Nigeria’s Manufacturing Export industry is in turmoil, as stakeholders report a sharp decline in revenue. The government is being urged to step in and resolve the crisis. Local manufacturers are finding it hard to stay competitive on a global scale in a challenging business landscape filled with issues such as inadequate infrastructure, logistical hindrances, and increasing costs. This has resulted in the shutdown of businesses and the departure of multinational corporations. It is recommended that the government collaborate with these companies to address these obstacles and enhance the competitiveness of Nigeria’s manufacturing exports.
According to the latest report ‘Africa Pulse’ by the World Bank, Revenue from manufacturing exports in Africa has dropped drastically by 166 percent to ₦778.4 billion from its peak of ₦2.1 trillion in 2019. The report highlights a consistent decline since 2019, notably attributing the decrease to the impact of COVID-19, with revenue falling to ₦960.7 billion. However, there was a slight improvement in 2021 with revenue reaching ₦1.15 trillion. There was a substantial decrease to ₦781.1 billion in 2022, followed by another notable decrease to ₦778.4 billion in 2023.
Inadequate infrastructure led to declining foreign trade.
During that time frame, manufacturing exports’ contribution to non-oil exports decreased significantly, falling to 24.8 percent in 2023 from 82.4 percent in 2019. The bank attributed the country’s declining foreign Trade to factors such as inadequate Infrastructure and ineffective logistics. Nigeria’s manufacturers and exporters are deeply concerned about the decrease in revenue and called for immediate action from the federal government to enhance growth and revenue within the industry. Specifically, they are advocating for low-interest loans, streamlining of bureaucratic processes, and reducing redundant regulations from various authorities.
Segun Ajayi-Kadir, the Director General of the Manufacturers Association of Nigeria (MAN), argued that the increased expenses associated with conducting business have negatively impacted the competitiveness of Nigerian goods on the international stage. This decline in competitiveness is reflected in the significant decrease in the global demand for Nigerian products. A report from the NBS indicated a staggering 166% drop in Nigeria’s manufacturing export value between 2019 and 2023. Moreover, the excessively high Interest Rate of more than 30 percent contributes highly to the decrease of manufacturing exports compared to non-oil exports, which fell from 82.4 percent to 24.8 percent between 2019 and 2023.
Affordable financing options are needed by exporters.
Odiri Erewa-Meggison, the Chair of MAN’s Export Group (MANEG), expressed worries about the underperformance of exporters. She highlighted a steep rise of over 300% in the cost of conducting business in Nigeria, citing the recent surge in Electricity Tariffs as an example. Exporters require strategic support in the form of affordable financing options, assistance in streamlining bureaucratic hurdles, and simplification of regulatory processes from various authorities. A unified regulatory framework would be the most beneficial for exporters, she added.
Qualifying exporters should be able to benefit from incentives like the Export Expansion Grant (EEG) without having to resort to compromising or settling with anyone. It is crucial for the government and exporters to engage in discussions and come to an agreement on the future of these incentives. Exporters are requesting that the Nigerian government also make commitments if they are expected to bring back all export earnings to the country. One example of such a request is for a thorough review of the export proceeds list in the CBN foreign exchange manual to confirm its relevance and alignment with current requirements.
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On her part, Mrs. Bosun Solarin, chairperson of the Export Group at the Lagos Chamber of Commerce and Industry (LCCI), mentioned that in 2020, the former vice president made efforts to support small businesses by reducing production costs such as NAFDAC registration fees through the Presidential Enabling Business Environment Council (PEBEC). Nevertheless, numerous small businesses have disappeared due to unfavourable business policies. She stated that Nigeria is on the verge of finalizing the agreement for the implementation of the African Continental Free Trade Area (AfCFTA), but faces significant challenges with Logistics hindering the movement of goods. It is imperative that the government prioritize addressing these logistical issues in order to revitalize the sector.