Nigeria’s quest for diversified foreign exchange earnings away from oil not feasible for now as revenue from the manufacturing export sector plunged 166 per cent to N778.4 billion from the N2.1 trillion height reached in 2019.
Operators in the sector blamed poor state of infrastructure, logistics and other binding constraints which they said have worsened the operating environment in recent years.
The trend since 2019 has been downwards recording significant decline to N960.7billion attributed to COVID-19 in 2020, while a minor recovery was recorded in 2021 at N1.15trillion. But in 2022 a huge drop to N781.1billion was recorded and another significant drop to N778.4 billion was recorded in 2023.
Within the same period, the share of manufacturing exports to non-oil exports also dropped to 24.8 per cent in 2023 from 82.4 per cent in 2019.
In its Africa Pulse publication, the World Bank specifically blamed the country’s dwindling foreign trade on poor infrastructure and inefficient logistics, among other factors.
According to the World Bank, the cost of trade in Nigeria and Ethiopia is four to five times higher than what obtains in the United States due to insecurity, higher transportation costs, topography and poor road infrastructure.
“Studies from the Africa region consistently find spatial differences in prices of imported goods (food and non-food) as well as non-traded agricultural staples, indicating that markets are not well-integrated, and retail prices of products are affected by distance.
“For instance, trade costs are four to five times higher in Ethiopia and Nigeria than in the United States, due to poor road infrastructure, low competition in the transportation sector, and topography,” it stated.
The report further noted that the consequences of these distortions include preference of African producers to sell locally rather than export.
In a similar vein, statistics provided by the World Trade Organisation (WTO) revealed that South African manufacturing export value was $46 billion in 2022, which is 15 times higher than that of Nigeria which was $3 billion in the same year.
Manufacturers and operators in the export ecosystem have lamented that the harsh business environment in the country is making local products uncompetitive globally.
They noted that many businesses that are into exports have gone into extinction, even as several multinationals have also exited Nigeria over the past few years.
MAN, exporters seek govt intervention
Giving insights into what is happening in the sector, Director General of the Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said: “The rising cost of doing business has worsened competitiveness of Nigerian products in the global market, which is evident in the drastic reduction in global demand for these products.
“The reduction in global demand for Nigerian products was further buttressed by the NBS report that confirmed that the manufacturing export value of Nigeria plummeted by 166% from 2019 to 2023.
“In addition, the exorbitant lending rate of over 30 percent has contributed largely to a drop in the share of manufacturing exports to non-oil exports from 82.4 percent to 24.8 percent in 2019 and 2023 respectively.”
