Economic Confidential, May, 2009

INTERVIEW

Nigeria has Enough Exportable Goods - Ag. CEO NEPC

He likes to be addressed as the Acting Executive Director/CEO because to him it is a temporary appointment. Mallam Aliyu Muhammad Lawal won’t also give out his intimidating and enviable resume, probably to avoid misconception from some quarters. But when it comes to issues bordering on activities of Nigerian Export Promotion Council and how Nigerians and the country can gain from exports, he freely shares his perspectives. He generously granted the Economic Confidential this exclusive interview at the NEPC Headquarters in Abuja.

The main Thrust of the activities of the Nigerian Export Promotion Council (NEPC) is hinged on non-oil products. What is the revenue that accrues to government coffers from your operations?

The mandate of the Nigeria Export Promotion Council is to promote, that is to say the private Sector. This is in product development and market development in order to ensure that they export. The revenue they generate is not for the government. Rather it belongs to the entrepreneur who ventures to go into export. So in essence, the government is not collecting the foreign exchange neither is it doing the export itself. The responsibility is to promote and develop which means our major stakeholders is the private sector. Various economic perspectives in the solid mineral sector, the agricultural sector, manufacturing sector, etcetera, etcetera; so that people can imbibe the culture of export. I am sure you are aware being information gatekeepers, that Nigeria has been predominantly dependent on oil. But prior to oil it was generally dependent on agriculture.

In spite of the vast resources that nature has endowed Nigeria with, it is still seen as an importing country than an exporting one. What is the council putting in place to correct this anomaly?

First of all, we have stepped up campaign and sensitization programme where Nigerian business entrepreneurs are informed about opportunities that abound in the area of export. As much as I can tell you no nation can do without importation. But as you rightly said, we are more titled as a nation towards import than export. The whole economy from the 1970’s to the millennium is more of import dependent rather than export oriented. The enormous task ahead of us is to galvanize the private sector to venture into export. How do we do that? The government has provided incentive schemes that creates an enabling environment for businesses or successful companies to venture into export. For instance, there is an incentive scheme called Export Expansion Grant. The scheme provides an exporter between zero to 30% (percent) grant based on the turnover he has made and repatriated and also confirmed from the Central Bank of Nigeria. For instance, if an exporter made 1 million dollars or one million Naira, if it is a manufactured product, he will get 300 thousand of the equivalent currency as a grant from the government. This scheme has tremendously helped many indigenous companies to venture into export. We also export Nigerian products into the International Market through our participation in the International Trade Fairs, Solo exhibitions, match making counter promotion programmes between Nigerian Companies and their counterparts in other countries or host countries, where we attend programmes. Which has also created a platform for us to take the samples of our products to other countries and to exhibit them, attract buyers and importers, attract joint-venture agreement to come over to Nigeria and produce the product or attract dealers or distributors of made in Nigeria products from the foreign markets. Every year we also do such programmes to enable the council to ensure that the Nigerian export is virile though the rate of products that have high export potentials and are exposed to various international forum.

What will you consider as the indices that makes a country an exporting force. Do you see Nigeria becoming a player on that platform?

I must tell you if we overcome the challenges of energy which is infrastructural, this country will transform into more of an export oriented entity than an import dependent one. Because we don’t import food in the real sense. What we import are varieties of things that we want to eat. We have local made rice, maize, yam, beans. A whole lot of varieties of locally produced food. We are not dependent on food import to feed our nation. That is one great thing that is positive about Nigeria.

Can you give an example?

Because no matter the situation our Foreign Exchange is, if we are dependent on food import to feed about 150 million people it would deplete any amount of resources. What I want to say is that by the time the enabling environment is provided by the government infrastructurally, especially energy, that will be the key factor. One important issue is that the current government policy towards agriculture which the Minister of agriculture is pursuing is commercializing agriculture. Right from the onset, Nigeria has been practicing a rudimental, traditional and peasantry agricultural system. As much as we appreciate that level which contributed immensely to the GDP of the country to over 30% (percent). The GDP contribution of agriculture even at that rudimental level is far greater than that of oil that generates over 98% (percent) of our foreign exchange earning. Because 70% (percent) of agriculture represents the output of about 70% (percent) of our population. I can categorically tell you that when we shift from traditional farming into commercial farming, then we will require a lot of activities into mechanized farming. Creating new employment, agro processing, juice making, food processing which will be the nation’s power house in export to other countries that nature did not geographically endowed them with the benign Nigerian climatic condition which will enable them to produce an agricultural community, comparatively and competitively. At the same time we have huge potentials in the solid minerals sector which we are presently tapping just on the scratch.

Do we have mechanized mining?

There is no mechanized mining. What we are practicing presently is alluvial mining. Which is just taking a shovel and a digger to dig and take what is on the surface. When you go to a serious country where mining is taken as a vocation, like South Africa, Ghana and Sieria Leone especially in South Africa you can have miles, kilometers deep down the ground which means they are getting the real things. Today, if you go to our mining sites, it is just a shallow Ditch. They have not hit the main crust or level of the minerals. In terms of metallic products, in terms of industrial products like Kaolin and for the metallic, colombite. In terms of semi precious, we are talking of taomalin, garrette, sapphire, ruby, berut, etc. a lot of this products are exported in raw form. If you look at the non-oil export sector, over 67% (percent) is agriculture. Nigeria and other African Countries, 80% (percent) of our export are in raw form, by the time we start manufacturing, we will need to triple our production to enable massive consumption through mechanization.

What of agricultural commodities?

