This is the eleventh in a series of articles aimed at advising the President of the Federal Republic of Nigeria on the necessary actions to increase the non-export volume to levels that match or even exceed those of crude oil and gas exports.
In this edition, the focus will be on the policies relating increasing volume of production of manufactured goods in order to boost the volume of Nigeria’s finished goods that are exported to different markets around the world
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This policy is therefore aimed at growing the non-oil export volume by increasing the production volume of manufactured goods in order to make Nigeria’s value added products contribute significantly to the Nigerian export basket.
This will therefore require aggregating together different programmes that will support and help the manufacturers increase the output from their manufacturing activities and consequently the export volume.
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This involves the provision of different incentives and support to reduce the cost of production through a reduction in the cost of inputs like raw materials, power etc.
The important segments of the recommended policies to boost the production capacity of the Nigeria Manufacturing sector and consequently boost the non-oil export volume should include: enhancing infrastructure, incentives for investment, skill development and vocational training, establishing quality standards, support for research and development, local supply chain development, improving regulatory frameworks, market development and and export promotion.
One of the major reasons for the high pricing and hence uncompetitive nature of the manufactured goods in Nigeria is high cost of production. One of the factors responsible for this is the high level of infrastructural deficit. This is why a policy on improving infrastructure, such as transportation networks (road, rail, and ports) and utility services (electricity and water supply), is crucial for manufacturing efficiency. Adequate infrastructure reduces production costs, improves supply chain logistics, and facilitates easier access to markets for exporters.
In order to encourage manufacturing for export growth, a government policy that incentivises investment in the manufacturing sector is highly indispensable. This can include the offering of tax breaks, grants, or subsidies to domestic and foreign investors in the manufacturing sector can stimulate growth. Creating Special Economic Zones (SEZs) with favorable regulatory and tax conditions can attract new businesses and encourage investment in manufacturing facilities.
In order to increase the volume of manufactured goods in the country for the export market, it is highly imperative to grow the number of skilled and competent personnel in the sector.
This is why there must be a policy on continuous capacity building in the sector. Establishing vocational training programmes and partnerships with educational institutions can develop a skilled workforce tailored to the needs of the manufacturing sector. Training programmes should focus on modern manufacturing techniques, quality control, and management skills to enhance productivity.
One of the major problems that have plagued the non-oil export sector of Nigeria, as reported by the National Agency for Food and Drug Administration and Control (NAFDAC) is the frequent rejection of the items exported abroad.
This is why it is very important to have a policy that ensures the development and enforcement of quality standards for manufactured goods in order to increase competitiveness in international markets. Certification processes can help build consumer confidence and ensure compliance with global standards, making Nigerian products more appealing to overseas buyers.
According to the World Trade Organisation (WTO), manufactured goods constitute more than 60 per cent of the globally traded merchandise goods, the volume of which has been put at about $24.4 trillion . In order to have a good share of this sector of global trade, there must be a policy to support research and development in the manufacturing sector. This is because investing in research and development (R&D) can foster innovation in manufacturing processes and product development. Collaboration between industries and research bodies can lead to the creation of new products, improved processes, and enhanced competitiveness in the global market.
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Regulation is important to ensure quality standards but over regulation can stifle the growth and development of the manufacturing sector. Therefore there is a need for policy that streamlines the regulatory processes to reduce bureaucratic hurdles in order to create a more conducive environment for manufacturing.
Ensuring that regulations are transparent, predictable, and supportive of business operations will attract local and foreign investments into the manufacturing sector and consequently contribute to the volume of exported manufactured goods.
In conclusion, since the exporters of manufactured goods are the major beneficiaries of the trillion dollar trade in the export market, it is therefore important to increase Nigerian exports of manufactured goods.
In order to do this, there must be a deliberate policy to encourage private sector investment in the manufacturing sector. This will consequently help the government achieve its goal of increasing the volume of non-oil exports in the country, and thereby positioning this sector as a major source of foreign exchange earnings for the nation.
Bamidele Ayemibo, Ph.D
International Trade Consultant/Member, BoT Network of Practicing Non-oil Exporters of Nigeria (NPNEN)
For questions, send an email to [email protected]
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