Olusegun Awolowo: On Zero Oil Export
By Remmy Diagbare
Olusegun Awolowo is the Chief Executive Officer of the Nigerian Export Promotion Council (NEPC). NEPC is Nigeria’s apex organisation for the promotion of non-oil exports to diversify the Nation’s economy. He leads a team of nearly 400 staff spread across 15 offices and the headquarters in Abuja.
Nigeria is witnessing significant growth in non-oil contribution to the nation’s GDP occasioned by increased trade volumes, export of non-traditional goods and exports to new markets. His goal is to shift the focus from the export of raw produce to value-added products to increase revenue, value for the products, create jobs and improve lives.
Before NEPC, Mr Awolowo played a significant role in evolving a Master Plan for an efficient urban transportation system in the FCT, the Federal Capital Territory Administration as Secretary for Social Development, Area Councils and later Secretary of Transport; He worked in the FCTA until 2011, when he went back to his law practice.
In November 2013, President Jonathan appointed him as Executive Director/CEO of the Nigerian Export Promotion Council. Mr Awolowo is a lawyer, the grandson of Chief Obafemi Awolowo, one of Nigeria’s great founders, and the only biological child of the famous designer, Princess Abah Folawiyo.
Tell us about the operations of NEPC.
The Nigerian Export Promotion Council (NEPC) was established through the Nigerian Export Promotion Council Decree No. 26 of 1976 (now an Act before the Parliament), an agency of the Federal Government of Nigeria under the supervision of the Federal Ministry of Industry, Trade and Investment to develop and promote non-oil export. The vision is to make the world a market place for Nigerian non-oil products.
Our mission is to spearhead the diversification of the Nigerian economy by expanding and increasing non-oil exports for sustainable and inclusive economic growth.
How has NEPC keyed into the new compulsory need to diversify?
We are at a very critical period in Nigeria’s history. In 2014, our revenue from oil was $70 billion, in 2015 it was $40 billion. We know we need to diversify the economy. The Council’s strategic objective is to diversify the productive base of the Nigerian economy away from oil and foster a market-oriented, private sector-driven economy. Nigeria is the biggest economy in Africa and to remain globally relevant, we need to continue to grow our GDP as we reduce our dependence on oil. NEPC is very strategic in achieving this goal.
As the number one agency for the promotion of non-oil, our flagship strategic plan is the ‘Zero Oil’ plan which seeks to replace oil as the major national foreign exchange earner through proactive and carefully conceptualized interventions. This will help to grow earnings from non-oil exports to US$8 billion (by 2019) and, eventually, US$25 billion (2025). The ‘Zero Oil’ plan also aims to diversify the country’s export base from exporting raw commodities to value added products, increase participation of SMEs in export trade by 50%, achieve US$706 million in non-oil export to the West Africa sub-region and create 1.5 million new jobs in the SME sector by 2020.
What innovations have you brought into the Council and how effective have they been in contributing to the economic growth of the country?
The ‘Zero Oil’ plan is Nigeria’s first attempt at a coherent agenda to mobilize public and private resources towards replacing oil as our number one source of foreign exchange. Under President Buhari, Nigeria’s immediate focus is to identify new non-oil export sectors where the country can earn 40%-50% of what was earned by oil in the past.
Key initiatives of the ‘Zero Oil’ plan include:
- NSEPs – National Strategic Export Products Sectors to replace Nigeria’s crude oil exports must be carefully selected to ensure that sufficient income can be earned to replace lost national revenues within a reasonable investment cycle. The 13 NSEPs are:
- Agro Industrial: palm oil, cocoa, cashew, sugar and rice;
- Mining Related Products: cement, iron ore/metals, auto parts/cars, aluminium and,
- Oil and Gas Industrial Products: petroleum products, fertilizer/urea, petrochemical and methanol.
- OSOP – The One State, One Product initiative is an essential part of the “Zero Oil” plan.
- NDEX – The Nigeria Diaspora Export Programme is another key component of the “Zero Oil” plan meant to leverage on the opportunity provided by the huge population of Nigerians overseas.
What has been your experience from your travels round the world promoting Nigerian products? And what have been the reactions you have received?
My experience in promoting Nigeria’s non-oil exports has been fantastic because most of our products are found in major cities of the world; in Europe, Asia and Africa – among others. But sustainable supply is a major problem as most of these products are hardly enough in those markets.
For instance, the favourable responses generated by our products outside Nigeria have necessitated our resolve to embark on projects such as Nigerian Cuisine Beyond Borders (NCBB) and Nigerian Heritage City (HCC) among other initiatives.
The important message here is that Nigerian products are in high demand all over the world as inputs to production lines in manufacturing, as food to Nigerians living abroad and as a veritable opportunity to earn foreign exchange and promote our culture.
On the flip side, while the demand is high, we truly need to work on the quality of some of these products including packaging, labelling and SPS-related issues in some cases. We also need to do more of value added exports and less of commodities. All these will make our products globally competitive.
How important is export to the economic growth of a country and do we have enough exportable products to sustain economic growth?
All over Nigeria, one finds exportable products. From food commodities to minerals, petrochemicals and even manufactured products, there’s no corner of Nigeria where exportable goods can’t be found. The trick is to key into developing and promoting these goods, adding value to them and making Nigerian products competitive enough to join the international market. Some of Nigeria’s key exportable products with high potentials are:
- Agro-Industrial: palm oil, cocoa, cashew, sugar and rice.
- Mining-Related: cement, iron ore, metals, auto parts/cars, and aluminium.
