Need For Better Credit Structure For Exporters

Nigeria boasts immense potential as an agricultural exporter, with a bounty of crops like cocoa, soya beans, and sesame seeds eagerly sought in China’s vast market of 1.4 billion consumers.

Yet as last November’s China International Import Expo (CIIE) in Shanghai demonstrated, Nigerian exporters still face steep obstacles competing globally.

Chinese Premier Li Qiang welcomed the world to share in China’s opportunities and strengthen trade ties.

The expo presented the full opportunities of the Chinese market that countries are already strategizing to exploit.

Although some Nigerian companies were present at the expo, there appears to be a limited number of agro-products they were able to offer to the huge Chinese market.

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Foreign firms eagerly responded, snapping up Nigerian commodities. Our own exporters, however, had little to showcase beyond raw crops, their efforts hobbled by difficulties securing reasonably-priced credit to procure goods.

While Chinese and other foreign companies fund purchases with government-backed loans as low as 3-5 percent, Nigerian banks demand double-digit interest, some as high as 30 percent.

The constraint of credit facilities leaves Nigerian exporters struggling against better funded Chinese, Lebanese and sometimes Indian companies for Nigerian agro commodities to the Chinese market.

Indeed, facing rates that discourage business, local exporters struggle to supply the Chinese appetite even for traditional agricultural fare, let alone the value-added, semi-processed goods the Nigerian Export Promotion Council (NEPC) urges them to develop.

This is a disincentive to business and a drawback on the country’s quest to improve its exports in order to have a favorable balance of trade with China, which is one of its major trading partners.

According to the National Bureau of Statistics (NBS), agro-products accounted for 4.31 percent of Nigeria’s total exports in Q1 2023. The value of this export to the Chinese market is high because China is the biggest importer of sesame seeds from Nigeria in 2023, with others being Japan, Vietnam, Turkey and South Korea.

In the considered opinion of this newspaper, the government must make it a priority to help exporters access more affordable finance if Nigeria is to profit from the openings of the world’s second largest economy.

We believe this is where special funds for export should be activated or reactivated to support business interests of Nigerians.

Extending dedicated export credit at single-digit interest would allow more exporters to boost procurement and shipments.

The NEPC should strengthen its Market Access Department (MAD) to support exporters. The NEPC and diplomatic corps should negotiate arrangements to ease the flow of agricultural goods to China in compliance with import regulations, to avoid a situation where a huge number of products from Nigeria are not cleared by the Chinese authorities.

We are indeed disturbed by the fact there are limited numbers of processed goods from Nigeria that have made it to the international markets due to shortage of processing plants in the country.

Regrettably, the country has been exporting mainly primary products which has not added value to the products.  It is only through processing that value can be added to the goods to bring the much needed foreign exchange.

We cannot cede this crucial market to foreign intermediaries. Growth in Nigerian firms builds jobs for Nigerian workers.

The annual expo has leveraged the strengths of China’s enormous market, fulfilled its platform function for international procurement, investment promotion, people-to-people exchanges and open cooperation, and made a positive contribution to creating a new development pattern and promoting world economic development.

The CIIE contributes to China’s sound domestic circulation and links it up with international circulation with countries such as Nigeria.

The CIIE is a window into China’s economic vibrancy and it is a sure way to boost Nigeria’s immense potential in exports and provide an important platform for businesses which the country can tap into.

Needless to say, if further motivated and enabled, Nigerian exporters can leverage annual events like the CIIE to forge direct trade channels abroad rather than exporting mainly raw materials. With the right facilities and opportunities, they can thrive – and take Nigeria’s economy with them.