For all countries, trade remains an essential economic level, as it drives increased revenue and other benefits. World Bank maintained that nations that promote international trade are inclined to have a higher rate of economic growth, innovation, income, and opportunity space. In the instance of Nigeria, trade is essential to the country’s economic composition. The country exported $57.7 billion worth of products in 2021, ranking it as the 52nd largest exporter in the world. During this period, petroleum products were the most valuable export, generating $41.8 billion for the government. Despite the fact that the country continues to be a modest exporter of products, there is a vast amount of untapped export potential.
Some fundamental and minor trade-related challenges are reportedly deterring Nigeria from realizing its full export potential. Inadequate access to foreign exchange, high costs of conducting business, a severe gap in the availability of basic trade facilities, the risk of crime and lingering security cracks, and corruption are all factors impeding trade. The country’s non-oil exports, affected by a network of trade restrictions impacting Nigeria’s export processes, will need to do more to meet up with many of its African counterparts. Even though things look bleak, Nigeria’s export sector still has some potential for growth.
Nigeria can preserve its export base and turbocharge its economy.
A report by the Nigerian Export Promotion Council (NEPC) in January 2023 shows that the country’s non-oil export revenues increased by 39.91 percent in 2022, totaling $4.82 billion. This non-oil export figure demonstrates that Nigeria’s commercial sector has tremendous potential to further expand. More so, with the right steps, Nigeria can preserve its export base and turbocharge its economy, helping millions of people there escape destitution. One feasible starting point is cutting down business’s operating costs.
Understand that the incredibly expensive cost of production in Nigeria is a major factor in the lack of expansion of Nigeria’s trade exports. The Manufacturers Association of Nigeria (MAN) carried out a survey spanning 2018 and 2021 and discovered that growing business costs were a contributing factor in the demise of nearly 400 major businesses in Nigeria during that time period. Further research revealed that in the first half of 2022 alone, manufacturing firms listed on the Nigerian Stock Exchange incurred over N207 billion on energy costs.
Government needs to rein in rising business costs.
Looking into the situation, the fluctuating value of the Nigerian naira and the ever-increasing cost of electricity are the primary source of the rising operational costs faced by businesses today. The government needs to rein in rising business costs to create a climate where manufacturers can thrive in order to maximize trade exports. Another necessary step is to enhance access to foreign markets to see Nigerian exports thrive and for its domestically manufactured goods to acquire far reaching prominence in global markets.
Exports of shea butter and ginger from Nigeria, for example, have seen increased potential for export across numerous international markets such as in Asia, Europe, and the United States, according to a study by the Africa International Trade and Commerce Research (AITCR) which was carried out in collaboration with the Nigerian Export Promotion Council. To this effect, the Nigerian Export Promotion Council (NEPC) has mandated that Nigerian exporters adopt food safety procedures to enable their products to gain access globally and open up new export markets for Nigerian goods.
The country needs a unified trade policy at all levels.
With the advent of the African Continental Free Trade Agreement (AfCFTA), the NEPC has maintained that its now necessary for non-oil exporters in Nigeria to obtain extra certifications to be more competitive on the global markets. Lastly, Nigeria must ensure that all levels thereof have unified trade policy. Export activities in Nigeria have so far been severely hampered by the government’s incoherent policies, PricewaterhouseCoopers (Pwc) said. Nigeria’s trade export level can be boosted and its untapped potentials could be harnessed if the country’s policies are harmonized, and attending to the aforementioned recommendations.