The Nation Newspaper

Tag: export

  • Export or die

    Export or die

    •More than ever, the Export Council, NAFDAC, SON and other stakeholders must get serious about export

    One would think that Nigeria needs no diviner to convince her that she must diversify her economy hastily if she would not lapse into a failed state in a couple of years. Again, one would want to take it for granted that methodical and aggressive export stimulation is sine qua non to the country’s very survival and that this ought to be apparent to government and her agencies.

    But facts abound to prove that government and most of her agencies seem utterly inured to the reality of a looming economic debacle in Nigeria. They seem particularly lax about the urgent necessity to seek alternative revenues and diversify the economy from dependence on crude oil sales. Thus, stimulating increased export of primary commodities to earn foreign exchange ought to have been a natural alternative.

    But this is not the case as recent events show. First, the immediate past managing director of the Nigerian Ports Authority, (NPA) Mr. Habib Abdullahi, in reviewing the activities of the authority for 2015 noted that 90 per cent of containers bringing goods to Nigeria from other countries return empty, among other woeful reports.

    Nigeria is probably the only country with this glaring aberrant situation. According to experts, most other countries of Africa have substantial non-oil export commodities to fill out-bound containers. African countries like Cote D’Ivoire, Ghana, Kenya, Malawi and South Africa always have various semi-processed agric products as well as finished goods to export.

    Another pointer to Nigeria’s authorities’ lack of seriousness and will to drive her export business is the troubling report about European Union’s (EU) ban on Nigeria’s beans and some other agricultural produce. According to the report, EU Food Safety Authority had in June 2015 suspended the importation of Nigeria’s beans for one year, to allow the relevant Nigerian authorities address some quality control issues.

    Beans of Nigeria origin was found to contain between 0.03 mg to 4.6 mg of pesticide considered to be injurious to human health; as opposed to the acceptable maximum residue limit of 0.01 mg per kilogramme.

    For one year, the Nigerian authorities could not muster the will to meet the EU condition until the grace period elapsed last June. Now the EU has extended the ban by a punitive three years, depriving Nigerian beans farmers of a lucrative export business reportedly worth about $10 billion.

    Notably, agencies such as Standards Organisation of Nigeria (SON); National Agency for Food and Drug Administration and Control, (NAFDAC); Nigerian Export Promotion Council, (NEPC) and the Federal Ministry of Industry, Trade and Investment reportedly collaborated to ensure that the ban was lifted but to no avail.

    Just recently, shipping companies raised cargo-handling charges astronomically, thus compounding the woes of exporters. Though the shipping companies complain of scarcity of foreign exchange which warranted their sourcing from the parallel market, exporters insist the new charges are arbitrary and unfair. Ironically, in spite of the government’s sing-song about economic diversification, exporters bemoan official aloofness on this matter.

    Yet another telling example of official nonchalance and insensitivity: last week, a large government crew made up of five ministers and a retinue of aides were on a trip termed ‘Nigeria’s investment road show in London’ ostensibly to promote Nigeria’s trade and investment. We dare say that we assumed the days of mindless jamborees like the London show were over with the last government.

    This government is still stuck in the old mode of much talk and much show and little work. As we have said so often, this government must return to the basics as far as exports and indeed the economy are concerned.

    Nigeria has huge potential in agro-commodity exports and this must be aggressively pursued. Agencies involved must be stirred from slumber and perhaps, rudely too! Our new mantra should be: “Export or die.”

  • States can be self-sufficient via non-oil export: Nasarawa as case study

    One of the most blessed states in Nigeria is Nasarawa because it combines a unique potential for both agriculture and solid minerals. Its appellation as “Home of Solid Minerals” is, indeed, true because this is the most endowed state in Nigeria in terms of deposits of economically and commercially viable natural resources.

    The report of the 2013 National Survey on Agricultural Exportable Commodities done through the collaboration of Central Bank of Nigeria, National Bureau of Statistics, Federal Ministry of Agriculture and Federal Ministry of Trade & Investments revealed that Nasarawa State has great potential for the production and exportation of sesame seeds, ginger and sugarcane.

    According to the report of BudgIT on the revenue and expenditure of the Nigerian states from January to last July, Nasarawa was the fourth on the list of states that with huge deficit. Despite the huge potential of this state, it has not met its recurrent expenditure due to over-dependence on federal allocation.

