The reality that Nigeria as a nation is known to have huge export and investment potential leaves the government seeking inter-country partnerships towards boosting foreign direct investment (FDI) and foreign exchange, as well as creating new trade routes across borders.| Ruth Tene Natsa and Favour Okpale write on the trajectory of growth and the export boost to the Nigerian economy.
 
  BACKGROUND: 
 
  According to the Nigeria Bureau of Statistics (NBS), in the fourth quarter of 2022, Nigeria's total trade stood at N11,722. 44 billion, of which total exports stood at N6,359. 61 billion and total imports amounted to N5,362. 83 billion. On an annual basis, total trade was N52,387. 30 billion, total imports amounted to N25,590. 55 billion, and total exports were recorded at N26,796.75 billion.
 
  The Bureau noted that total exports increased in the fourth quarter by 7.| 17 percent and 10.| 28 percent when compared to the amount recorded in the third quarter of 2022 (N5,934.15 billion) and the corresponding quarter in 2021 (N5,766. 62 billion), respectively. Conversely, total imports declined by 15. 46 percent in the fourth quarter of 2022 compared to the value recorded in the third quarter of 2022 (N6,343.53 billion) and fell by 9.73 percent when compared to the value recorded in the corresponding quarter of 2021 (N5,940.| 58 billion).| ++ The Re-export value in the quarter under review stood at N199.59 billion, representing 3. 14 percent of total exports.
 
  However, in 2023, Nigeria witnessed a sharp decline in foreign investment inflows, dropping by 26.7 percent to $3. 9 billion from $5.3 billion in 2022.This decline, as reported by the National Bureau of Statistics (NBS) and analysed by Nigerian Economic Summit Group (NESG) Research, was predominantly driven by heightened political risks and rising production costs that dampened investor confidence throughout the first three quarters of the year.
 
 
  "The scheme focuses on three critical investment areas, which include manufacturing at 45 percent, services at 30 percent, and oil and gas at 11 percent. " 
  The top five export destinations were Namibia and Equatorial Guinea, Cameroun, Ghana, and Togo, while the most re-exported commodity was 'Floating or submersible drilling or production platforms with N142.| 02 billion, this was followed by 'Cruise ships and similar vessels for the transport of persons or goods and lt;=500 tonnes' valued at N14. 78 billion and 'Refrigerated vessels, other than those of subheading 8901.| 20, of a capacity andgt; 500 tonnes' amounting to N13.16 billion. 
 
  Meanwhile, data obtained from the Nigeria Export Processing Zones Authority (NEPZA) has revealed that it has contributed a total sum of N11.1 billion into the federation account between 2020 and 2023. 
 
  NEPZA is considered the major driver of the government's initiative to diversify the Nigerian economy, with attractive investment packages and a focus on economy-driven sectors. NEPZA provides investment opportunities in different sectors across the country.
 
  The scheme focuses on three critical investment areas, which include manufacturing at 45 percent, services at 30 percent, and oil and gas at 11 percent.It has 56 free trade zones harbouring 580 enterprises with a cumulative value of USD 30 billion.
 
  Read also: Nigeria's trade surplus surges to N6.5trn amid rising exports – NBS 
 
 
  The data available to BusinessDay revealed that the authority collects over 20 types of revenues, ranging from 500,000 USD in declaration fees, 60,000 USD annually as an operation licence (OPL), and 3000 USD to 500 USD in registration fees, in line with existing regulations on IGR remittances to the Federation Account.
 
  "There are also the 100 USD to 300 USD examination and documentation fees per transaction, which occur daily, as well as other periodic revenues derived from vehicle registration and visas, among others. The operations within the free trade zones are not free in the context of the word." 
 
  It also states that the authority's first and second quarters of the 2023 Key Performance Indicator (KPI) showed that a combined total of 21. 3 million USD was generated as foreign direct investment, while N9.8 billion was accrued as local direct investment.|Conversely, a total of 28.9 million USD was generated as international exports and N250.| 5 billion was accrued to the government as domestic exports, while 338.9 million USD and N36 3 billion were generated as international imports and domestic imports, respectively.
 
