election year, this could fuel inflation rather than spur growth.

    For instance, the Manufacturers Association of  Nigeria (MAN), expressed fear that with next month’s general elections, distractions from political activities may slow down infrastructure spending, which will adversely affect the performance of the real sector whose operations rely heavily on supportive infrastructure.

    MAN also expressed worries that technically, from the observed trends in the Nigerian budget cycle, the 2019 budget proposal might undergo late passage and the resultant negative effect on the overall economic ambience of the country might be colossal for an economy whose current growth rate is still fragile.

    The Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) is also worried. Its National President, Chief Alaba Lawson, said the Chamber looks forward to the prompt passage and implementation of the programmes and capital projects outlined in the 2019 budget.

    Lawson, who lauded the increased allocation to capital projects, also applauded the Federal Government and the National Assembly for ensuring that the budget cycle returns to the January to December period.

    She, however, expressed concerns about the implementation of the budget, noting that late implementation of the budget will have negative effects on the execution of capital projects.

     

    ERGP threatened by rising

    unemployment

    Barely a year to the end of ERGP’s delivery timeline, Nigeria is nowhere close to achieving its target of reducing the high unemployment rate. While the document targets to reduce the unemployment scourge to 11.23 per cent next year, latest figures from the Nigerian Bureau of Statistics (NBS) paint a disturbing picture of the scourge.

    While the ERGP targets to create over 15 million jobs or an average of 3.7 million jobs per annum, the NBS “Labour Force Statistics Report for Q3, 2018” showed that 20.9 million Nigerians are unemployed; around 7.7 million have been unemployed for a period ranging from one to three years, with a rate of 90 per cent still looking for a first job.

    Specifically, the report showed an unemployment rate of 23.1 per cent for Q3, 2018, compared to unemployment rate of 18.8 per cent at the same time last year. How the managers of the economy hope to reduce the unemployment rate from 23.1 per cent to 11.23 per cent between now and next year remains to be seen.

    But as Lawson pointed out, “The rise in unemployment from 18.8 per cent in 2017 to 23.1 per cent in 2018 underscored the need for intensified innovative policy actions to combat unemployment.”

    She said this will entail various measures including support for vocational training; industrial attachments and more efforts in job-creating infrastructure and development.

    Lawson said these measures have become necessary because “high unemployment among the youth increases the incentives for them to join criminal gangs and network, including radical and extremists groups and also acts as a push factor for illegal migration to foreign countries.”

     

    Electricity crisis is spanner

    in the works

    Of all the issues hurting the ERGP’s implementation and making the realisation of its set objectives almost impossible, the persistent crisis in the nation’s ESI is perhaps, the most formidable.

    Although, the ERGP recognised the fundamental role of power to the development of all sectors of the economy, Nigeria has not made much progress in boosting electricity supply to homes and businesses.

    Her plan to expand the power sector infrastructure and achieve 10, 000MW by 2020 has come under threat. For instance, the nation’s installed power generation capacity is put at 12,000MW, but actual output stood at about 5,207.57MW as at December 26, 2018.

    This is barely enough to power an economy as big as Nigeria’s particularly one that recently exited a debilitating recession, requiring an adequate, steady and reliable electricity supply to boost the real sector’s productivity and competitiveness.

    Although, the crisis in the ESI partly prompted the need to ride on the back of the ERGP to put the economy back on the path of sustainable growth, chances of significantly increasing the current output between now and next year appear slim.

    The Director-General of Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf, said the power situation continues to pose severe challenges to private sector operators, impacting adversely on productivity.

    “Throughout last year, we received complaints across sectors about high energy costs especially high expenditure on diesel, higher cost of and scarcity of gas, and payment demand by electricity distribution companies (DisCos) for power not supplied,” he said.

    Yusuf further stated that the situation continued to take its toll on the bottom line of investors and SMEs, adding that some real sector companies reported that they spend as much as 20-25 per cent of their total operating cost on provision of alternative power supply and payment to DisCos.

    The LCCI chief, who emphasised that the provision of power remained at the heart of the ease of doing business in Nigeria, however, noted the government’s efforts in addressing the perennial power supply shortage and the deeper commitment to alternative sources of power including off-grid initiatives.

