The latest quarterly Economic Report from the CBN puts non-oil exports provisionally at US$577m in Q2 2016, indicating a decrease of 43% from the preceding quarter. The fall in receipts on a q/q basis can be traced to the steep decline in export receipts from manufactures, minerals and food products. The largest proceeds came from agricultural products, which earned US$197m. The breakdown by sectors for Q2 2016 shows that proceeds from manufactured, agricultural and mineral products accounted for 13.8%, 34.1% and 32.2% respectively.
The high cost of doing business in Nigeria (intensified by current macro challenges) has adversely affected export activities as domestic production levels have dropped, resulting in a cut in export products.
The CBN’s non-oil export stimulation facility has had minimal impact on the sector. However, the CBN has disclosed its intent to address bottlenecks hindering the effective execution of the facility.
Loans for up to three years will be granted at a maximum interest rate of 7.5% per year while those with a tenor above three years will be granted a maximum rate of 9% annually.
Last month the Manufacturers Association of Nigeria called for the restoration of the export expansion grant (EEG), which was withdrawn in 2014 due to extensive abuse of the system (Good Morning Nigeria, 11 August 2016.)
However, some argue that the EEG should be granted only to exporters of processed products, as opposed to those that focus on raw materials, to reduce the level of abuse.
The FGN should consider export-driven policies to hike proceeds from non-oil exports. However, structural issues such as power shortages as well as inadequate utilisation of domestic input need to be addressed to make these policies effective.