    This report is aimed at showing the government of Nasarawa State that it can truly diversify the economy of this state by making some deliberate effort to increase the farming of the sesame seeds, ginger and sugarcane in the state. The government should encourage citizens to undertake farming of exportable product by forming cooperatives in different parts of the state, train citizens in the farming of one of these commodities, provide them with improved variety of seedlings, agree a price to buy the harvested crop from them and then give them bank guarantee to buy the harvested crops from them at a collection point and pay them back within a stipulated period.

    This means the state will partner with trading firms to coordinate the exportation of the commodity and earn  foreign exchange afterwards. The state can then pay the farmers from the export proceeds upon conversion to Naira. This model has a humongous potential not just to generate revenue for the government, but also to create unprecedented job opportunities for the citizen of this state.

    In this article, I will be considering the potential of farming and exporting sesame seed as a very viable and sustainable means of revenue generation for Nasarawa. Let me also point out that the facts raised in this paper are based on the data obtained from different research done by Central Bank of Nigeria, National Bureau of Statistics, Ministry of Agriculture and some universities in Nigeria.

    Nasarawa produced about 40,000 metric tonnes of Sesame seeds in 2012. Using the national average of about 38 per cent, this state has arable land that is about 1,041,292.80 hectares of lands. We have made some reasonable and very conservative assumptions in this analysis and these include:

    • The state is using just 20 per cent (260,323.20hectare) of this land for the farming of sesame seed -the yield per hectare of sesame is two metric tonnes per hectare (even though, there are varieties that can yield more than this) this yield was used to make provisions for losses that might occur during harvest -the unit price of sesame seed is $1,200 per metric tonnes FOB Lagos (even though it can be as high as $1,500.
    • Cost of farming was put at N122, 000 per hectare based on some research works-cost of exporting per metric tonne was put at N25, 000 based on the export projects I have handled in the past.

    With a yield of 2MT per hectare, this means that the state can produce 520,646.40MT of sesame seeds on the land size stated in the assumptions above. If this sesame seed is exported at a free on board (FOB) price of $1,200/MT, the total proceeds will be $624,775,680.00. Using a conversion rate of N280 to $1, this amount to N174, 937,190,400. The unit cost of farming sesame seeds and exporting are N130, 000 per hectare and N35, 000 per MT respectively. The total cost of farming plus 30 per cent profit on the sales to the government (or to the trading company engaged by the government) comes to N43,994,620,800 and the total cost exporting (transport, documentation, freight forwarding etc) comes to N18,222,624,000. The total project cost (farming and exportation) will be about N62, 217,244,800. The estimated profit that can accrue to the state on this project comes to about N112, 719,945,600.

    According to data obtained from government sources, the IGR of the state for the year 2014 was about N4, 085,127,585. From the analysis we have done on farming and exportation of sesame seed, the state could grow her internally generated revenue by about 2,759% from this source alone.

    We strongly believe that if the government of Nasarawa can adopt this commodity as a means of revenue and implement the strategies suggested in this report, the state can be repositioned on the path to prosperity and greatness within few years.

    For questions on this thought, you can reach me via email to bayemibo@3timpex.com.

  • Organic farming can boost export of non-oil products, says NEPC

    Organic farming can boost export of non-oil products, says NEPC

    An official of the Nigerian Export Promotion Council (NEPC), Mr Macpherson Fred-Ileogben, has said value addition and organic farming are possible strategies that can boost the export of non-oil products.

    Fred-Ileogben, who is NEPC’s Trade Promotion Advisor and Export Assistant in Benin, spoke in an interview with the News Agency of Nigeria (NAN) in Benin, yesterday.

    He said these strategies were “necessary to enable Nigerian exporters know how to make their products acceptable in the foreign markets and earn more value for them”.

    According to him, the government is looking at diversifying the country’s resource generation from oil to non-oil products.

    “The government is also promoting the exportation of non-oil products because it is a way to boost foreign exchange earnings, conserve foreign reserve and create jobs.

    “So, exporters and would-be exporters should key into this policy and generate more foreign exchange for the country and in the same vein strengthen the valve of the naira,” he explained.

    The NEPC trade advisor said value chain addition was, therefore, imperative to making Nigeria’s non-oil exports more competitive and acceptable in the international market.

    “On the average, our products are up to standard but we have to do more so that they can compete well at the international market.

    “The country needs to do more in the aspect of infrastructure, such as improving power, processing facilities, access roads and rail transportation to ease conversion of raw materials into semi-finished or finished goods for exportation.

    “This is because most semi-finished or finished products attract more value at the international market than products in their raw forms.