    Lawson noted that a lot of work was required to improve infrastructure, particularly power supply. She, therefore, said the Federal Government must redouble efforts in improving infrastructure, such as power, roads and rails, as well as its efforts at improving the ease of doing business.

    The NACCIMA boss commended the ERGP Focus Labs, SME Clinics and the various Executive Orders aimed at making the business environment friendly for operators and investors.

    She pledged NACCIMA’s continued support of the government and all stakeholders working to create and sustain an enabling business environment for the real sector against the background of the ERGP.

     

    Tracking ERGP’s achievements

    But it is not entirely a tale of woes for the ERGP’s implementation. While there are doubts over the realisation of its objectives within its stipulated timeline, some milestones have been recorded.

    One of them was the launch of the ERGP Focus Labs to fast-track the plan’s implementation.The ERGP Focus Labs is a targeted six-week intervention that brings together all stakeholders to identify bureaucratic bottlenecks impacting medium-scale and large-scale investments in Nigeria and then generate ideas and resources to resolve them.

    The first phase of such labs was held in Abuja, from March 12 to April 22, 2018. At the sessions led by Vice President, Professor Yemi Osinbajo, investors were said to have left the focus labs convinced that they were the better for it. Investors received all the assistance they require to overcome the teething problems that are usually associated with business startups.

    For instance, one of the outcomes of the focus labs was investors’ realisation that the transformation of the agro-allied sector for the objective of achieving self-sufficiency in food production and export was possible.

    Investors in this sector were said to have formed strategic partnerships that would boost their businesses in terms of identification of funding opportunities, increase in capacity utilization and marketing.

    Similarly, investors in manufacturing, especially Micro, Small and Medium Enterprises (MSMEs) were exposed to opportunities that exist for them to unlock their potential, grow their businesses and contribute to building an economy that would compete with the industrialised economies of the world.

    The focus labs identified projects that can boost commercial and industrial development, employment generation with positive impact on families, local sufficiency and export for the much needed foreign exchange, and also contribute to Gross Domestic Product (GDP) growth.

    Osinbajo summed up the success of the exercise when he announced that it had identified private-sector projects worth about $22.5 billion – and with a potential for 500,000 jobs (in agriculture, transportation, manufacturing and processing, power and gas) – for unlocking by 2020.

     

  • On a bumpy road

    On a bumpy road

    Are the Free Trade Zones (FTZs) doing their job of stimulating industrial activities,  encouraging manufacturing of goods for export,  facilitating inflow of Foreign Direct Investments (FDIs) and creating jobs? To experts and operators, FTZs are handicapped by inadequate funding and government’s failure to fulfil its obligations to them, reports Assist. Editor Chikodi Okereocha.

    When the Federal Government opted to ride on the back of Free Trade Zones (FTZs) to stimulate industrial activities and encourage the manufacturing of goods for export, the expectation was that Nigeria would soon begin to reap bountifully from the initiative.

    The FTZs, otherwise known as Export Processing Zones (EPZs) or Special Economic Zones (SEZs),are specially designated industrial and commercial areas within a country where trade barriers, such as tariffs and quotas are eliminated to drive industrial presence in those areas and attract Foreign Direct Investments (FDIs). Economic activities within the FTZs are mainly geared towards export and such activities are expected to help promote transfer of technology and create jobs.

    By leveraging the FTZs to strategically improve the investment climate by stimulating export oriented business activities, the ultimate goal of setting up the FTZs was to diversify the nation’s economic base by weaning it of its over-dependence on proceeds from oil and gas. Although, between November 1991 when former military President Ibrahim Babangida led the foundation stone of the first FTZ in Calabar, the Cross River State capital, and now, a period of 13 years, the Nigeria Export Processing Zones Authority (NEPZA), the agency responsible for promoting and facilitating local and international investments into licensed free zones in Nigeria, says it has recorded some modest achievements, such achievements are considered mere drops in the ocean.

    For instance,  at the last count, the NEPZA, according to itsManaging Director (MD), Mr. Olugbenga Kuye, has licensed a total of 25 Free Zones across the country. Out of these, 12 are operational and open for business while the rest are at various stages of development.