- Solid Minerals: gold, coal, lead and zinc and glass sand.
- Service Sector: ICT, outsourcing, financial solutions, tourism, entertainment etc.
- Semi-Manufactured Goods: palm kernel cake, cocoa cake etc.
The potentials within Nigeria’s non-oil sector are huge. Our projection at NEPC, therefore, is to replace oil as the major national foreign exchange earner by growing non-oil exports from the current earnings of US$1.203billion (2016) to US$8billion by 2025.
You are doing a lot with fashion. Please tell us the areas you are intervening in fashion?
The realization of the vast opportunities in the garment and apparel sector made the Council, under my leadership, to adjust its strategy and concentrate on buyers’ market and trade shows. Specifically, we have led Nigerian entrepreneurs in the industry and designers to participate in the last three editions of Fashion Magic Fair, Las Vegas, USA, (November 2014, February 2015 and August 2015). Emerging apparel and leather goods designers from Nigeria could identify niche markets, develop and adapt their products, understand the market better, adapt to required standards and project our unique selling points.
NEPC’s intervention is also targeted at improving production capabilities. Specific interventions include:
- Rehabilitation of the Human Capital Development Centre in Lagos to enhance capacity building for the industry. We recently graduated our first batch of participants in November 2016.
- Strategic partnership with private sector (Style House) on capacity development.
- Collaboration with UNIDO on production and skills capacity development.
- Collaboration with state governments in building ‘Common Facility Centres’ as a basis to attract investment to the industry; and,
- Collaboration with Bank of Industry to help the industry access N1 billion Fashion Fund.
Can fashion be a viable alternative to oil? If yes, how can this be promoted such that the government takes an interest in it?
Globally, the fashion industry is worth about US$1.5trillion. Nigeria’s fashion export potential is not fully exploited despite the prospects. We must continue to raise awareness of this important sector. I believe government has already taken interest in the sector with what NEPC and other government agencies are doing. For instance, there is N100 billion Intervention Fund for the Cotton, Textiles and Garment (CTG) sector, low interest funding plan for cotton/textile manufacturers and another N50 billion from CBN to revive the industry.
The industry is not doing badly in terms of performance (though there is big room for improvement). There are also a lot of interests from the private sector to promote the fashion industry. For instance, the annual Lagos Fashion Week sponsored by Heineken and supported by African Development Bank (AfDB) is a good promotion platform for the sector.
I have been advocating for a Fashion Council to regularize and push fashion like the Sports and Arts Councils. Do you think this is needed?
I am getting to know this for the first time. It may not be a bad thing if government considers it relevant given the potentials of the industry. But as a government official, I will like to counsel that we may need to work smarter and operate within the existing governance structure and make it effective and more accommodating.
There are a lot of products being imported into the country; some of which we produce or have the capacity to produce. What policies prevent such produce/products from flooding the Nigerian market?
Government has several fiscal and monetary policies to discourage unwanted imported products into the country using tariff and non-tariff barriers. You will recall some of the recent government policies on selected products that could access the official foreign exchange window. In other words, CBN has priority products whose imports are either encouraged or discouraged.
Periodically, government agencies with trade related and foreign exchange regulation mandates do introduce measures to either encourage or curb trading in certain products. Recent examples are: CBN 41 select products for FX and policy statements on the importation of used vehicles into the country through land borders, among others.
As a country, we need to increase production of essential products, attract investments into the green field (areas of economic priorities and interests), enhance ease of doing business and patronise made-in-Nigeria products.
Taxation from importation is a source of income for any nation but how do we balance importation with exportation without one hurting the other?
As you rightly said, taxation is a form of income for governments across the globe. In the case of Nigeria, Nigeria Customs Service (NCS) is statutorily responsible to collect excise duties from importers and exporters alike.
As much as the country desires income from both sources, it must not be at the detriment of our ability to export. In other words, NCS is expected to be a trade facilitation agency and not necessarily a revenue generation organ.
However, in practice, NCS, over the years, focuses more on revenue generation through imports to the detriment of trade facilitation – a role that could have greatly enhanced the performance of non-oil export as a source of foreign exchange. The situation is compounded by high appetite of Nigerians for foreign goods which makes importation more attractive.
With government’s renewed efforts at economic diversification from oil, there is increased synergy, reorientation and inter-agency collaboration to deepen export trade and earnings with a view to promote trade and grow the economy. Both NEPC and NCS have important roles to play in trade facilitation and revenue generation for the economy.
Other African countries have benefitted from AGOA. Why has Nigeria not tapped into this opportunity? And, what challenges are militating against the utilization of the opportunities provided?
AGOA, as you are aware, is a non-reciprocal trade preference programme that provides duty-free treatment to United States’ imports of certain product from eligible Sub-Saharan African (SSA) countries.
It is true that Nigeria has not maximised the opportunities offered by the Act which came into existence since May 18, 2000 under the then President Bill Clinton – because Nigeria had never looked prepared to key into the vast prospects embedded in the platform.
Several challenges inhibited Nigeria from fully tapping into the AGOA trade window including (and not limited to) inadequate awareness, skills gap, infrastructure deficiency, weak competitiveness, poor standard/quality of products, lack of capacity to cope with demands, branding and packaging issues and poor value-chain linkages, among others.
But all hope is not lost as Nigeria can take advantage of the recent US Congress’ 10 years extension.
With stability in the polity and continuous efforts at addressing infrastructural challenges, supply side constraints will be reduced; thereby ushering in a vibrant manufacturing sector that will increase our market share in the US trade through AGOA.