New Telegraph

December 10, 2023

3.4% growth: How non-oil sector can drive economy, by Analysts

At a time when Nigeria’s earnings from its major revenue source, oil, is dipping as a result of instability in the world market occasioned by oscillating prices, there is a consensus of opinion that the non-oil export sector holds a lot of promise as a ready cash cow. That is as the country’s gross domestic products driven by nonoil export, expanded by 3.4 per cent in 2021. PAUL OGBUOKIRI reports that the irony, however, is that the sector, promising as it is, has suffered serious setbacks, chief among which is the inconsistency in government policies


Non-oil export rises

Nigeria’s non-oil exports rose from N458.6 billion recorded between January and September 2017 to N1.4 trillion within the same period of 2021, according to an analysis of data from the National Bureau of Statistics. This means that within the five-year period, non-oil exports rose by N942 billion or 205 per cent.

This came as The Founder, B. Adesipe Associates Limited (BAA Consult), Dr. Biodun Adedipe, has stated that one of the outcomes of a non-oil export policy is the fact that the Federal Government can grow its reserves, noting that export- led-economics enjoy relative stability and suitable growth. He also hinted that to be export led goes beyond natural endowment.

“It is more about clarity of what to produce to the rest of world but the important issue is whether our economy is growing. Certainly, our economy is growing just like any other economy globally.”

Meanwhile, a breakdown of non-oil exports within the period under review showed that in the first quarter of 2017, non-oil exports stood at N170.6 billion, but fell to N161.57 billion in the second quarter and dropped further to N126.47 billion in the third quarter of the year.

These brought the value of non-oil exports in the first nine months of 2017 to N458.64 billion, which is 4.7 per cent of total exports made during the reviewed period.

Further analysis of data from the NBS showed that in Q1 2018, non-oil exports rose sharply to N577.6 billion, but dropped to N218.4 billion and N163.3 billion in Q2 and Q3 respectively, bringing total non-oil exports within the reviewed period to N959.3 billion. The N959.3 billion non-oil export accounted for 6.9 per cent of the total exports of N13.8 trillion recorded within the reviewed period.

The NBS stated that in Q1 2021, non-oil exports stood at N455.4 billion; it rose to N462.8 billion in Q2 2021 and jumped to N546.2 billion in Q3.


These showed that non-oil exports stood at N1.8 trillion in the first nine months of 2021, which accounted for 13.7 per cent of the N13.1trillion exports recorded as at September 30, 2021.


While there was a significant increase in non-oil exports during the five-year period, a cursory look at the export component of each year showed that crude-oil exports accounted for a large chunk of the total exports recorded. For instance, between January and September 2021, crude oil exports accounted for 80.6 per cent of the total exports recorded within that period.


This was despite the various programmes and initiatives introduced by the government to shore up non-oil exports. For instance, in 2016, the Federal Government, through the Nigerian Exports Promotion Council (NEPC) instituted the zero-oil plan, a core component of the Federal Government’s Economic Recovery and Growth Plan (ERGP), to increase the contribution of non-oil exports to Nigeria’s Gross Domestic Product by 20 per cent.


According to the NEPC’s 2016 annual report, the focus of the plan is to ‘generate at least, a minimum of 40 – 50 per cent of Nigeria earnings from non-oil export.’ Among other things, the report disclosed that the plan was expected to grow non-oil foreign exchange to $30 billion by 2020.


The $30 billion was to be generated from 11 strategic export products – such as petrochemicals, palm oil, cocoa, soybeans, rubber – with high financial value to replace oil.


The $30 billion target, when converted to naira using the current official exchange rate of N411/$ equals N12.3 trillion. Speaking on the development, financial analysts explained that the growth in nonoil exports could be attributed to some of the listed initiatives which were effectively implemented.


Potentials of non-oil sector

From available information, the Nigerian non-oil export sector has deep agro-allied linkages made up of semi-processed and processed agricultural products such as cocoa, cashew, sesame seed, ginger, gum Arabic, shrimps, cotton and rubber.

The country is also a major exporter of finished leather which has direct linkage to the livestock growers. Expectedly, the export sector has helped in no small measure to boost the incomes of over 10 million farmers in rural areas across the length and breadth of the country.