    Kuye said the scheme has generated 3,000 new jobs from the various enterprises in the zones while the new FDI attracted has $664 million of which the Aluminium Smelter Company of Nigeria (ALSCON) EPZ topped the highest having invested $83 million for expansion of its aluminium smelter facility. This is followed by LADOL and Ogun Guangdong Free Trade Zones, respectively.

    The NEPZA helmsman also said  Nigeria’s Free Zones exported goods and services worth $664 million while local exports, which are local sales into the customs territory realised N29 billion.

    Kuye, who spoke at the Sixth National Council on Industry, Trade and Investment, also said the agency was putting mechinery in place to increase the volume of investment to about $15 billion in the next five years. He told council members that the agency had received 11 fresh applications for free zone status and that the applications are at various stages for consideration.

    He said the delay in granting free zone status was because of the inability of most zone promoters to meet relevant requirements, such as the provision of resettlement plan for current dwellers/inhabitants of the proposed free zone.

    However, experts, operators and stakeholders are far from being impressed by the performance of the FTZs.

    Some of them, who spoke with The Nation, described the performance of the FTZs as sub-optimal. For instance, Kola Oladipo, former chairman, Export Group of Manufacturers Association of Nigeria (MAN), said  the FTZs have failed to live up to the objectives of setting them up, blaming their sub-optimal performance on  lack of infrastructure and funding, among others.

    He accused the government of reneging on its obligations to provide the requisite infrastructure for the smooth operations of the FTZs. “Government failed to play its part; there is no government participation. Under the arrangement establishing the FTZs, government is supposed to provide access to land, water, electricity, and security, among others. But the government has failed to provide all of these, leaving operators in the free zones in the lurch,” he said. He said some operators, who could no longer cope with rising cost of providing their own electricity, water and security, have since fled the free zones.

    Oladipo is not done. He said the Nigeria Customs Service (NCS) is not helping matters either. According to him, operators within the FTZs are having a raw deal in the hands of Customs. “They (operators) are not supposed to pay duties for raw materials coming into the country to be used for manufacturing activities,” he said, adding that this has not been the case and it is against the original understanding that industrial activities are mainly for export.

    He said operators are sometimes made to sell manufactured goods to the local market rather than export. According to him, the original concept of FTZs was to develop export-oriented manufacturing in the non-oil sector of the economy.

    Kuye agrees with him. He explained that no import duty is payable for goods imported into the Free Zone either for consumption, production or capital goods and there is no export charges on goods exported. He noted that in the Free Zone, goods are transferred under customs escort from any ports of entry in Nigeria to Free Zones and there is fast-track of airfreight cargo movement under customs escort from any airport in Nigeria to the free zones. But Oladipo said customs has been observing these only in the breach, thus creating problems for the operators.

    He also said those managing NEPZA are mostly civil servants who lack understanding of the workings of the scheme and its operations. This, he said,was why the agency is not doing enough in the area of collaboration with relevant agencies such as MAN and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN).

    “There is need for all the stakeholders to come together and collaborate if the concept of FTZ must work,” he argued, adding that the government must also come in through the Nigeria Export Import (NEXIM) Bank to fund the operations of the FTZs. He said government agencies, which run the FTZs  are on budget, thereby making funding difficult.

    Kuye admitted that budgetary provision in recent years had been on the decline. He however, noted that efforts were on ground to tackle this challenge by seeking alternative sources of funding, such as adopting the Public-Private Partnership (PPP) model as well as seeking assistance from international development partners.

    Noting that FTZs are, indeed, capital intensive, requiring adequate funding, a Lagos-based lawyer,  Obiora Akabogu, said apart from poor funding, “The FTZs are suffering from undue politicisation, which is why they are under-performing.”

    He said the original concept of a free zone is to stimulate economic growth in a designated area that requires industrial presence, but the fact that some states whose geographic locations do not support a free zone, are now dabbling into it means that they have lost focus.

    Akabogu said, for instance, that while the Lagos State Government’s decision to explore the FTZs’ initiative to boost its economic prosperity, which led to the establishment of the Lekki Free Trade Zone (LFTZ) could be understood given the availability of seaports for ease of export, the decision of the Ogun State Government to go into a FTZ project is difficult to understand. As far as he is concerned, “some of the states that have delved in the project despite not having seaports for ease of export are merely playing to the gallery or jumping into the band wagon.”