    “If you are taking anything outside the country, we expect that the standard and packaging should be acceptable abroad.

    “If the standard is good, it will earn you good value for your product but if otherwise, it could be rejected. And worse still, the exporter will bear the cost of returning it back to the country,” he said.

    He advised farmers to adopt the emerging international trend in organic farming.

    According to him, this involves more concentration on the use of organic materials, such as manures, crop rotation and planting on the right soil and at the right time.

    “We are encouraging farmers to shift from subsistence farming to commercial farming for purposes of exportation.

    “As they do so, they should also do more of organic farming as the prolong use of inorganic fertilisers has adverse health effects on plants and humans “, he said.

    He, however, noted that the major challenges confronting small and medium scale exporters in some parts of the country were lack of access to finance and the international market.

  • Handling critical 5Ps of export business success -Part 5: Payment

    The purpose of a business is to solve problems and, thereby, create value while the goal of a business is to make a profit. This, therefore, makes this last factor very critical to the success of any export business. The payment factor in this series focuses on how to source for funds from banks to pay for products or raw materials procured from the local suppliers and how to get payment for the exported goods from the buyers abroad.

    The business plan of a new exporter should answer the following questions about payment, both to local supplier and the receipt of inflow from the buyers abroad. These questions include the following: What are the payment methods available in export trade? Where is the place of valid export contract in export financing? When is ordinary letter of credit not reliable as a payment security? Who are those that are eligible to access export finance products? Why are some payment methods not attractive to banks and is there a way to make them acceptable? Which instrument can give banks comfort when financing local supply? How can an exporter mitigate the risk of non-payment?

    The first question states that, what are the payment methods available in export trade? This is a very crucial question that is also grossly misunderstood by many exporters and sometimes bankers. The payment methods in an export trade transaction include Open Account (Cash against documents); Bill for Collection, Letter of Credit, Advance Payment and recently, a new one was developed called the Bank Payment Obligations.

    Under open account transactions, the exporter  ships the goods and sends documents directly to the buyer who then clears the goods and pay the exporter at a later date like 60 days or 90 days after shipment. Bill for collection is another payment method and it involves the transmission of documents through both buyer and seller’s banks and collection of payment through the same channel.

    The banks do not have obligations to pay in this arrangement. The importer can pay at the sight of document or at a later. If the importer fails the pay, the exporter will be at a loss. Letter of credit will be treated under the third question. Advance payment is the most secured method for the exporter because Payment is made before shipment is done. A bank payment obligation is not yet in operation in Nigeria. It is a technologically driven payment method that combines the simplicity of Open Account and the security of Letter of Credit.

    The next question states that, where is the place of valid export contract in export financing? A bank needs to see and review the export contract before financing an export transaction. This is because the contract forms the premise for the loan request. It helps the banker to know when the preparation for the production and sourcing of products for shipment should commence. It helps the bank to monitor the planning of the shipment with the shipping line. It shows the bank what, where, when, who and how the payment on shipment will be made. It informs the financiers the agreed price of sales for the goods. It also helps the banker to know how best to package the loan facility. Through the contract, the bank is also able to know the liabilities and responsibilities of the exporters. It helps the banker to envisage the likely challenges of the transaction and put in place the mitigants.

    The third question is very pivotal and it states that, when is ordinary letter of credit not reliable as a payment security? First of all let me define letter of credit. This is the undertaken of the buyer’s bank (issuing bank) to the exporter to make payment when the shipment is made and all the documents that complies with the terms of the letter of credit are presented.

    However, if the letter of credit is coming from a bank in a jurisdiction that is facing a sovereign risk (political and economic risk) or if the issuing bank ranking by rating agencies is very low, then an exporter might need another bank in another country to give an additional undertaken. This concept is called confirmed letter of credit. So, an ordinary letter of credit is the unconfirmed letter of credit. Even though it has the force of a bank’s undertaken to pay however, it becomes unreliable for payment when the issuing bank is exposed to sovereign risks.

  • NEXIM MD unveils guidelines for N500b export facility

    NEXIM MD unveils guidelines for N500b export facility

    The Acting Managing Director/Chief Executive, Nigerian Export Import Bank (NEXIM), Bashir M. Wali yesterday unveiled the implementation modalities of the N500 billion Export Stimulation Facility and the N50 billion enhancement on the Rediscounting and Refinancing Facility.

    Speaking at the non-oil export stakeholders’ engagement session in Lagos, he said over the past few months, the NEXIM Bank has been working with the Central Bank of Nigeria (CBN) to review existing policies and strategies towards increasing funding support and stimulating additional investments in the non-oil export sector.

