The Federal Government’s Zero Oil Plan seeks to liberate Nigeria from dependence on oil by stimulating the non-oil export sector. It targets non-oil export revenue of $100 billion annually. But, the implementation of the plan may have been off to a shaky start. No thanks to lack of laboratories for testing and certifying export-bound agro-allied products. Experts say there is a need for appropriate measures to guarantee the quality of export products, if the plan as well as other initiatives to drive the transition to a non-oil economy must succeed. Assistant Editor CHIKODI OKEREOCHA reports.
If robust policy initiatives were to decide Nigeria’s productivity and competitiveness in international trade, her non-oil export sector would have been sufficiently stimulated to play its role of dislodging oil as a major foreign exchange earner. But, unfortunately, the implementation of most, if not all the initiatives, has continued to be undermined by the inability to meet the standards for export-bound agric products.
Since 2015 when the present administration came on board, the non-oil sector has, indeed, been the focus for several initiatives designed to liberate Nigeria from her age-long dependence on crude oil for survival. The refocus on the sector came in the heat of the crisis in the international oil market where the price of Nigeria’s crude oil was crashing, requiring urgent rejuvenation of the non-oil export sector as a wedge.
It was hardly unexpected. Nigeria depends on oil for 70 per cent of its revenue and 95 per cent of foreign exchange earnings, which was why the unprecedented fall in oil prices put her finances under pressure. But it also necessitated strident calls on government to speed up the development of the non-oil sector to mitigate impacts of falling oil prices.
The Federal Government rose to the challenge, rolling out several initiatives aimed at pushing possibilities into the hands of operators in the non-oil export business and, ultimately, diversifying the economy and creating jobs. It put the right foot forward by the launch of two export financing programmes, known as Export Rediscounting and Refinancing Facility (RRF) and Non-oil Export Stimulation Facility (ESF).
The N500 billion ESF and the N50 billion RRF were meant to support export-oriented companies with concessionary financing and boost the foreign exchange earnings of Africa’s largest economy. For instance, the purpose of the N50 billion RRF was to create a liquidity window in support of Deposit Money Banks (DMBs) to encourage them to provide more pre- and post-shipment finance to exporters.
In other words, the ESF and RRF facilities were designed to redress the declining export credit and reposition the non-oil sector to increase its contribution to revenue generation and economic development. They were intended to help lower the costs of Nigerian exporters so that their products can be priced at a level where they can compete with other products around the world.
The facilities were followed by the launch of the Micro, Small and Medium Enterprise (MSME) Clinic, an initiative of the Office of the Vice President in partnership with the Federal Ministry of Industry, Trade and Investment, as well as 11 other federal agencies. The project brings together key agencies to a series of business forums organised in different cities across the country where MSMEs can interact easier with them.
Other initiatives that raised hopes of a new dawn in the sector include the inauguration of the Nigerian Industrial Policy and Competitive Advisory Council, which, according to Vice President Yemi Osinbajo, “will rescue and save our country and give it a real chance to be competitive in global business and commerce.” There was also the Presidential Enabling Business Environment Council (PEBEC).
The PEBEC was established to further boost the performance of the real sector where many Nigerians are active in the non-oil export business. The vice president also signed three strategic Executive Orders to promote the patronage of made in Nigeria products, transparency and ease of doing business. The executive orders were aimed at eliminating the hurdles that stand in the way of a bigger and more productive private sector.
‘One-state-one-product’, zero to export training, also
To grow the country’s non-oil export value, the Federal Government, through the Nigerian Export Promotion Council (NEPC), also unveiled “One State One Product (OSOP) initiative
The idea was to have all states of the federation identify at least one strategic export product based on their comparative advantage, from which Nigeria can earn foreign exchange.
However, states are not limited to choosing only one item. For example, Enugu State continues to successfully export pineapples into the European market, despite choosing other products for OSOP.
The thinking is Nigeria is richly endowed with agricultural resources so, there was the need to encourage state governments to ramp up production so as to meet export targets in areas where the states are naturally endowed.
There was the “Zero to Export Training Programme.” The scheme was focused on creating a new generation of Nigerian exporters through practical and theoretical training of business executives, bankers, civil servants and unemployed graduates among others in the export business.
The initiative is anchored on a Public Private Partnership (PPP) arrangement with support from Deposit Money Banks, the Bank of Industry (BoI) and the Nigerian Export-Import Bank (NEXIM).