  Furthermore, the figure that accrued to the government as customs duty stood at N20 billion, while that of payroll amounted to N346.| 8 million, and a total of 3,776 jobs were generated within the two quarters reviewed.| 
 
  In total, the Authority's 40 percent contribution to the consolidated  naira  revenue in  November 2023  was  N1,800,809,1773.|  38, with a similar  margin of  40  percent,  transferring  an  amount  of  $1,167,122  to the  dollar  account.|  86.|  ,,  The total  figures generated in 2023, which  include  figures  for  tender  fee,  withholding  tax  (WHT),  value  added  tax  (VAT),  stamp  duty,  PAYMENT  FEE  and  customs  duties,  were  N38, 879, 485, 774, 568.| 90.| 
 
  The data  also  shows  that the  plan  is also  delivering  on  its  mandate  of  creating  jobs  for  the  citizens. 
 
  Direct  employment  created  by the zones currently stands at 38,429 jobs, with an additional 172,930 indirect jobs  to  be  created  by  the end of 2023. In  addition,  the  programme  has  promoted  skills  development  as  many  semi-skilled  artisans  have  been  able  to  gain  the  experience  they  need  to start their  businesses. Foreign direct investment (FDI) and local direct investment (LDI)  have  reached  US$491  million  and  US$1.15  billion  respectively  from 2019 to  2023. He  adds that the  free  trade  zones  have also contributed to import  substitution  with  more  than  1.62  billion  shipments  imported from these  areas  between 2019 and 2023, saving scarce foreign exchange.| 
 
  Without  a  doubt,  Nigeria,  with its rich  history  of untapped mineral resources and abundant agricultural  resources,  remains  an  investment  destination  at a time when global  companies  are  looking  for  new investment destinations.

Speaking with BusinessDay, Ayo Sotinrin, an ardent environmentalist, finance expert, and the MD/CEO of SAO Agro, is optimistic that President Bola Ahmed Tinubu's administration is strengthening agricultural produce safety as well as animal and plant health capacity for the country to regain its top continental status in exports.
 
  Sotinrin, however, believes that to achieve the export vision of the administration, there is an urgent need to further improve the development of infrastructure.
 
  In his words, "the Tinubu administration needs to further improve infrastructural capacity, such as power and transport, and reduce the negative impact of the gridlock at the ports on the shelf-life of agricultural produce.
 
  Meanwhile, Ibrahim Usman, the president and CEO of the Nigerian-Saudi Chamber of Commerce, Industry, Mines, and Agriculture, has said that Nigeria has huge arable land that can be used for agriculture, adding that it also has several valuable mineral resources that could be exploited.
 
 
  He says, "We can develop our agriculture in such a manner that we could be exporting to Saudi Arabia, which imports all its food.| Similarly, Nigeria needs a lot of funding, technical support, skills, and equipment to be able to develop our economic sectors." 
 
  "For instance, Saudi Arabia has been trying to compete with the US, China, and Europe in terms of energy storage, which cannot be done without batteries, and batteries cannot be made without lithium, a strategic mineral that Nigeria has in abundance.
 
  He adds that "for sustained growth and improved investor confidence, the Nigerian government must address these challenges and create a more favourable business environment. This includes resolving persistent issues in the oil sector, improving the regulatory landscape, and providing necessary support to the industrial sector. 
 
  The persistently unfavourable investment climate has significantly impacted several foreign-owned subsidiaries, as major companies like Nestle, Guinness, Airtel Africa, MTN Nigeria, and most recently, Multichoice, the owners of DSTV, have collectively lost over N100 billion due to currency devaluation as well as the high economic cost, affecting demand and supply.
 
  This downturn underscores the broader economic challenges Nigeria faces, despite attempts at policy reforms aimed at stabilising the market.
 
 
  Some of these challenges range from insecurity, EU/US rejection of Nigeria's agricultural products, forex decline, and various government policies that affect businesses locally.
 