    He explained that during the course of this review, the bank has also met with various stakeholders, including exporters, commodity associations, bankers, the Organised Private Sector (OPS) and other relevant government agencies to obtain strategic inputs and share perspectives towards achieving our common objective of diversifying the Nigerian economy.

    He said the approval of the two intervention funding schemes and release of the operating guidelines by the CBN represent the result of NEXIM Bank’s collective efforts.

    He said with the release of the guidelines and commencement of the schemes, Nigerian exporters and export oriented businesses will now seize the opportunity to expand and upscale their operations towards boosting the current low contribution of non-oil exports, which has remained at about five per cent over the years.

    “Let me also add that besides the issues of availability and access to funds, we have also intensified our collaborations and engagements with relevant institutions and stakeholders towards addressing other challenges affecting the export sector such as the problems of infrastructure, issues of packaging and labeling as well as improving access to market,” he said.

    He said the event was meant to create a forum for discussion of the implementation modalities, the role of all participants and the expected outcomes from the successful implementation of these schemes.

  • NPA eyes export to meet $1.2b revenue target

    NPA eyes export to meet $1.2b revenue target

    The Nigerian Ports Authority (NPA)  yesterday said it would go into strategic partnerships as well as encourage exports to achieve its  $1.2 billion revenue target for this year.

    Its Managing Director, Mallam Habib Abdullahi, who spoke in Lagos, said the agency was already reaching out to the Nigerian Export Promotion Council (NEPC) and the ministries of agriculture and solid minerals to work out other means of assisting in diversifying revenue sources for government, especially in growing exports for the country.

    According to the NPA chief, the agency may even surpass its target if current economic indices improve. He said the agency is also set to dedicate some port terminals to export hubs for agriculture and solid minerals. He said there are proposals for ports that will be solely dedicated to the export of agric produce adding that the Ilaje port in Ondo for was being proposed for solid mineral export.

    Abdullahi further stated that the NPA was already working out a strategy with the Nigeria Customs Service (NCS) on how to achieve this milestone, even as the terminal operators are also being re-oriented to support the success of the programme.

    He said this will not only help in the diversification of the economy, but also compensate for the revenue the ports are losing, as there is the urgent need to utilise the many containers that are lying idle in the ports and being taken away empty.

    According to him, NPA’s primary responsibility is to raise more revenues for government and work to assist in expanding the economy and ensure the nation’s dependence on oil is reduced significantly. He said the NPA is doing this by encouraging export promotion and foreign direct investment (FDI).

    He also stated that the agency is working  hard to ensure smooth operations at the ports. According to him, managemnt has so far developed an inter-modal type of transportation system, railways and motor roads within the ports to ease congestions in the Lagos and Port Harcourt ports, adding that the projects are 93 per cent completed.

  • Nigeria seeks duty-free cassava export to China

    Talks are  ongoing between Nigeria and China for the removal of current five per cent export duty placed on cassava export from Nigeria.

    The Minister of Agriculture and Rural Development, Chief Audu Ogbe, who spoke at the Third Ogun State Investors’ Forum, yesterday, said although there is a high demand for Nigeria’s cassava, especially in China, the high cost of transportation of the commodity from the hinterland to Lagos, enroute China, has made it less profitable.

    “Transportation of exports to China is expensive because of the distance  from here. So if we can get the Chinese government to remove the five per cent duty placed on Nigerian cassava, then that will be encouraging for farmers,” he said.

    Ogbe expressed optimism that the discussion will sails through, especially since the same waiver was granted Thailand on cassava export to China.

    “Nigerian cassava has been proven to be of higher and better quality than that of Thailand. So I am hopeful that China will grant us waiver on the commodity because this will further boost our export capacity of same to the Asia country,” he said.

  • SON, EU partner on export

    SON, EU partner on export

    The Standards Organisation of Nigeria (SON) and the European Union (EU) have begun an initiative to establish a code of practice for Nigerian agricultural products for exportation.

    A statement jointly signed by the Deputy Director, Standards Directorate, SON, Mrs. Chinyere Egwuonwu and Mrs. Irina Kireeva of EU said to achieve the goal, the organisations planned a national training on standards on code of practices for products.

    The theme of the training, scheduled to hold in Abuja on Thursday, is “Standard and Quality: Unleashing the Potential of Agricultural Products to Grow the Non-oil Export in Nigeria.”