“The zero to export programme was aimed at achieving specific objectives, which include the development of new exporters from zero knowledge to a point of export readiness, equipping exporters using practical hand-holding approach, field training and mentorship to build a new crop of indigenous exporters,” the Executive Director/Chief Executive, NEPC, Mr. Olusegun Awolowo, said.
Awolowo, who spoke at the recent graduation of participants of the zero to export training in Abuja, added that the council’s Zero Oil Plan (ZOP) was its flagship programme aimed at mobilising public and private resources towards replacing oil as the number one source of foreign exchange.
“The programme (ZOP) equally has a vision of growing non-oil exports from $1.2 billion in 2016 to $8 billion in 2019 and eventually $25 billion by 2025,” Awolowo said.
Zero oil plan takes centre stage
However, the ZOP would go down as perhaps, the most ambitious, pragmatic and comprehensive initiative to fast-track Nigeria’s transition to a non-oil economy. At least, on paper, the initiative was the NEPC’s magic wand for replacing oil as a major national foreign exchange earner.
Under the ZOP, Awolowo said the Federal Government was targeting annual non-oil export revenue of $100 billion, about N30.5 trillion. Through the implementation of ZOP, he said the council hoped to grow non-oil export to reach about 20 per cent of the country’s Gross Domestic Product (GDP).
A document prepared by the council, showing how the plan is to be implemented, said while non-oil products are still exported to key destinations around the world from Nigeria, the priority of government was to concentrate on new export products to earn between 40 per cent and 50 per cent of what was earned from oil in the past.
Consequently, the NEPC identified 22 countries as markets for the products. It also went a notch higher, identifying 11 products with high financial value to replace oil. The products are palm oil, cashew, cocoa, soya beans, rubber, rice, petrochemical, leather, ginger, cotton and shea butter.
The ZOP document, which was accessed by The Nation read in part, “Nigeria’s trade has been largely driven by exports of petroleum products, which contribute about 17 per cent to the nation’s GDP, signifying about 90 per cent of total merchandise exports and more than 65 per cent of government’s income.
“This revenue boom has been threatened by a sharp drop in the global price of oil particularly as a result of the United States’ introduction of the shale oil leading to severe economic stress. NEPC’s vision is to replace oil as a major national foreign exchange earner by growing non-oil export to $30bn in the next 10 years and eventually to $100bn annually based on its ZOP.”
He was emphatic that if the country could key into the council’s plan by taking advantage of the opportunities in the agricultural sector, there would not be any need to depend on oil revenue for survival.
He said the volatility in the oil market had made it imperative for the government to look inwards, adding that Nigeria could no longer depend solely on oil revenue for implementation of government’s programme. “We are targeting manufacturing and industry so that we can produce and export more,” Awolowo said.
He was optimistic that the plan would be successful if stakeholders collaborated with the NEPC, noting that the council’s goal is for Nigeria to survive without selling oil.
ZOP implementation begins
The Federal Government about a fortnight ago, commenced the implementation of ZOP as set out in the Economic Recovery and Growth Plan (ERGP). The Minister of Budget and National Planning, Udoma Udo Udoma, who made this known in Abuja, even gave Nigerians more reasons to be expectant.
The minister said in order to achieve the objective, government has set up a committee that would be working in close collaboration with state governments to promote the establishment of Domestic Export Warehouses and Aggregation Centres in each of the six geo-political zones of the country.
“The Committee is also promoting Project MINE. The acronym ‘MINE’ stands for Made-in-Nigeria for Export. Under Project MINE, Special Economic Zones (SEZs) will be used as the mechanism for making Nigeria a pre-eminent manufacturing hub in Sub-Saharan Africa and a major exporter of Made-in-Nigeria goods and services regionally and globally,” Udoma gleefully announced.
He also said the project has received the Federal Executive Council (FEC’s) approval, and has secured early commitments from domestic and foreign investors in textiles and garments industry as well as agro-processing sub-sector.
Perhaps, to underscore government’s commitment, the Minister of Trade, Industry and Investment, Dr. Okechukwu Enelamah, said the Federal Government planned to spend N250 billion for the development of the SEZs across the six geo-political zones of the country in pursuit of the country’s industrialisation agenda.
Enelamah, who made this known to newsmen at the end of a recent FEC meeting in the State House, said that of the N250 billion earmarked for the projects, N40 billion was contained in the 2017 budget while another N40 billion was contained in the 2018 budget.
According to the minister, Projects Made in Nigeria Exports, otherwise known as Project-MINE initiative, was aimed at developing what he described as world class export-oriented SEZs. He pointed out that one of the factors leading to industrialisation was the development of SEZs.
