+234 805 115 1655 info@ncan.ng
+234 805 115 1655 info@ncan.ng

Why exporters are struggling — Investigation

Against the backdrop of the need for more foreign currency inflow to moderate pressures on exchange rate, rising cost of goods and services as well as high interest rates have combined to dampen the productive capacity of exporters resulting in weak growth of Non-oil exports, NOEs.

Financial Vanguard investigation revealed that the factors militating against exporters include: the high cost of goods and services have increased the working capital of exporters by over 350 per cent in the past year; high interest rate charges by banks, mostly above 30 per cent, which made it difficult for exporters to raise the funds to sustain or increase production.

Other factors include restrictions on how exporters can repatriate foreign exchange earnings; non-payment of outstanding export grants from 2021 to 2024, flooding, and port congestion.

Exporters who spoke to Financial Vanguard said that these factors are behind the weak growth recorded in the first half of the year, H1’24, as well as the inability to return to pre-pandemic level in growth in Non-Oil Exports

NOEs performance breakdown

Data from the Quarterly Statistical Bulletin of the Central Bank of Nigeria, CBN, indicates that Nigeria’s NOEs while showing mixed performances in the first half, H1’24, have not recovered to pre-Covid levels.

Though the data shows that NOEs reversed the decline recorded in the first half of 2023, H1’23, growth in H1’24, was weak at 3.1 per cent, Year-on-Year, YoY. Also, NOEs recorded a Quarter-On-Quarter, QoQ, decline of 0.6 per cent in Q2’24.

The weak growth recorded in NOEs in H1’24 was occasioned by 39 per cent and 4.3 per cent, YoY declines recorded in Re-Exports and Electricity exports in H1’24, which subdued the impact of the 6.1 per cent and 8.6 per cent YoY increases in Other Non-Oil Exports and Informal Trade.

Other Non Oil Exports rose to $3.16 billion in H1’24 from $2.98 billion in H1’23 while Informal Trade rose to $134.99 million from $114.2 million in H1’23.

But the value of Re-Exports dropped to $143.47 million in H1’24 from $232.96 million in H1’23, thus maintaining the downward trend recorded in H1’23 when it declined by 22 per cent YoY.
Similarly, Electricity exports fell to $90.03 million in H1’24 from $93.72 million in H1’23. This reversed the 16 per cent YoY increase recorded in H1’23.

Courtesy: Vanguard News Paper, Read More

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