A case in point is that during the global financial crisis, Nigeria’s non-oil sector not only soared high but helped absorb the shock caused by sharp fall in oil revenues. Giving an insight into the benefit of the non-oil sector on the economy, Professor of Agricultural Economics at Babcock University, Tomilayo Adekanye, said Nigeria had received respectable earnings from the nonoil sector, a fact, made manifest in the rising GDP growth.

“The Central Bank of Nigeria Economic report for the third quarter of 2007 was estimated at 6.05 per cent compared with 5.73 per cent in the second quarter. The growth was driven by major agriculture activities in the non-oil sector such as yam, Irish and sweet potatoes, groundnuts and maize, which was estimated at 9.47 per cent.”

It is also instructive to note that the Bank of Industry’s intervention in the sector may have also impacted positively. Analysts easily point to the almost comatose Nigerian textile industry.

With the lifeline from the BOI, some of the remaining textile mills have embarked on re-tooling of their equipment. Some companies are even going in for industrial or technical textiles to have a competitive edge.

Impact of government policy

The Federal Government in its determination to drive growth in the non-oil sector has put in place certain policy frameworks such as the Export Expansion Grant (EEG) scheme which operates under the legal context provided under the Export.


The policy, which is a fiscal policy instrument, is implemented under the guidelines issued by the Federal Ministry of Finance and enforced by the Nigerian Export Promotion Council (NEPC), the apex agency responsible for the administration of the policy in conjunction with other key implementation agencies such as the CBN and Nigeria Customs.

The export grant is given to exporters to cushion the impact of infrastructural disadvantages faced by Nigerian exporters and make exports competitive in the international market.


The fund is only available to exporters who have repatriated in full the proceeds from their export transactions, which must be certified by the CBN as eligible. Interestingly, the present EEG Policy underwent clinical reform in 2006 during the first term of Dr. Ngozi Okonjo-Iweala, the then Finance minister. With technical assistance from international consultants PriceWa-

terHouseCoopers (PWC), the scheme was streamlined to make it more effective by categorizing the export products according to degree of value addition and processing and rewarding those companies which generated higher export growth and new investment in export capacity building. Besides the EEG, the Export Adjustment Scheme (EAS), Export Processing Zone, the Nigeria Import Export Bank (NEXIM), among other instruments have been put in place to ensure a hitch-free export trade.

Market diversification

It’s interesting to observe how persistent efforts of Nigerian exporting companies have led to the acceptance of their products in some of the highly quality conscious customers and markets. Consider a few examples.

Ten years after AGOA (African Growth & Opportunity Act) was passed by the USA to allow duty free access to products from sub-Saharan Africa, Nigerian exports seem to have achieved a breakthrough.

Today, Nigerian products such as cocoa beans and butter, dried-split ginger, leather, woven sacks and technically specified rubber (TSR) are being exported to the US.

Hibiscus flowers are also being exported to the USA. Available information from the NEPC indicates that EU accounts for 56 per cent market share of Nigeria’s non-oil exports, followed by the regional ECOWAS with 11 per cent share


Employment generation

There are over two hundred exporting companies in Nigeria. CBN publishes the list of top 100 export companies.

According to industry experts, the direct employment in the non-oil export companies is estimated at about 200,000 while indirect employment in the agriculture sector which gains from the market linkages provided by the exporting companies is estimated at over 10 million. A large cashew processing plant set up in Kwara State directly employs 1,500 people, mostly rural women.


The cashew kernels are processed and packed, direct for shipment to developed countries such as the USA and Europe.

Cluster development

A very positive fall out of the non-oil export expansion has been the emergence of export processing clusters. Challawa Industrial Estate in Kano has emerged as a major export cluster with modern tanneries situated in this zone.

Annual exports from this industrial zone which also has integrated textile mills are estimated at over $700 million. Likewise, cocoa processing clusters have emerged in the South Western part of the country, rubber processing in Sapele in Delta State and large scale shrimp processing in Lagos.

The private companies located in these clusters have invested in plant and machinery and infrastructure, almost substituting the role of the government, to meet international quality standards and provide employment to hundreds of thousands directly and indirectly.

Boosting foreign exchange earnings

Boosting export earnings becomes even more pertinent today in view of weakening exchange rate of Naira and shrinking foreign exchange reserves.

According to an NEPC official who is familiar with the past export trends, “a positive feature of the EEG scheme has been the tendency on the part of exporters to operate through official channels which compliments CBN efforts to discourage the unofficial forex market in Nigeria”.

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