  However, in the fourth quarter of 2023, Nigeria implemented crucial pro-market reforms, including the removal of fuel subsidies and the harmonisation of the exchange rate.These measures sparked a positive shift, with capital importation rising to $1.1 billion in Q4 2023.| The Central Bank's efforts to clear foreign exchange backlogs also contributed to this uptick, bolstering investor confidence.
 
  Foreign Direct Investment (FDI) in Q4 2023 surged to $184 million, a significant rise from $84.2 million in Q4 2022.Consequently, FDI's share of total investment inflows jumped to 16.9 percent from 7.9 percent year-on-year. Similarly, foreign portfolio investment (FPI) increased by 8.6 percent to $309. 8 million in the same period. However, other investments, mainly foreign loans, declined to $594.8 million from $691.2 million.
 
  Despite the fourth-quarter recovery, the overall FDI for 2023 fell by 19. 4 percent to $377. 4 million from $468.| 1 million in 2022. Major multinational companies, including Shell, GlaxoSmithKline Consumer Nigeria, and Procter and Gamble, divested from Nigeria, citing an unfavourable business environment. Shell, for instance, sold its onshore oil fields for $2. 4 billion.
 
 
 
  Sectoral impact and economic performance 
 
  The divestments have notably affected Nigeria's manufacturing sector, which expanded by a modest 0.5 percent in the first three quarters of 2023 compared to a 1.9 percent contraction in the same period of 2022.These weak capital inflows have led to a shortage of foreign exchange, further depreciating the naira.
 
  In the first quarter of 2024, Nigeria's economy grew by 2.98 percent, a decline from the 3.46 percent growth recorded in Q4 2023 but an improvement from the 2. 31% growth in Q1 2023. The non-oil sector, accounting for 94 percent of real GDP, remained the primary driver of economic activity. The oil and gas sector grew for the second consecutive quarter, achieving a 5.7 percent growth rate in Q1 2024, driven by increased domestic crude oil production.
 
    The  industrial  sector,  however,  recorded  mixed  results. While manufacturing and water supply  expanded,  the  power,  non-petroleum  mining  and construction sectors contracted. The  inauguration  of  the  Dangote  refinery  in  the  first  quarter  of  2024  could  not prevent a sharp  33.4  percent contraction in the oil refining sub-sector,  underscoring  the need for  accelerated  measures  to  reactivate  local refineries.
 
  Challenges and  Future  Prospects
 
 
  Despite some positive developments, Nigeria continues to  face  major  economic challenges. Inflation remains a major  concern  with the  average  annual  rate rising to  24.7  percent in 2023 and monthly inflation  set  to  hit  a 27-year high of  33.7  percent in April 2024. The food inflation component  exceeded  40.5  percent  and core inflation reached 26. 2 percent.
 
  The Central Bank of Nigeria (CBN),  using  its international  payments  data, reported that Nigeria recorded $282.  A  total  of  61 million  foreign exchange  remittances  were  received  in the first quarter (Q1) of 2024.
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  Represents  a decrease of $18. 96  million  or 6.28  percent  compared to  $301. 57 million  remittances  from  the  diaspora  in  the  first  quarter  of  2023.
 
  Efforts  are  being  made  to diversify  the  Nigerian  economy away from oil by  strengthening  the manufacturing  sector. The Federal Ministry of Industry,  Trade  and Investment has announced investment commitments totaling $30 billion over the next five to eight years.| However, issues such as corruption, political  instability  and inadequate infrastructure continue to  hamper  foreign direct investment.

  Similarly, the mining and solid minerals sectors have  announced  efforts to revive the Ajaokuta Steel Company Limited (ASCL) and the National Iron Ore Mining Company (NIOMCO) by engaging the consortium led by the original developers of  the  Ajaokuta Steel Company Limited  (ASCL)  ,  Tyamzhpromexport (TPE), to  reactivate  the steel plant.

https://businessday.ng/features/article/export-as-nigerias-economic-game-changer/


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