Obiora Madu, Director-General, African Centre for Supply Chain, Lagos, spent a decade on the export desk of two major export-facilitating banks and was a member of the pioneer team that developed most of the export financing products and instruments that are generally used by most banks . In 1992, he left banking as Head, Export / Import Operations to start Multimix, the pioneer indigenous Export House in Nigeria. Mr. Export also pioneered Global Trade, Logistics and Supply Chain Education in Nigeria leading Multimix Academy to become the leading firm delivering competency based education that has empowered managers across all sectors of the Nigerian economy. Daniel Essiet sought his opinion on international trade, customs procedures, laws and regulations to improve trade facilitation, procedures for traders and government agencies involved in the import and export of goods.
Experts are canvassing reduction in government size and expenses drastically. What solutions would you recommend?
Governments everywhere face pressure to provide public services better, faster, and cheaper than before. Lean methods have been used by governments of various sizes across North America to successfully meet this imperative. Lean has particular promise for public-sector organizations because it doesn’t require a lengthy planning and implementation cycle, it does strive to make the best use of the talents and ideas of those who work in the process, and it focuses on the value that public services create for the citizen and how to maximize that value.
Governments around the world want to deliver better education, better health care, better pensions, and better transportation services. They know that impatient electorates expect to see change, and fast. But the funds required to meet such expectations are enormous. The need to get value for money from governments at all levels is therefore under the spotlight as never before. But cost-cutting programs that seek savings of 1 to 3 per cent a year will not be enough and in some cases may even weaken the quality of service.
In the past two decades beginning the 1980s, there has been a growing realization among some public servants, politicians, activists and academics around the world regarding the inherent weaknesses of government bureaucracy. From the industrial states of Europe and the United States of America to the developing and underdeveloped countries of Africa, Asia and Latin America, bureaucratic dominance is often viewed not as a solution to the problems of public administration, but the very source of these problems.
LEAN is “a management culture that emphasizes the centrality of the ‘customer’, as well as accountability for results.” The main objective of implementing LEAN is to achieve “more transparency, more efficiency and more quality as well as reduction of expenses.”
Mr. Madu has over 28 years of related working experience with international corporate exposure in international trade, customs and maritime as well as transport and logistics/supply chain management. His experience in training and capacity building cuts across all the industries as has been shown in activities too many to list. He has experience working with international agencies like International Trade Centre in Geneva, The US Commercial Service and USAID amongst others.
How would you describe export outlook this year?
The outlook for export this year is not two different from last year. Infact the press have reported some decline in revenue from non oil compared to 2012. However with the flurry of activities in the agric sector, we are likely to see a surge. The unfortunate however has been the fact that we continue to export raw agro-produce and this does not pay us. Our manufactured export is very low for obvious reasons.
President Goodluck Jonathan in his message to a recent non oil export conference made it clear that if the country must achieve its set goal of becoming one of the top twenty largest economies of the world, Nigeria must embrace manufacturing and the non-oil sector, and that the country must develop the non-oil sector with resources from oil.
The sustained volatility of world oil prices, the global tendency towards a diversified export based economy and the urgent need to expedite the process of economic growth and development has made it imperative that we either focus on non oil export or we regret it.
How much interest is there from international buyers in our exports?
In terms of agro-produce, tropical crops grow in the tropics and those who leave outside the tropics have no choice but to buy. But that notwithstanding, we have a acquired for ourselves a reputation of unseriousness particularly in respect of executing export contracts. This has adversely affected the level of interest in our export products. The result is that people that ship products from Nigeria and label them as either Ghanaian or Burkinabe products. Atypical example is in Shea butter.
The challenges notwithstanding, what sectors of the economy stand to benefit the most from export trade?
When you mention export every body’s mind go to the traditional agric produce but indeed so many sectors in the country are exporting without knowing it. However let me talk about the not too popular export of services.
Trade in Services refers to the sale and delivery of an intangible product, called a service, between a producer and consumer. Trade in services takes place between a producer and consumer that are, in legal terms, based in different countries, or economies, this is called International Trade in Services.