One, if we look at most of our agricultural commodities like cocoa, rubber, the sesame seed, groundnuts and other exportable crops, they are predominantly exported primarily or semi tradition. By the time we want to go into chocolate making, we need new technology. We need to generate new employment work force, new technicians that will provide huge employment. That’s where the sector makes breakthrough in terms of foreign exchange. Dealing with primary commodities will never make us mega rich unless we add value. I will give you an instance, some years back as of 2004 – the total value of coffee to the farmers produced in developing countries was about 5 billion dollars. But when it is send to developed countries where they processed it to instant coffee, cappuccino and the rest of them; the turnout becomes 75 billion dollar. If you minus the 5 billion dollars, it means for adding value in terms of the technology, packaging and the refined taste, they make 70 billion dollars without the 5 billion which is the field stock, there will not be 70 billion dollars. So in every product you take the value chain, you will find out that we are losing a lot. The only way to go forward is to go into industrialization which in itself is not possible without the energy sector in full swing.

After industrialization what do consider next in term of priority?

An effective transportation system. I must equally mention here that the high cost of transportation is an inhibitive factor in making Nigerian products not to be competitive in the international market. The absence of railway which would have eliminated about 200 tracks of roads, has created a very serious bottle neck in pricing and costing of export products, for instance, if you have  a railway system, a big engine can take almost 100 wagons or 50 wagons all at the same time to the ports. But if you have 100 or 50 trailers, I want to assure you they would arrive at different times. No ship will allow such cumbersome and slow mode of logistic management. Regardless of the risk factor involved, you find out that when you are going into shipping and international trading, there’s the utmost need for effective transportation network locally and internationally. The government is focusing on roads if you look at the 7-Point Agenda, roads infrastructure are key to unlocking the potentials that Nigeria has in its economic endeavors.

Apart from the council playing a promotional role in creating the enabling atmosphere for private sector participation, do you have a record of what accrues into their purse yearly?

No, no, the policy is that exporters have unimpeded access to their foreign exchange. It is their money not government’s money or NEPC‘s money. The government funds the activities of the council. It is the social Responsibility of the government to provide us with tools, resources to promote and develop the non-oil sector.

How do you intend to take the councils activities to the next level in order to create a better export culture of international standard.

We are building up capacity first before we make the thrust. We must equipped ourselves with knowledge and current international practices. What I do believe is the professionalizing of our key staff to ensure that they are well equipped with the knowledge that will be of interest and benefit to the business of exporting communities. We are also developing an I.T Capacity building in terms of up grading our computer system so that we can communicate electronically. Which would increase one’s sufficiency and become more effective in terms of service delivery. For instance, today because of the internet facilities we have, it has provided available tools for importers all over the world to access us and find out what we have as well as make other enquiries. We are also looking at the structures for the country in terms of product provisions so that we can target some quick wins products. Such gestation periods manifests rapid results and we can measure one performance on such basis. We are also focusing on the service sector which is new in Nigeria. All the time we are talking about exportable products, we always assume we are referring to tangible products. But the service sector provide most revenue than even the tangible products. I will tell you areas like I.T, out sourcing business, call centres, the film industry, our sports men and women, professionals in the engineering, accounting, medicine and so forth. We are working with the Commonwealth to enhance our capacity. First, by undertaking a National Export Service Strategy so that we have a focus. Because it’s a new area, we are ready to have the pathways on how to go about promoting it. If you don’t know something, you cannot promote it. We are partnering with various International Development Agencies like USID, FDI to mention a few. In terms of product development and market development, we have make some effort to build the capacity in the area of garment and apparel production. Nigeria is not a garment – apparel producing Country. When African Growth Opportunity Act (AGOA) came,  an American incentive to aid Africa’s economic self sufficiency in year 2000, Nigeria decided to focus in product positioning via garment and apparel production. Unfortunately at that time we did not have the structure to produce garments in an industrial capacity like what is happening in Asia. The first 2-3 years, nothing was done. And in AGOA Programme there is time bound. When you don’t benefit when it elapsed, it’s as good as it never existed. We established a Human Capital Development Centre in Lagos where we train entrepreneurs for 3 months free of charge, an average of 40-70 entrepreneurs. Today I can tell you we have trained up to 6 batches of such entrepreneurs. Right from the same centre, we experienced commercial export production. We made one container load shipment to the U.S of T-Shirts as a trial shipment. Which means from concept to reality, the project is viable. What do we do with that project? It is to be replicated in other locations across the country. So that we can have economics of state in order to ensure an enabling environment within various geographical locations for people to imbibe into. That will also be an import substitution base indirectly because export is about boosting foreign exchange. And where you can minimize your use of foreign Exchange, you are boosting your foreign reserves. This is also indirectly an export.

Does the global economic recession affect the council’s activities in anyway?

Well the council is not directly in business per-se like stock buying but I must tell you there’s a way it affected our clients that’s the Nigerian exporters in the areas of falling market prices and falling demands. For example those who used to buy100 tons of goods are now coming down to 50 tons. Because most of their products end up in external markets and I will tell you, over 67% of our exports goes to Europe and America. 14% (percent) go to Asia and only 12% (percent) goes to West Africa and some other African countries. So naturally, we are indirectly affected because it affects our clients. Some exporters informed us that   their shipment  have been reduced from the first quarter of this year to about 16% (decline ) in terms of foreign exchange compared to the previous year.

Do you have a final word for Nigerians?

Nigeria has enough exportable goods, raw and finished products that can generate more revenue to the nation than depending solely on oil. Let’s explore these potentials to make our nation great.