Cargo exports in Nigeria have continued to increase since the devaluation of naira and implementation of certain policies deliberately to facilitate exports. Seyi Adewale, chief commercial officer, Nigerian Aviation Handling Company Plc (nahco aviance) talks to Ifeoma Okeke on some of the products that are gaining traction outside Nigeria and how best to improve exportation in Nigeria. Excerpts.
Data obtained from the two major warehouses for cargo in Nigeria show that exportation has risen to over 50percent. What are the reasons for this significant rise?
In terms of volume, the Nigerian Aviation Handling Company Plc (nahco aviance) currently has about 50percent increase in exportation. In terms of revenue, we have 52percent increase but you cannot compare these in terms of quantity of importation. However, we want to promote exportation as it is mostly beneficial to our economy.
When there is devaluation of naira or the local currency, it promotes export because of the exchange rate. When agricultural products are grown locally and taken abroad, people earn that same foreign exchange back to the country. Another factor is that the government is promoting exportation.
The current administration wants to limit importation into the country and promote export because that is how we can earn foreign exchange. This will make the economy stronger and more buoyant. We are also able to diversify our revenue from traditional crude oil. Government is doing a lot of awareness campaigns through its agencies such as Nigerian Export Promotion Council, (NEPC) to both the middle man and agricultural farmers. These enlightenment campaigns show them the opportunity and what they stand to gain in exportation. Another reason for the increase in exportation is that the tariffs are reduced at the export end compared to the import end in order to make it easy for people to export.
In Nahco, we have not increased the export tariff for ten years now despite the fact that we are putting lot of investments towards increasing our exports facilitation, cargo screening and all our internal processes. It is not also as if we make a lot of money from exports as it is today. We want to promote it because if we are able to get the aggregate sum to now change the ideology of the public that everyone now want to export, eventually it will pay off. Another thing that is responsible for importation is that before now, banks used to facilitate and promote trade in terms of importation but as at today because of government’s restrictions, their loans for imports are limited. There is now an allotted fund, some of which are done by the Central Bank of Nigeria, (CBN), which makes money available to banks to give credit facilities to farmers and Small and Medium Enterprises (SMEs). Once they have access to these funds, they can grow their farms, develop and expand. When they produce, they have some for local consumption and some for exportation. Another factor is that the Lagos State government and other institutions are also educating youths to go into farming. Through the local government, they teach people fish farming, agriculture, poultry and piggery amongst others. Some people are given incentives and free lands to farm. Some also assist with channels to export and guide the youths for a period of one year. So, all these aggregate things are working to promote exportation in Nigeria.
What products do we export in Nigeria and which countries are we currently exporting to?
Presently, exportation of perishables is increasing. Perishables have grown from as low as two percent to about 12.5percent, representing over 10percent increase. Since we handle about 80percent of the cargo in and out of the country, this for us is large. Most of the shipments go to the United States, (US). US has the highest percentage for export. We discovered that 38percent of exports coming through our warehouse goes to United States, 34percent to the entire Europe, which includes United Kingdom, 15percent to Africa, nine percent to Asia and only two percent to the middle East. Perishables like tomatoes, fruit and vegetables amongst others have grown and are still growing. Now people are now exporting yams. They also export dry fish. People also export general goods such as non-consumables like cloths, our native fabrics, hair extensions; donkey skins amongst others constitute 88percent. A lot of our products exported to the US are consumables. Products like hair extensions are not in the US and if they are there, they are very expensive. So, people export things that Africans and Nigerians over there use.
What are the challenges of exportation in Nigeria?
One of the challenges of exportation in Nigeria is that the requirements for us to maintain a world class export warehouse are huge. We have two X-ray machines and just to service these machines on a quarterly basis cost millions of naira and that is if there are no major repairs. This takes away a lot of the profit. Airlines are more concerned about exports because whatever they are going to put on their aircraft must be tight in terms of safety and security, so they are conscious about the export facilities, export processes and security. This puts us on the edge. In a month, we have at least two audits, some can be from the International Civil Aviation Organization (ICAO), the Federal Aviation Administration (FAA) of the United States, the Nigeria Civil Aviation Authority, (NCAA) and others are from airlines that we carry. This is to ascertain that whatever goes into the aircraft are not harmful or illegal. Another challenge is that because the business is growing and we need to expand, the little money we are making, we are putting it back into the same business. We just extended our acceptance section to another product packaging section so that we decongest the export warehouse because of the capacity. Thirdly, since we have to promote export, we cannot charge the effective rate. We know that at the end, we will be beneficiaries but in the interim, we are not making the money. The training that is required for export is huge. Since Nahco is International Air Transport Association (IATA) certified, we have people certified by IATA to train others on how to handle dangerous goods and cargo processing. There are others that we outsource to the Federal Airports Authority of Nigeria, (FAAN). There is another licencing that we must get from NCAA and some are specific to the airlines that we must comply with. Again, our packaging of products in Nigeria does not meet the international standards and it is something we need to work on.
Are there facilities you have upgraded in NAHCO to cater for the increasing volume of exports in Nigeria?
Our responsibilities are to accept, screen, put in the sterile area and load according to Load Controller Flight Instructions. Our services are limited towards safety, security and appropriate aircraft loading. Packaging is done before the shipment is brought into Nahco. It is only if Nahco now decides to develop a product processing and packaging company around the airport, then can we do these things. Our improvements has been with space, processing, security screening, storage, loading and providing the platform for government agencies to perform their statutory oversight function on all shipments leaving the country, to ensure they are safe and secure.
Are there specific states where you have observed increase in exportations?
We are in four international airports which can also export. These include Lagos, Abuja, Kano, Enugu and Port Harcourt. Products exported in each of these states are different. In Port Harcourt, you see more of industrial and pipeline items that are related to the oil and gas business being exported. In Abuja, the nature of products exported is close to that of Lagos. In Kano, kolanut exports are high. Also people export the northern wears, threads and textiles to other countries through Kano. In Enugu, people export those products that are developed in the Eastern part of the country like slippers and shoes. These things are sent to Ethiopia, South Africa and other countries.
What are those things that we used to import before now that we no longer import?
Before now we import everything you can imagine. Nigeria was just a dumping ground. Before now, there was no standardisation or regulations. So, one of the reasons for the drop in importation is because Nigeria has stepped up to standardisation, regulations and greater enforcements of only allowing authorised goods into the country. A lot of the things that were brought in were illegal. That is why CBN stopped the bank from giving out loans to certain types of business. For instance, they do not give those in the Furniture business loans to import anymore. They encourage them to build factories and produce their furniture locally. That is why 41 items cannot access loans from the banks for importation. The capacity of the consumer to spend has also reduced because of recession.