As the
economic recession wanes, notwithstanding high food prices, industry
stakeholders have warned of another crisis that may be triggered by unstable
commodity prices, low export capacity and little commitment to non-oil economy
by the federal and state governments.
According to
some of them, Nigeria’s $30 billion non-oil revenue target within the next 10
years under the zero oil plan is currently being undermined by the nation’s
renewed focus on oil revenue as crude prices rise.
While the
non-oil commodities appear to have a stable outlook in the future, operators in
the sector note that global glut of major agriculture commodities and the
possibility of manufacturers mopping up certain crops as part of measures to
explore alternatives to imported raw materials, may likely affect the projected
non-oil revenue by government.
With many
developed economies outpacing frontier markets like Nigeria with technology in
agriculture production and also seeking new markets for their commodities,
potential earnings from the non-oil sector may become threatened as commodities
outlook reflect potential glut and crowding out of smaller players.
Currently,
the global Commodity Agricultural Raw Materials Index remains on a negative
5.39 per cent based on a year-to-date analysis, according to index mundi
statistics.
The Chief
Executive Officer, Nigerian Export Promotion Council (NEPC), Segun Awolowo, had
said the zero oil export policy of the council was already shifting the
attention of Nigerians from oil.
He added
that the volatility in the market had made it imperative for the government to
look inwards, especially as the country could no longer depend mainly on oil
economy for the implementation of its programme.
Although oil
sentiments are often revised by regulators and cartels like the Organisation of
the Petroleum Exporting Countries (OPEC), the non-oil sector is left to market
forces to determine with exceptions of trade treaties that had been signed.
According to
the Chief Executive Officer, Economic Associates, Ayo Teriba, the outlook of
commodity prices is bleak as the world economy is growing faster.
Teriba
argued that Nigeria needed to look beyond exports as a source of external
financing, and boost foreign investment inflows. “The outlook of global exports
is bleak, but it offers cheap liquidity through investments. Nigeria is
currently very close to foreign investment as many large infrastructure sectors
that could be major investment destinations remain under government monopoly.
“A glut is
expected in almost every segment. There is a supply glut that will affect
commodity prices. It goes beyond oil. There is no cartel in the agric
commodities sector like what OPEC does in the oil sector. This means that
export income cannot grow beyond world requirements.
“Trade
reforms, such as export promotion or import substitution, take five years or
much more to yield results. In contrast, foreign investment reforms, such as
Eurobond issuance, diaspora bond issuance, brownfield/greenfield foreign direct
investment inflows into infrastructure sectors that are currently under
government monopoly, begin to yield results within a year. Nigeria’s
experiences with FDI inflows into telecoms and the recent $1 billion Eurobond
issue show that capital can flow in shortly after necessary steps are taken,”
he added.
On his part,
the Deputy Director-General, Partnerships and Capacity Building, International
Institute of Tropical Agriculture (IITA), Dashiell Kenton, said that things
were improving, but all depended on the consistency of government’s policies
because investors need to be assured of the future of where they are investing
their money.
“If
government’s policies help to promote agriculture, then businesses can thrive,
but if government changes policies then all the development will collapse. That
is very important. Nigeria has the weather, soil and the technologies are
available not only to IITA, but in many other organisations,” Kenton said.
On the
rejection of exports from Nigeria in global markets, Kenton said the presence
of toxins like the Afro toxins in export commodities was responsible. He said
solutions had been developed to address this concern.
The
Chairman, Manufacturers Association of Nigeria (MAN) Export Group, Ede
Dafinone, confirmed that the nation’s export capacity was still low, but said
efforts were being made to encourage other operators.
A social
commentator, Greg Odogwu, advised that to avoid the failure of export
initiatives for agricultural produce, the current administration needed to
address the issue of access to credit at a single digit interest rate, access
to market, security of lives and property and provision of accurate data on
food production index.
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