The International Trade Centre in Geneva has said that by 2050 80 per cent of workers around the globe will be working in that service sector and also that services now account for approximately two-thirds of the world’s economic activity, with trade in services contributing over 20 per cent of world trade and over US$1.3 trillion annually. Currently over half of the world’s workforce is employed by service firms, which also create most of the new jobs. The contribution of services to Gross Domestic Product (GDP) in the majority of countries is well over 50 per cent and in some cases, as high as 70 per cent. Furthermore, new information and communications technologies are increasing the tradability of services. Trade in services is expected to represent half of all world trade by 2020.
A country survey of the services sector in Nigeria, I conducted for ITC in 2006 revealed that 42 per cent of Nigeria’s trade performance is traceable to the services sector. Identified sub-sectoral activities with high export potentials include engineering, telecommunications, healthcare, catering, tourism, architecture, accountancy, courier, business and management consultancy, etc. Emerging markets was also identified in business advocacy both at the public and private sector levels. It is doubtful, however, if the nation is aware of the potentials of this sub-sector and its ability to contribute immensely to the country’s economic diversification agenda. Nigeria’s tourism industry, for instance, is a big gold mine that is yet to be excavated, the same goes for our film industry with our home videos making waves in homes around the world and yet no coordinated approach to ensuring its official exports.
What are the biggest challenges to export market development?
The challenges are mainly policy failures. This is why at our export has not progressed in spite of the interest shown by government.There are other challenges within the sector. These include absence of relevant support structure. This issue is vital.The export sector is a very large one and needs so many hands on deck in the chain. This means that if any section is not working, others will be affected. It shouldn’t be only the concern of Ministry of Trade and Investment. You notice that that inadequate attention is paid to the small and medium scale enterprises in our export policies. As a strategy global, SMEs are supported because they offer considerable potential for exports. However, in spite of a deliberate policy of providing support to SMEs adopted by many countries, this potential is yet to be fully exploited. This assertion was made by the International Trade Centre in Geneva. It went ahead to say that in many developing countries there seems to be insufficient awareness of the part that can be played by export development companies toward coordinating the SMEs and channeling their exports. This observation is as relevant today as ever, particularly in Nigeria. A close study of our export sector shows clearly that we have never considered the issue of training in international trade important. Perhaps because our importers open Letters of Credits and receive their goods and our exporters seem to be “doing something”, we erroneously jump to the conclusion that we do not need training. Nothing could be farther from the reality. All countries that are serious with export, place a lot of emphasis on training because the quality of a nation’s export output is a reflection of the quality of her manpower. If we can possibly quantify the losses incurred and the image problem created by lack of training in this sector, then we will appreciate the importance of the need to quickly address this situation.
Do you send any export potential in our film industry?
It is doubtful, however, if the nation is aware of the potentials of this sub-sector and its ability to contribute immensely to the country’s economic diversification agenda. Nigeria’s tourism industry, for instance, is a big gold mine that is yet to be excavated, the same goes for our film industry with our home videos making waves in homes around the world and yet no coordinated approach to ensuring its official exports.
In the face of current unfavorable developments in the international oil market which is likely to be with us for some time to come, Nigeria must seek alternative exports or face the unhappy consequences of constantly reduced foreign exchange earnings.
The export industry is an exceptionally dynamic sector. Consequently, it requires a system of proactive and future-oriented strategic policies and measures which will have to be constantly reviewed, adapted and improved to ensure its effectiveness.
What is the precondition for effective export promotion?
Exporting is an important factor of economic growth, and therefore export promotion is a critical consideration for economic development of each country. As a public policy component government-sponsored programs must be developed to promote export activities. Promoting export activity; particularly by traditional exports and new export products, is essential for progress in this area. Currently the government is the principal provider of export assistance to the business community but government alone does not have all the resources, the staff, the expertise, or the communication channels needed to wage such a broad-based promotional campaign and for this reason the government needs to develop broader and deeper partnerships with the private sector. Export promotion is a high economic priority for virtually every country. While facilitating the expansion of existing export product lines is an obvious concentration area, it is in the promotion of new export products, and the exploitation of new markets that can provide special help to home enterprises. For developing countries, external markets pose several kinds of problems. First, home exporters do not know the basic environment in foreign states, and do not have the capacity to invest in exploration, much less pay consultants to advise them on entry strategies. Associations of exporters at home confront a like problem, though on paper they should be able to carry out market surveys and the like. Secondly, foreign regulations on safety and environmental standards, and other norms laid down by potential markets are little understood by home exporters, and pose real nontariff barriers (NTBs) to entry. Also home exporters lack credibility with potential foreign customers, and this becomes a chicken-and-egg syndrome, making it difficult to break this cycle of unfamiliarity.