    He said such states should have channelled their lean resources to other deserving projects such as agric. “Cocoa used to be the mainstay of the economy of Western Nigeria, but has been abandoned. Some of the states in Western Nigeria who are dabbling into FTZs could have channeled their resources to agric such as cocoa farming,” he said. Noting that the Federal Government’s FTZ in Calabar has not been working at full capacity, the lawyer wondered how that of Ogun State, for instance, would work.

    Akabogu is right. The Federal Government’s failure to dredge the Calabar channel is threatening the survival of the CFTZ and Tinapa Free Trade Zone, two of Nigeria’s popular free zones. Terminal operators in the CFTZ, for instance, have been lamenting that the non-dredging of the Calabar channel has been stunting the growth of the CFTZ and Tinapa Free Trade, which are struggling to survive.

    Here, Oladipo’s accusation that the government failed to carry out its obligations rings a bell, as the concession agreement the terminal operators had when they took over operations stipulated that the dredging of the channel had to be done by the Nigerian Ports Authority (NPA) to the advertised draft of 9.4metres. Till date, this has not been done, prompting persistent calls by stakeholders on the Federal Government to ensure that the NPA completed the capital dredging of the Calabar river channel.

    That is not all. Other challenges identified by the NEPZA include policy reversals and inconsistencies, slow responses to changes in global trend, conflict and overlapping laws and procedures with other relevant government agencies, delay in passing into law the proposed Free Trade Zone Bill, which is before the National Assembly, high cost of borrowing funds and non-availability of long term fund as well as lack of consideration of free zones in policy formulation.

     

     

     

     

     

  • Bumpy road to Nigeria’s agric dream

    Nigeria’s dream is to become a regional hub for agro exports. But the road seems not too smooth. Reason: producers and agro-allied companies seeking export markets have to contend with stiff regulations and standards, lengthy certification processes and other barriers, such as limited transport infrastructure. DANIEL ESSIET points the way forward.

    Under the Agricultural Transformation Agenda (ATA), Nigeria aims to become an export hub for agricultural goods in Africa. In the thinking of experts, that may hold the key to diversifying the economy. It is also capable of creating new jobs and generating economic activities in diverse areas.

    At the moment, Nigeria’s soybeans, cotton, sesame seeds, cashew nuts, mangoes, green beans, melons, vegetable tropical products are in high demand in the international market.

    The Minister of Agriculture and Rural Development, Dr Akinwumi Adesina, recognised that much when he said there is huge potential in agriculture, particularly in agro exports.

    The minister is right. Already, some agri-entrepreneurs have seen the new vista of opportunities in agro export and are ready to grow, process, package and export fruit and vegetables. One of such entrepreneurs, who have seen the opportunity in agro export is Sunday Anjorin, Chief Executive, Anjorin & Atanda Investment Limited, Lagos. He has since carved a niche in the business where he exports cashew nuts, ginger, sesame seeds, moringa, pepper and vegetables to Europe, Asia, and the United States. He is looking at selling more produce overseas, having learnt export processes, from field preparation to clearing produce.

    President, National Cashew Association of Nigeria (NCAN), Tola Faseru has also keyed into agro export business. Today, he is large cashew exporter. He relies on a national network to get supplies. He has agents across villagers, who search for nuts. During the harvest season, which starts in January, agents and traders looking for supplies for processors and exporters, go to the villages. During the peak months of April and May, the farms literarily become a theatres of war for exporters scrambling for farmers’ loyalty.

    For Faseru, cashew makes a substantial economic contribution. The major importers are the developed countries. Although, the kernels are used in food preparation and confectionery and are important in Asian cuisine, the principal outlet is the snack food market, and this sector is growing rapidly in markets in the developed countries. Foreign buyers, according to him, prefer kernels without defects or blemishes for confectionery, biscuits and bakery products, and other prepared foods.

    Faseru and other agro experts say that a lot is happening around the cashew sector, as growers of cashew are buoyed by demand from India and China as well as resurgent consumption in Europe and North America. Demand for cashew has grown about seven per cent a year over the past decade on the back of healthy snacking habits.

    However, as Faseru, Anjorin, and others agri-entrepreneurs, are striving to key into the agro export business, they are met with stiff challenges. For instance, Anjorin lamented that export of agricultural products, especially those meant for human consumption, is often fraught with various impediments part of which is the rigid and cumbersome sanitary testing procedures by most importing countries. This, he said, is quite challenging, particularly, for a relatively new entrant in the agro export business.