While stating that the FEC approved N2.655 billion to be paid to some consultants preparatory to the implementation of the projects, Enelamah listed places where the economic zones would be sited to include Lekki, in Lagos, Aba in Abia State and Funtua in Katsina State.
He also said existing economic zones in Calabar and Kano would be elevated to world class standard, adding that pre-development work meant to herald the development of green field SEZ will also commence in Akwa Ibom, Benue, Ebonyi, Edo, Gombe, Kwara and Sokoto states.
“The total budget of developing these zones would be in excess of N250 billion and it will include partners. This is going to be done through something called The Nigerian Special Economic Zones Company Limited, which is a public private partnership.
“The Federal Government is going to own 20 per cent of that company and Afrexim Bank is going to be a shareholder and other investors like the Nigerian Sovereign Investment Authority and other international investors.
“It is going to be developed in such a way that it will be world class. We are going to see rapid implementation now that Council approval has been obtained,” Enelamah explained.
The SEZs will be coming on the heels of government’s plan to reactivate the Export Expansion Grant (EEG) Scheme and the Export Development Fund (EDF) Scheme, with the sum of N13.28 billion provided in the 2018 Budget.
Many policies, little emphasis on quality and standards
While the afore-mentioned policies are no doubt, laudable, forward-looking and are capable of turning around the fortunes of the non-oil export sector, Nigeria’s lack of a clear and coordinated approach to quality and standardisation for export-bound agric products is said to be the missing link.
At present, export-bound products manufactured in Nigeria lack global quality certification. They are denied access to markets in developed economies. And the situation has continued to a pain in the neck of manufacturers, as their productivity and competitiveness continue to suffer.
According to experts, standardisation will boost the competitiveness of locally made products at the international market and ensure the global acceptance of products and services from Nigeria. But unfortunately, Nigeria has no functional laboratories for testing and certifying products before export.
For instance, a Quality Management Practitioner, Mazi Colman Obasi, told The Nation that lack of standardisation remains one of the greatest hurdles before Nigeria’s current efforts at growing the non-oil economy. He lamented that lack of a national quality infrastructure was damaging the nation’s economy and brand reputation.
According to him, a national quality infrastructure is a system of institutions, which jointly ensure that products and services produced in the country meet predefined specifications. It also provides technical support to companies so they can improve their production processes and ensure compliance with regulations or international requirements.
The lack of it, Obasi said, was not only partly responsible for Nigeria’s rising unemployment, but also why Nigeria is not globally competitive. “Until we have many companies that are accredited with ISO 9000 management systems certification, we are not going anywhere; we cannot export anything. Nigeria should work towards having a quality management plan,” he said.
Former Acting Director-General of Standards Organisation of Nigeria (SON), Dr. Paul Angya, could not agree less. “A quality infrastructure for export trade is vital and a laboratory is the way to go. If we do not have the laboratory to test those products and to verify their standard conformity to the standards obtainable abroad, they cannot be exported overseas,” he said.
Angya, who expressed concern over the lack of capacity to test and certify products in the country, lamented that Nigeria still depended on neighbouring countries, particularly Ghana, to verify compliance of suspected seized goods.
“… Because our laboratory is yet to be completed, some seized goods have to go for testing in Ghana,” he said.
He said the laboratory, located at Ogba, Ikeja, Lagos, would, when completed, ensure that locally-made products become exportable and acceptable anywhere in the world.
Angya also said the facility, when completed, would aid the Federal Government’s drive for alternatives to oil export by more than 50 per cent. According to him, the facility will house about four different laboratories.
“This laboratory is going to house about four different kinds of laboratories, which include the chemical, food and engineering laboratories and it is only when these laboratories are tested and accredited that we will stop taking our products to Ghana for testing,” he added.
A catalogue of export rejections
Nothing, perhaps, underscored Nigeria’s seeming helplessness in riding on the back of a vibrant non-oil sector to diversify the economy and create jobs than the recent use of sniper to preserve beans. The development, which went viral on social media, caught various standards regulatory agencies unawares. Save for moral suasion by the agencies, there has not been any concerted effort to trace and recall the batch of beans 2,2-dichlorovinyl dimethyl phosphate, otherwise marketed and known as Sniper, was used on.
For instance, the Minister of Agriculture and Rural Development, Chief Audu Ogbeh, expressed displeasure at the use of chemicals for food preservation and fruit ripening, warning that it was detrimental to human health and the environment. Rather, he appealed to foodstuff and fruit sellers and other Nigerians to adopt natural means of preservation.
