Border closure: Exporters decry rising unsold inventory
With the nation’s borders remaining shut indefinitely, the local manufacturers involved in export have expressed concerns over the huge losses being recorded on a daily basis, as unsold inventory rises.
The Chairman, MAN Export Promotion Group (MANEG), Ede Dafinone, said due to the current border situation, many companies are in dire problems, saying that significant losses and many businesses are about to collapse.
He stressed that there are companies who rely on the west African market for additional sales to make profits, while some manufacture locally in Nigeria for export, but have had their warehouses filled with unsold inventory.
Dafinone at the second yearly meeting of the Group, said: “There are companies in all sorts of dire problems. Some companies that manufacture here have 100 per cent of their products meant for exports. How are they going to survive two months of border closure? They will make significant losses and the business would collapse. They will still pay interest on loans, pay their staff for this period when they are not selling anything.
“The best alternative means is the sea link that has been mentioned over the years, but that ship going across the coast is yet to be launched and we are waiting for that as an alternative, but even at that it is still expensive, but going forward, it is the only alternative.”
He commended the federal government for the payment of Export Expansion Grant (EEG) for the 2017 applications, adding that the payments due to exporters have not been paid in full, but expressed the hope that the government would pay the balance to exporters.
He said the use of the Export Credit Certificate (ECC) as payment for EEG has been expanded to allow for alternative use of the certificate, urging agencies like the Nigerian Export-Import Bank (NEXIM), and Asset Management Corporation of Nigeria (AMCON), to follow suit.
Ede added that 2018 was difficult for MANEG members, as the Apapa gridlock lingered in the period, leading to the high cost of transportation of goods meant for export to the port and imported machinery and raw materials from the port.
He said other familiar challenges of the sector such as high cost of energy, funds, multiple levies and taxes, and smuggling also unleashed untold constraints on manufacturing operations.
He pointed out that since the collection of the unutilised NDDC’s by the federal government; no payment has been made to any of its members, which he said has put them in a difficult position with their banks, and called for full commencement of payment of the backlog of EEG.
Delivering his keynote address, the Managing Director, African Export-Import Bank (AfreximBank), Prof. Okey Oramah, said the AfCFTA is expected to bring the share of intra-African trade to 22 per cent by 2022, up from the current level of 16 per cent and bringing total Intra-African trade to about $250 billion from about $160 billion currently.
Represented by the Managing Director, Intra-African Trade Initiative, Ms. Kanayo Awani, he noted that since manufacturers account for about 60 per cent of total Intra-African trade, intra-regional trade in manufactures can rise to more than $150 billion by 2022.
He stressed that AfCFTA is expected to enhance competitiveness at the industry and enterprise levels through the exploitation of opportunities for scale production, continental market access and better allocation of resources.
“As the largest economy in Africa and one of the leading intra-African trading nations, the AfCFTA holds phenomenal growth and export opportunities for Nigeria. Bringing together 55 countries and creating a market of 1.2 billion people with a combined GDP of about $2.5 trillion, it opens the wider African market for Nigerian manufacturers and exporters,” he said.
Oramah said between 1980 and 2018, Africa’s contribution to global trade fell from about 6 per cent in 1980 to 2.3 per cent in 2018 with its share of world imports falling from about 4.6 per cent in 1980 to 2.5 per cent in 2018.
According to him, African trade has helped Africa achieve among the highest growth rates in recent years, but said it increased the region’s exposure to global volatility and adverse terms of trade shocks.
He added that the excessive reliance on primary commodities and persistently low levels of intra-African trade means that the continent’s economic fortunes remain contingent on commodity price movements and external shocks.
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