Overall, the economy has managed to navigate the financial crisis relatively well. We expect economic growth to accelerate. However, as the economy recovers, we face different challenges which were at the centre of the crisis. In terms of manufacturing activity, the immediate outlook looks to be slowing somewhat. What is your take? An economy with consumption mentality will face the challenges we currently face. The real sector is not working? Where are the manufacturing companies? Are small and medium sized enterprises (SMEs) growing or dying? If any economy is not growing forget about the Gross Domestic Product (GDP) and look at the reality on ground. Who will employ the army of half baked graduates that you churn out yearly? As we speak, the few companies that are still afloat are groaning under terrible conditions that affect their competitiveness-ranging from infrastructure, to human capital challenges occasioned by the half baked graduates coming out of our tertiary institutions. As we speak, the universities have been shut down for three months and as soon as they resume by the grace of God, examination will be administered. What do you expect from such a system? We must address both the hard and soft infrastructure to help our industries to survive.
Will oil continue to be the key export, or are you expecting other sectors to play an increasingly important role?
From available statistics, only few countries of the world can match Nigeria’s endowment in the area of natural resources. With an estimated population of over 140 million people, and onshore and offshore that boast of some of the finest deposits of oil and natural gas, a rainforest belt that offers the best cash crops and hard wood and a savannah region with very large tones of oil seeds, coffee, chilies, spices and abundant solid mineral resources. In fact, the opportunity that Nigeria offers investors in the field of non oil export is immense and irresistible. In spite of all these, the economy has remained largely monolithic with investment in non oil export sector being everything but strategic. There is no gain saying that any policy or strategy aimed at achieving the nation’s Vision 2020 should therefore integrate the development of the non oil export sector, if we are going to achieve economic recovery. We need a purposeful and well-articulated non-oil export development policy to form part of our general development plan to achieve such a goal.
What kind of collaborative export promotion strategy, do you think would allow companies to overcome the various barriers and obstacles involved in exporting and to successfully position Nigeria in international markets?
Obtaining access to export markets is crucial for fostering SME growth and productivity, especially in light of increased globalization and market liberalisation. SME in developing countries, however, face many constraints to competing effectively in these markets since they often lack the necessary knowledge and financing, may not meet foreign regulatory requirements, or may produce products in quantities and of a quality that are not adequate for foreign buyers.
One effective way of addressing these problems is through the development of export consortia. Export consortia or Cooperative Exporting are voluntary groupings of enterprises, usually in the same or similar business or sub-sector, with the objective of improving the export readiness and increasing the export volumes of the participants. By combining their knowledge, financial resources and contacts within an export consortium, SME can significantly improve their export potential and reduce the costs and risks involved in penetrating foreign markets.
Most consortia are non-profit entities, and members retain their financial, legal, managerial, and commercial autonomy. So, despite their participation in the export consortia, member firms do not give up any control over their business to others. This is the main difference between consortia and other types of strategic alliances.
This offers firms the opportunity to reduce costs by capturing economies of scale. Joint ventures also enable participating firms to spread risks. These benefits are likely to be greatest for small and medium-sized firms that are either new to exporting or have limited export experience. However, firms of all sizes and levels of international business experience can use joint exporting to reduce per unit export costs and develop proactive export strategies that may not be feasible for individual exporters. The ability to reduce export costs and risks is especially important when considering entry into a new or complex export market
It is wise to consider collective exporting and its advantages. The western markets are very complicated to export to but joining forces with compatriots may put exporters in a better position to succeed. ITC described the international market as ruthless, selective and fiercely competitive. This underscores the need to explore all options capable of reducing inherent risk.