Ogbeh, however, said his ministry would collaborate with the National Orientation Agency (NOA) and state ministries of agriculture to create more awareness on the need for citizens not to use chemicals for food preservation and fruit ripening.
SON, National Agency for Food, Drug Administration and Control (NAFDAC), Consumer Protection Council (CPC), also condemned the practice, warning Nigerians against eating and buying foodstuffs and fruits preserved or ripened with chemicals.
SON Director-General Osita Aboloma hailed the consumer, who reported a beans vendor for using a pesticide to preserve the produce on sale to the public.
A statement signed by his Special Adviser and Head, Public Relations, Mr. Bola Fashina, said such individual and collective awareness by consumers was essential for standards implementation and enforcement.
Aboloma urged Nigerians to take greater interest in their welfare by reporting to regulatory and security agencies any suspected unwholesome or life endangering products or practices.
While NAFDAC advised that sale of grains or beans suspected to be preserved with chemicals be reported to the agency, the CPC, on its part, advised consumers to extensively parboil beans before consumption.
CPC’s Director-General Mr. Babatunde Irukera added that consumers should make sufficient enquiries before buying beans. He said consumers should also sufficiently wash their food items before cooking.
“Thorough washing of food items before consumption or preparation for consumption is a generally accepted method of protecting and promoting safety,” Irukera said, CPC recently confirmed by credible information that retailers, mostly in the open market, were using a pesticide to preserve beans.
But a Lagos-based cashew exporter regretted that the nation’s standards regulatory authorities were caught napping. The exporter, who declined to have his name in print, said he expected the agencies to mobilise and move into some major markets across the country to take samples of beans, test them and possibly mop up any batch suspected to have been preserved with dangerous chemicals.
He said although, it was not clear whether the beans said to be preserved with Sniper was meant for local consumption or for export, what was clear, however, was that no one knew how long the practice has been going on undetected and the exact quality of the product suspected to be preserved with chemicals that has gone into the market and consumed by unsuspecting Nigerians.
The exporter lamented that despite the renewed focus on non-oil export to prepare Nigeria for life without oil, following the crisis in the oil market, the standards regulatory agencies are ill-prepared to help drive the process. He, however, said the agencies are grossly under-staffed and lack adequate funding to effectively monitor, test and certify products before export.
According to the exporter, the failure to adequately fund the agencies and support them with enough trained personnel was responsible for the embarrassing setback Nigeria’s renewed push for non-oil export has continued to falter. He recalled, for instance, the European Union (EU) ban on the importation of Nigeria’s dried beans in June 2015.
The EU had slammed a ban on Nigeria’s dried beans, citing the presence of high level of pesticides considered dangerous to human health. In June 2016, the EU extended the ban by another three years, citing the continued presence of dichlorvos (pesticide) in dried beans imported from Nigeria.
This came after the Republic of Ireland returned five containers of beans exported from Nigeria. The products were said to have heaps of weevils.
As if these were not enough to hurt Nigeria still struggling to boost non-oil export, the United States (US) banned Nigeria’s cocoa from its market. This was because the cocoa did not meet the US standard.
Incidentally, beans and cocoa are among the 11 products the NEPC identified as having high financial value to replace oil. “The government is not serious,” the Founder, Centre for Cocoa Development Initiative, a Non-governmental Organisation (NGO), Mr. Robo Adhuze, charged.
He said, for instance, that lack of seriousness by the Federal Produce Inspection Service (FPIS), the agency responsible for checking and certifying agro-allied products leaving the country, was robbing Nigeria of the benefits of a vibrant non-oil export-based economy.
“Quality standards have moved from physical standards to biological standards, but FPIS appears not to be up to speed with this reality,” Adhuze said, recalling, for instance, that for some years, Ghana suffered the same fate as Nigeria’s when over 2, 000 metric tonnes of her cocoa beans were rejected by Japan.
He said Japan’s Chocolate and Cocoa Association appealed to the Ghanaian authorities to take immediate steps to reverse the excessive agro-chemical residues found in cocoa beans exported to the Asian country.
Adhuze said Ghana, a country famous for its very high quality cocoa beans, rose to the challenge by putting in place appropriate and adequate measures to guarantee the quality of her cocoa products for export.
The expert expressed disappointment that while Ghana’s standards regulatory authorities took steps to reverse the excessive agro-chemical residues found in their cocoa beans, Nigeria was unable to do so. The result, he said, was the harvest of import ban now threatening the non-oil sector, especially in agro-allied products.
