By Ayo Yusuf
There are fears that Nigeria’s economic woes have no end in sight as the country spends $6.7bn on the importation of manufactured goods in the first six months of 2023.
Data from the National Bureau of Statistics show that in comparison the nation was only able to earn $746m via manufactured goods exports in the first half of the year.
An analysis of the Foreign Trade Statistics reports published by the NBS indicated that the value of manufactured goods traded stood at N2.5tn in the first half of the year.
Over the past few years, manufacturers, at various fora, have lamented that about 95 per cent of their forex needs were sourced at the parallel market, where the dollar was sold at an average rate of N750.
Going by NBS data, this implies the country spent about $2.9bn (N2.39tn) on the importation of manufactured goods in Q1.
On the flip side, in Q1, the export component of total trade accounted for just N131bn, indicating that over N2.3tn (94.7 per cent) of total trade of manufactured goods were imported.
The country’s low export returns have been attributed to non-remittance of proceeds by many exporters through banks.
This takes the total exports of manufactured goods to $285m, as against the $6.7bn gulped by imports during the same period.
Further analysis of the data showed that in the second quarter of the year, the value of manufactured goods traded stood at N3.2tn, the export component accounted only for 93 per cent (N212bn) of total trade, while imports were valued at N3tn.
This means that $3.8bn was spent on manufactured imports while $461m was repatriated as earnings via exports of manufactured goods.
The major goods imported during this period included used vehicles, with diesel or semi-diesel engines from the United States and United Arab Emirates, machines for reception, conversion and transmission of voice, images or data from China and ‘Other medicament not elsewhere specified’ from India.
The President of the Manufacturers Association of Nigeria, Francis Meshioye, said Nigerian manufacturers were usually unable to compete with their international counterparts due to factors bordering on high production costs.
According to him, local manufacturers are saddled with high production costs, which ultimately push up the prices of manufactured goods.
Mr. Meshioye said, “We tell our members to export more, but all these things are based on competitive advantages. If you want to export a product, it is fine, but at what cost are you going to export it?
“What will be your price? If the cost is astronomically high, it will be difficult to export. It is a circle.
The export base should be good enough to support the floating exchange rate, but we need to have a good economic base to do that.”
He called on the government to look at why manufacturers cannot export as expected, adding that it could do that through a roundtable.
“They can look at those products that can generate money, and ask what the impediments to exports are. That would be fantastic. We need to boost our export base. It should be robust. The more we export, the more forex we earn. And the more forex we earn, the more we have to source our importation needs,” the MAN president remarked.
Speaking further, Meshioye implored the government to implement policies that would motivate and stimulate manufacturing.
“If we stimulate investments in manufacturing, we will definitely churn out more products. So, these products will find their way out of Nigeria legally, and we will get forex to defend the naira,” he added.
In the same vein, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Muda Yusuf, said Nigeria’s over-reliance on importation had exacerbated the protracted forex crisis that had bedevilled the economy.
He added that more attention needs to be paid on import substitution and leveraging the country’s competitive advantage to boost exports and repatriate more foreign exchange earnings.
Mr. Yusuf said, “You cannot have a manufacturing sector that is so heavily import-dependent. We should have a deliberate policy to ensure that the materials that we import are produced locally. That will require active government support in those areas.”