In an economic environment characterised by constantly changing technology and market trends, how do SME export companies cope?
Access to finance had been singled out as one of the major challenge impeding the survival and growth of SMEs in Africa. Significantly low figures of SMEs who apply for financing succeed in getting financing. The ability of SMEs to grow depends highly on their potential to invest in restructuring and innovation. All these investments require capital and therefore access to finance. Against this background, the consistently repeated conception of SMEs about their problems regarding access to finance is a priority area of concern.
Lack of adequate credit for SMEs traceable to the reluctance of banks to extend credit to them owing among others to poor documentation of project proposals as well as inadequate collateral by SME operators. Developmental policies weigh in favour of large firms and sometimes foreign owned firms leaving SMEs in a distressed and vulnerable position.
The problem of access to information may be attributed to the inadequacy of SME support institutions. This point to the need for a supportive policy to encourage the establishment of documentation centers and information networks to provide information to SMEs at an affordable price.
Federal Direct Investment is dwindling. Looking at the macroeconomic situation, is Nigeria not stable enough for foreign direct investment by multinational corporations?
Nigeria receives the largest amount of Foreign Direct Investment (FDI) in Africa. Foreign Direct Investment inflows have been growing enormously over the course of the last decade: from $1.14 billion in 2001 and $2.1 billion in 2004, Nigeria’s FDI reached $11 billion in 2009 according to UNCTAD, making the country the nineteenth greatest recipient of FDI in the world.
Nigeria’s most important sources of FDI have traditionally been the home countries of the oil majors. The USA, present in Nigeria’s oil sector through Chevron Texaco and Exxon Mobil, had investment stock of $3.4 billion in Nigeria in 2008, the latest figures available. The UK, one of the host countries of Shell, is another key FDI partner – UK FDI into Nigeria accounts for about 20 per cent of Nigeria’s total foreign investment. As China seeks to expand its trade relationships with Africa, it too is becoming one of Nigeria’s most important sources of FDI; Nigeria is China’s second largest trading partner in Africa, next to South Africa. From $3 billion in 2003, China’s direct investment in Nigeria is reported to be now worth around $6 billion. The oil and gas sector receives 75 per cent of China’s FDI in Nigeria. Other significant sources of FDI include Italy, Brazil, the Netherlands, France and South Africa.
What is the most cost effective and quickest method to stimulate the economy and support job creation?
Successful employment creation hinges on a triple E ie Education, Employability and Economy. That means that we must strategically deal with the three issues before we can achieve a substantial success in our employment generation effort. What is the quality of our education? Who is to blame for the quality? If you train soldiers for previous wars can they fight the present wars not to talk about the future wars? The answers to above questions will address the first two Es. In respect of the economy,
Is the real sector working? Where are the manufacturing companies? Are SMEs growing or dying? If any economy is not growing forget about the GDP and look at the reality on ground that will employ the army of half baked graduates that you churn out yearly. As we speak the universities have been shut down for three months and as soon as they resume by the grace of God examination will be administered and what do you expect from such a system. We must do something about our education system to improve the employability of our graduates. Also the SMEs hold the ace if there is a deliberate effort to help them grow.
Some ago when the present minister of Trade and Investment was in Finance three sectors that have the capacity to generate the largest number of employment and they were Business Process Outsourcing (BPO), Construction and Entertainment. It was unveiled and some meetings held but as soon as he left, nothing was heard of that again. The South African government identified BPO and Tourism as their target for economic growth and employment generation and I you fly into South Africa, from the airport everything speaks to you about these two sectors. This policy saumasult and they need to always change what the predecessor started will lead us nowhere. We need to get strategic and show seriousness from the top and pursue our dream to a logical conclusion. Grow the SMEs if you wish to grow the economy. Show consistency in policy implementation. As much as we do not want quick fixes, let us go for low hanging apples that will give us good results in the short run. Declare a state of emergency in our education sector and overhaul the education system to address current and future challenges.