    On his part, Faseru lamented that entrepreneurs are losing a lot because most cashew output is exported in raw nut form. According to the Programme Coordinator, Farmers Development Union (FADU), Mr. Victor Olowe, agricultural products and processed foods shipped from Nigeria have been rejected by foreign buyers. The rejections, complaints and restrictions, he said, were from Vietnam and India. In addition, many countries have imposed restrictions on peanuts, rice, poultry products, curry leaves, okra, groundnuts, and cassia seeds for different reasons. Also, some countries imposed temporary bans on various products. The European Union (EU) maintains such data online on its website.

    Indeed, experts say that Nigeria could have achieved far higher growth in the export of agro products if it had come up with a suitable policy providing, among other things, the facilitation of the movement of export cargo within the country, bulk storage at the airports, and space for carrying the export merchandise by the national carrier, where applicable. Besides, it has been found that short shelf-life is a major constraining factor and this has yet to be addressed through intensive and extensive laboratory research.

    Some of these issues are believed to be responsible for why many agro-based consignments from Nigeria frequently face confiscation and rejection at destinations. This not only causes economic loss to the exporters, but also puts a question mark on the credibility of Nigeria as an exporter of quality produce. About 264 Nigerian agro-commodity products were rejected at the international trade market between 2004 and 2012, according to the Deputy Director Export and Port Inspectorate Directorate National Agency for Food and Drug Administration and Control (NAFDAC). Sylvia Ajoku. This was made known at a stakeholders’ forum on export proceeds recovery through cargo defence fund held last week in Lagos.

    She explained that one of the problems that led to trade rejects was substandard packaging, adding that the specified nylon and other buyers’ specifications were not strictly adhered to in most cases by the exporters.

    Continuing, Ajoku said: “The nutrition analysis, batch number, expiring date and the manufacturing date as well as moisture content should be evaluated and printed on the specified nylon as these were some of the causes revealed by investigation.”

    She maintained that some exported products were rejected on the grounds of being preserved with prohibited chemicals, advising exporters to attend training organised by NAFDAC. She urged exporters to get approval for every product to be exported, adding that getting a certificate was necessary to avoid subsequent rejection on export. She said that export certificate and laboratory analysis for exportable products are issued free by NAFDAC.

    Ajoku advised agro exporters to imbibe the culture of sending their exportable products to the quarantine department to be certified and fumigated with the proper chemicals.

    President, Federation of Nigerian Shippers Association (FONSA), Ayobami Omotoso urged exporters to adopt a secured means of payment to reduce the risks of loses. He said a bank account was the least secured method of payment to the exporter but most attractive to the importer, adding that it is only recommended when an exporter is sure that payment would be received.

    Omotoso said some exporters do not comply with the key terms of the contract relating to documentary requirements such as quality and quantity, noting that the practice could result in issuance of Non-Negotiable Certificate of Inspection by the inspecting agencies which often leads to litigations and delay of payment.

    Nigeria’s aging transportation infrastructure has also been a pain on the neck of agro exporters, as most of them are unable to move produce from farms to the ports. Inadequate infrastructure is seen as one of the major challenges to doing business in Nigeria, a situation that puts the country at a competitive disadvantage when compared to its neighbours.

    Besides, as the global trading environment becomes ever more competitive, the fragmentation and geographical separation of commodity value chains compound traditional challenges faced by exporters. Today, it is no longer enough to meet quality and packaging standards, have storage facilities, possess the appropriate skills, and have access to technology; participation in value chains requires superior infrastructure and transport as well as swift crossing of borders.

    Anjorin said that entrepreneurs must have a deep understanding of the export markets by keeping abreast of changing consumption trends; for example, the move towards organic products in some segments and the reality that more consumers wish to know where their food comes from. For instance, traceability and certification standards are of growing importance to agri-entrepreneurs. He said he has taken note of these because he is planning to go into fresh produce export, which requires a facilitated pack house, refrigerated trucks and cold storage.

