30% processing of export raw materials

For years, Nigeria has paid mere lip service to the need to diversify the export base of our economy to widen the sources of our foreign exchange earnings. Crude oil exports have traditionally been the mainstay of our economy.

Over the past ten years, the economy has gone into recession several times, which put pressure on the Federal Government to scramble around for quick-fix measures to diversify the economy. On this score, the Muhammadu Buhari government’s economic blueprints failed woefully to produce the desired results. No noticeable new frontier has been broken so far.

One of the reasons Nigeria’s non-oil and gas exports have failed to positively rival the oil sector is that we have not been able to unlock the huge potentials in our agricultural, mining and manufacturing sectors. The feeble non-oil exports were mostly unprocessed raw materials which do not command much value in the international market.

The Nigerian Senate is making a renewed effort to engage this problem. It recently passed a Bill that mandates all our exportable raw materials to be pre-processed up to 30 per cent before being sold overseas. This is sequel to the report by its Committee on Science and Technology which made this recommendation.

The Bill was sponsored by Senator Onyekachi Nwebonyi (APC Ebonyi North). Any raw materials exporter who fails to do this will be charged 15 per cent of the export value. This penalty is aimed at discouraging unprocessed exports which deny the economy the benefits of value chains.

Pre-processed exports add value, boosting export revenue and economic growth. It creates local employment opportunities and reduces reliance on importation of raw materials. According to the Minister of State for Industry, Trade and Investment, John Owan Eno, Nigeria spends about $10bn annually to import raw materials, many of which exist in abundant quantities in Nigeria.

A good example is our crude oil, which is now refined domestically for local consumption and exports. If our standard quality cocoa beans are pre-processed as mandated, Nigeria could rejoin the league of chocolate and cocoa butter manufacturers in addition to exporting to our traditional customers. Other valuable exports that can enjoy the value addition are: palm oil, groundnut, sesame seeds, shelled cashew nuts, Shea and others.

The Bill mandates the Raw Materials Research and Development Council, RMRDC, to issue the guidelines defining the parameters of the 30 per cent upgrade of our exports. They are also to issue certificates for goods that comply fully. Unfortunately, in Nigeria, implementation is always the snag. Our indolent and corrupt public sector workers and political leadership are only interested in the money, not service delivery. That is why our beautiful policies gather dust in the shelves.

If this policy is properly implemented, we will achieve economic diversification.

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