What services does your organisation provide to help firms become successful in foreign markets?
Multimix Academy is an integrated supply chain solutions and intervention company that provides exceptional high quality International Business and Logistics education and intervention. We provide Logistics and Supply Chain Management consultancy services, Marketing Strategy Development, Professional education in Logistics and International Business Management, Import/Export and customs compliance Consultancy, Business Process Re-Engineering, Business Support Outsourcing and Customised training services.
Our consultancy interventions will deliver amongst others: reduction in the logistics process chain, reduction in cost, enhancement in the operation system integrity, Improve staff productivity levels, Improve margins and profitability of your logistics operations and creation of additional value in the overall logistics chain.
The key objective of our training programmes is to provide excellent programmes essential to anyone in pursuit of world class performance in logistics and supply chain management
Multimix Export House on the other hand is Nigeria’s pioneer and leading Export Management Company. Our Services are a strategic link in the export process for companies of all sizes and degrees of export experience. Our Export Management Service is especially crucial to companies wishing to penetrate new markets or expand their current exporting business but lacking the expertise, physical facilities or other resources needed for such an international undertaking.
We provide Export consultancy services for both buyers and sellers in the global supply chain. We are also traders of products ourselves using our knowledge and experience as an Export Management Company to help your business gain entry into new markets across the globe. Our solutions add real value and support international growth and sales. On the procurement side, we can provide professional representation for your company, helping source and procure new products and services.
What are the requirements for exporters to avail of these services?
Our Export Management Services are a strategic link in the export supply chain for companies of all sizes and degrees of export experience. Especially crucial to companies wishing to penetrate new markets or expands their current exporting business but lacking the expertise, physical facilities or other resources needed for such an international undertaking. Exporters can contact us right from the beginning of their transaction for handholding till the end of the transaction
We act as the export management company for its client firms, assuming most of the technical export responsibilities. Our various services include: conducting market research to determine the best foreign markets for your products; attending trade shows and promoting your products overseas; assessing proper distribution channels; coating foreign representatives and/or distributors; arranging export financing; handling export logistics, such as preparing invoices, arranging insurance, customs documentation, etc.; and advising on the legal aspects of exporting and other compliance matters dealing with domestic and foreign trade regulations. Attend trade shows and travel abroad, meeting potential customers face to face. Continuously research and appraise market conditions overseas, providing feedback to our business partners for incorporation in their marketing and product development plans
What do you consider as the major accomplishments of the export promotion council?
The export promotion council has tried within available resources and have assisted in developing various products and organised various trade fairs and solo exhibitions. Through the Export Mentorship Programme which I manage for NEPC several new exporters have emerged coached by their mentors.
What advice would you give the policy makers to help the economy and exporters?
It is imperative that SME policies have an export orientation at the point of conception. This would culminate in the entrenchment of a wide-spread export culture in the country. Experiences of industrialised countries have proven that small and medium scale enterprises are the pivot of exports as they account for at least 60 per cent of export activities. With SMEs in the centre of exports repatriation of proceeds is monitored and guaranteed. It is recognition of this type of advantage that UNIDO has supported the Federal Ministry of Commerce in establishing and organizing the Aba leather products-cluster. This strategy should be extended to other products. Nigeria is no doubt one of the most promising countries in Africa and its potential as a net exporter of agro industrial products, manufactures and services has never been in doubt and will continue to attract high interest from the international business community.
Result from the two major interactive stakeholders fora organised successfully by the Federal Ministries of Commerce and Finance has indicated the preparedness of the Nigerian private sector to accept the challenge of driving the nation’s economy. This acceptance is however, predicated on the ability of government to provide the proverbial enabling environment. It is, therefore, in recognition of this that recommended solutions need to be vigorously pursued via the vehicles of the attached specific projects. In doing this also government must accept and act on the fact that a lot of financial investments must go into the creation of the necessary support structures towards making trade the hub of the nation’s economic development and growth. Nigeria is no doubt one of the most promising countries in Africa and its potential as a net exporter of agro industrial products, manufactures and services has never been in doubt and will continue to attract high interest from the international business community.
