Trade transactions in the first quarter of 2015, totalling N4.87 trillion, have exposed Nigeria’s low productivity level as a large chunk of exports were minerals and primary products, while imports were mainly capital and consumer goods.
Data compiled by the National Bureau of Statistics (NBS) for Q1 2015 show that imports accounted for 1.645.3 trillion, while exports totalled 3.230 trillion. Of the exports, mineral products, made up of crude oil and liquefied gas, accounted for 89.2 percent share of the total.
What this implies is that other products such as prepared food stuffs, beverages, spirits, vinegar, vehicles and parts and vegetables, among others, accounted for only 10.8 percent of the total exports.
Similarly, in terms of export ranking, only leather and cigarettes (containing tobacco) were the finished/manufactured products that made the list of the top 15 products. These two products, incidentally, accounted for less than 0.5 percent of the total export value.
The data further show that apart from mineral products, other commodities dominating the table are sesame seeds, raw cocoa beans, tin, cocoa shells, husks, skin, frozen shrimps and prawns, as well as cocoa butter, fat and oil, which are still primary products.
“It is clear that Nigeria is still unproductive,” said Muda Yusuf, director-general, Lagos Chamber of Commerce and Industry (LCCI), in a telephone chat.
“Productivity is a function of quality of infrastructure. It is a function of power, cost of finance, quality of logistics and others. If your production cost is 30 percent higher than you have in other climes, you cannot be locally or globally competitive,” Yusuf said.
Imported finished products within the period included plastics, textiles, footwear, headgear, cement, boilers, machinery and appliances. Others are base metals, ceramics, aircraft, arms and ammunition, among others.
Players in the productive sector of the economy say the biggest impediment to the sector is poor power supply, which has continued to reduce competitiveness of products in both local and international markets.
“Cost of power is enormous and could lead to massive shake-up in existing factories,” said Frank Udemba Jacobs, president, Manufacturers Association of Nigeria (MAN), in an interview held last Thursday in Lagos.
“This could hinder potential investment in the sector ,as majority of manufacturing companies are under SME category,” Jacobs said.
He further observed that manufacturers spend N73.12 million on alternative power monthly on the average, while 40 percent of production costs also go in the same direction.
Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group, believes that Nigeria is unproductive because of rising cost of production attributed to high cost of doing business in the country, as well as inconsistent policies of the Federal Government over the years, which have continued to stifle the productive sector.
“Manufacturers, particularly exporters, have had fewer incentives. The Export Expansion Grant that should have helped to boost export of value-adding commodities, particularly non-oil exports, has been suspended since 2013. Export business requires planning and certainty. But this is not happening here, owing to the type of environment we have found ourselves,” Oyelola said.
According to data compiled by Cobalt International Services, non-oil exports in 2014 declined significantly to $2.43 billion, from $2.97 billion recorded by the end of 2013. Data also showed that most of the exported products were agricultural commodities and animal skins, which serve as raw materials for European and Asian companies, which process and export them as finished goods into Nigeria.
Ede Dafinone, CEO of Sapele Integrated Industries, who is also an exporter, told BusinessDay that the suspension of the Negotiable Duty Credit Certificates (NDCC) by the Federal Government would continue to affect the country’s productivity.
“The paralysis of NDCCs is not a good omen for the economy,” Dafinone said.
ODINAKA ANUDU
