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Multinationals take over non-oil exports from local operators

By BusinessNews Staff on June 13, 2015

The non-oil export sector, once dominated by indigenous operators during the oil boom, has become attractive to big multinational companies as more and more of them have gone into the sector.

The result is that most indigenous companies are finding it hard to compete as prices of non-oil export commodities have gone through the roof and out of their reach.

According to the project coordinator of the newly inaugurated Zero to Export project of the Nigeria Export Promotion Council for new exporters, Mr. Kola Awe, the pressure on the sector has already pushed up local prices of commodities.

Speaking during the unveiling of trainees in the first season of the project, Awe said almost all the manufacturing firms in the country had gone into non-oil export and the resultant pressure reflected on local prices.

He said, “This is the first time in the history of Nigeria that ginger is selling for N450, 000 per metric ton. A short while ago, it was N26, 000. Cashew now sells for N250, 000 per metric ton.

“To export a container of ginger, an operator needs N5m while N4.5m is needed for cashew. It means an average Nigerian entrepreneur can no longer export because he cannot afford such costs.”

Awe added, “There is going to be more challenges in the sector. Many people are going to lose money because the focus of the government is now on non-oil export and there is a lot of inflow. Every company, including the big multinationals that were not exporting before want to export because the value of the naira has dropped drastically and firms need to raise foreign exchange to be able to bring in their goods.”

He added that the massive inflow into the sector was also affecting quality of commodities. “The man that is given the money to produce is getting money from several people. So he needs to produce quickly so he can meet up with the demand and in doing that, quality will be compromised,” he said.

Awe said the situation would lead to the exclusion of indigenous Nigerian exporters from the sector considering the fact that they would not be able to raise the kind of money required to export and the banks were not granting credit.

According to him, this thinking informed the Zero to Export initiative by the NEPC, to train exporters who at the end of their training can form themselves into groups in order to jointly raise the amount of money required to buy commodities for export.

He said the Zero to Export programme was one way the government could keep indigenous exporters in the business.

He said, “What we need is more advocacy and training from NEPC so that we can have a pool of trained entrepreneurs that will be versatile in the area of quality in export. The trainees from the Zero to Export project will be visiting quality control agencies to learn how to attain high quality.

A director at the NEPC, Olajide Ibrahim, said the programme brought people who knew nothing about export to a height where they could have all the knowledge required to be able to export.

He said, “The idea behind this is for us to begin to develop a crop of indigenous Nigerian exporters who can go on their own to the international market without going through different hurdles as many of them have done in the past and consequently swindled.”

[ThisDay]

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