    Ordinarily, the Export Expansion Grant (EEG) is supposed to take care of some of the challenges facing agro exporters and by implication, help achieve Nigeria’s dream of becoming a regional hub for agro exports, but the scheme has been allegedly abuse. The EEG is supposed to be a critical incentive stimulation package to drive the non-oil export sector. It is a Federal Government’s initiative aimed at encouraging exporters of non-oil products, including agro-commodities, through the reduction of high cost of production occasioned by inhospitable business climate at home.

    EEG beneficiaries in various categories mainly – manufacturing/ processed to finished products; and merchandise exporters/exporters of primary products (including commodities and Solid minerals) – whose products are evaluated based on local value added, local content, employment of Nigerians, priority sector, export growth and capital investment; gain between 10 and 30 per cent EEG (financial assistance). To be eligible to enjoy the benefit, an exporter must be registered with the Nigerian Export Promotion Council (NEPC); shall be a manufacturer, producer or merchant of made-in- Nigeria products for the export market; must have a minimum annual export turnover of N5 million and evidence of repatriation of proceeds of exports; and shall submit baseline data like audited financial statement and information on operational capacity to the NEPC.

    Violators of the guidelines are supposed to be dealt with by the Presidential Committee on Trade Malpractices (PCTM) and the Economic and Financial Crimes Commission (EFCC) in conjunction with members of the EEG Implementation Committee. However, the EEG has been grossly abused. Crooks and cronies of top government officials allegedly claim the grant. Cases of over-invoicing and fraudulently claiming the entitlement of manufactured products when raw commodities are exported also abound. Reports say Nigeria lost about N27.8 billion it would have earned as Customs duties and other charges in the first half of the year to the corrupt and inept implementation of the EEG, while about N74 billion was lost between 2003 and 2007.

    The calculated loss for the first half of 2009 was put at N12.5 billion. Customs authorities allege the huge fraud was perpetrated through the use of Negotiable Duty Credit Certificates (NDCCs) to cover import and excise duties that would have been paid by fraudulent beneficiaries of the EEG. The matter was made worse by reckless compromise in the issuance of duty waivers and concessions on the orders of the Presidency, especially in 2007.

    Bad as the situation is for agro exporters, experts say the situation can be salvaged if the government could frame appropriate policies in consultation with stakeholders aimed at boosting agro exports. Apart from ensuring access to mainstream markets, there is need for technical support in the areas of product promotion and product diversification and adaptation to suit the choices and preferences of consumers abroad. Also, there is the need to continue to educate farmers on the technical requirements of selling to certain markets. For example, exporters of agricultural products to the US must comply with the rules set by the US Food and Drug Administration. Other nations have similar regulatory organisations.

    At the level of policy, experts say the government could at the possibility of establishing Agri Export Zones to boost agri exports. Their argument is that since Nigeria is a producer of a range of commodities, such as coconut, mango, banana, , cashew nuts, pulses, ginger, turmeric and black pepper, there is need to leverage the production capability in these range of commodities for economic gains and to be self sufficient to meet the domestic consumption by setting up agri export zones. To promote agriculture and get returns to the farming communities, the Agri Export Zones (AEZs) should be considered.

    The AEZ focuses on the cluster approach of identifying the potential products, the geographical region in which these products are grown and adopting an end-to-end approach of integrating the entire process right from the stage of production till it reaches the market. There would also be a need to identify problems encountered at each stage. These difficulties could be procedural in nature or may relate to a particular quality standard.

    AEZs can yield benefits such as strengthening backward linkages with a market oriented approach; product acceptability and its competitiveness abroad as well as in the domestic market; value addition to basic agricultural produce; bring down cost of production through economy of scale; better price for agricultural produce; improvement in product quality and packaging; promote trade-related research and development; and increase employment opportunities.

    That is not all. Experts also canvass the establishment of centres of perishable cargoes. The thinking is that as exporters work to increase agricultural exports, some players are seeking more perishable centres to boost agro exports, a Centre for Perishable Cargo (CPC) at airports would boost, perishable cargo volumes. Such facilities improve the nation’s position in the global cargo industry by attracting global players and international freighter aircraft.

    The centre will also encourage farming for export in the area through production agreements with exporters, as well as a proliferation of sorting and packing centres. Also, plant quarantine centres at such facilities would ensure export quality is maintained. The centres should have facilities for temperature and humidity control, and cold stores.