    The statement said the training will focus on products such as cocoa, beans, Shea butter and melon. It added that the event would unveil the result of training facilitated by the organisations focusing on exports on key agricultural commodities.

    The workshop would equip participants with the technicalities of the export market with regard to the issues of development of standards and the engagement of the private sector.

    It said the workshop was critical for transforming agriculture in Nigeria and would help participants understand that Africa could feed itself through agriculture and export.

    The statement said the training would lead to adopting modernised and commercial agriculture, which was the key to transforming the country’s economy.

    The training is to be organised by African Caribbean and Pacific Countries from the EU’s Technical Barriers to Trade.

  • Nigeria to become hub for tile export

    • Firm to produce 500,000 ceramics yearly

    Niegria will soon become the hub for the exportation of ceramic tiles and sanitary wares, an industrialist has said.

    Dr. Khater Massaad, Chief Executive Officer of CDK  Integrated Industries, said Nigeria would be exporting the products to other African countries and Europe.

    CDK, he said, would open its state-of the-art porcelain and ceramic factory next month.

    He spoke with reporters at the factory in Sagamu, Ogun State.

    Massaad said the factory is built on a million square metres of land to meet global ceramics and sanitary wares industry demand in Africa and Europe.

    “Our aim is to produce high quality ceramic tiles and sanitary wares products. Everyone is in need of high quality products. We aim to meet the best quality in the world, matching and possibly surpassing the American and European standards,” Massaad said.

    Noting that the firm’s vision is to be number one in Africa, in terms of product quality and pricing, Massaad said the company was engaging Nigerians who are buying into the vision of the company as a professional organisation with global best practices.

    Over 65 million square meters of ceramic tiles are imported into Nigeria, according to Ceramic World review magazine published in Italy. And CDK Integrated Industries’ plan is to help Nigeria address this challenge by producing the highest quality of tiles and ceramic products that will shift the world focus to Nigeria in the area of ceramics and sanitary wares.

    The firm’s factory will be producing 500,000 pieces annually of several models of European designer collections, using the best technology, best raw materials, highest standards, world class fittings and soft closing hinges, amongst others.

    CDK Integrated Industries Porcelain and Ceramic tiles factory will be producing 60X60 CM, 30×60 CM and 40x40CM polished, glazed, glazed polished and soluble salt tiles with superior quality, using state of the art technology and latest digital printing equipment.

    On employment opportunities, Massaad stated that the company will be employing over a thousand Nigerians to be part of its dream of a world class factory to contribute to the development of the economy, adding that in the long run the idea is to eliminate the massive importation of the item from Italy and other countries to give value to the Nigerian economy.

    With active contribution to the construction of over 50 factories across the world, Dr. Massaad concluded that the investment in Shagamu, Ogun State, Nigeria will transform the economy of the communities and the country.

    He added that the firm is working on obtaining the necessary certification from the Standards Organisation of Nigeria (SON).

  • CBN chief praises Zenith Bank’s support for non-oil export

    CBN chief praises Zenith Bank’s support for non-oil export

    Central Bank of Nigeria (CBN) Deputy Director, Trade and Exchange Department, W. D. Gotring has ranked Zenith Bank Plc high among non-oil export supportive banks.

    Speaking at international trade seminar organised by Zenith Bank Plc in Lagos, with theme: ”Exporting for growth: Opportunities in non-oil export”,  he called on the government and other stakeholders to diversify the economy from oil by growing the non-oil export segment of the economy.

    He also urged other banks to emulate Zenith Bank’s commitment to real sector development and non-oil segment of the economy.

    He, however, urged banks to deepen funding for non-oil segment of the economy to boost the volume of forex receipts and economic stability.

    Group Managing Director/CEO of Zenith Bank Plc, Peter Amangbo, expressed the commitment of the lender to build non-oil export service excellence in the trade and investment sectors. This, he said, would lead to stability and growth of the economy.

    He said Nigeria is faced with the task of improving its Balance of Trade (BoT) by focusing on the non-oil exports since the sharp drop in oil prices in the international commodities market opened up the vulnerability of the nation’s economy.

    For him, increasing the country’s non-oil exports will help the economy rebound, create jobs, engender long-term prosperity, support sustainable economical, social and environmental growth while contributing to the development of many states.

    “Zenith Bank will continue to make significant contributions in the non-oil sector. We are focused, will embrace and evolve solutions that facilitate non-oil export. We will do more to help manufacturers, farmers, and entrepreneurs sell made-in –Nigeria products and services globally to benefit the economy,” he said.