THE STRATEGIC OPTIMIZATION AND EXPORTATION OF LOCALLY MANUFACTURED PRODUCTS IN NIGERIA
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THE STRATEGIC OPTIMIZATION AND EXPORTATION OF LOCALLY MANUFACTURED PRODUCTS IN NIGERIA
ABSTRACT
The goal of the project is to maximise exports of non-oil products, with a focus on locally created products. During the course of this research, the obstacles and potential for exporting locally manufactured items in Nigeria were thoroughly explored, as well as the predicted influence on the national economy.
The findings of this research study indicate that exporting locally created products is a definite approach to boost the nation’s socioeconomic development.
It is relevant to state that the research study emphasised the problems exporters have in selling their products abroad as well as obtaining cheap money to facilitate their operations.
Non-oil exports, particularly domestically created products, hold significant promise for the country’s future development. The key ingredient is revenue from exports. The importance cannot be overstated – emphasis.Chapter One1.0 Introduction
Export promotion policies as an outward-oriented development strategy have piqued the interest of policymakers and economists around the world, including Nigeria.
Since Nigeria gained independence in 1960, export promotion of primary and secondary exports has been regarded as a critical component of the country’s long-term economic growth strategy.
At the time of independence, Nigeria’s economy was mostly focused on the export of agricultural and mineral exports. Between 1960 and 1996, primary agricultural products accounted for approximately 72% of overall export value. However, with the introduction of crude oil to the economic scene, agricultural products’ share of overall export value has continued to fall.
It dropped as much as 3%. In 1984, but climbed marginally to around 6% by 1988. In fact, the two global oil price shocks of 1973/74 and 1979 effectively transformed the economy into a mono-product exporter,
with the oil sector accounting for approximately 37% of total export value in 1989, up from 57% in 1970 to 95% in 1989 (CBN Nigeria’s Principal Economic and Financial Indicators 1970-1990).
Furthermore, the oil sector has become the government’s primary source of foreign exchange revenues, accounting for more than 90% of total earnings each year. For example, the government’s revenue from the petroleum profits tax surged by around 368% in 1989, from N 5.16 billion in 1979 to almost N 24.16 billion in 1989.
Between 1973 and 1983, the Nigerian manufacturing sector expanded at an average rate of nearly 12% per year, fueled by buoyant oil income and hefty governmental investments, compared to a 4% annual expansion in GDP.
A comprehensive review of the manufacturing sector revealed that its contribution of GDP increased from 4% in 1973 to around 12% in 1982 (FMBP, 1990).
This tremendous success was the outcome of the import substitution industrialization strategy implemented during the period, which relied heavily on the expansion of domestic demand for industrial production.
Thus, in order to remedy the distortion in the economy caused by 1980s oil boom-burst cycles, current policymakers implemented the structural Adjustment Programme (SAP) in 1986, with the export-oriented approach serving as a sectoral policy.
The whole adjustment process is expected to effectively transform and restructure the economy’s consumption and output patterns by reorganising its import and export structures.
As a result, the government’s export promotion policies are helping to encourage industrial development. Some of the policies being implemented include 100% export proceeds retention by exporters,”
a duty drawback suspension scheme (which was increased by approximately 400% from N 10 million in 1990 to N 50 million in 1991), the Manufacturing Bond Scheme, and other functions of the Nigerian Export and Import Bank (NEXIM) aimed at stimulating international trade.
1.1 Background of the Study
Nigeria has ample resources to properly employ all nationals while also accommodating people from other countries. However, our inability to fully utilise the country’s enormous natural resources has resulted in a low information rate, poor infrastructure, and a very low level of living in Nigeria.
One of the solutions to the aforementioned challenges is to raise knowledge of available resources and their use; consequently, the best way out of these problems is to develop methods that will allow such a nation to utilise all of its resources. One such approach is to aggressively process locally created products for export.
Furthermore, the Nigerian economy is dominated by imported foreign goods and products, and the average citizen believes that imported goods and products are superior to locally created things.
Furthermore, the Nigerian economy has become a dumping ground for the majority of these imported items, saturating the market and leaving local businesses with little prospect of survival.
An average Nigerian may believe that “locally manufactured products are of poor quality.” This may be false at times, as seen by examples where the same locally created goods outperformed imported ones.
The government has a lot to do to encourage manufacturers to embark on a massive and aggressive export promotion campaign. This government can help by developing policies that benefit local manufacturers.
Such government policies can include raising import tariffs to deter or reduce the quantity of products imported, or employing a quota system in which quotas are assigned, i.e. specific quantities are placed on imported products.
All of this is necessary so that locally created products may compete favourably in the market before considering export. This is because a subpar product produced locally in the market cannot be considered for export to an external market.
Local producers must increase the standard and quality of their products to match the tastes of local consumers while also meeting international quality and standards for export.
Manufacturers must also strive to function at an optimal level in terms of resource utilisation, efficient human and management resource allocation, and effective cost and technique of production.
All of this must be optimised for a manufacturing organisation to completely utilise its total resources and capability. As a result, producers must identify a strategic level in order to determine the best location for exporting their products.
Crude oil dominates Nigeria’s export trade, accounting for 95% of the entire value of exports from 1979 to date. Cotton, lumber, coca, groundnuts, palm oil, and kernels were once the backbone of our exports,
but now account for barely 5% of total value. Cotton, groundnuts, palm oil, and palm kernel are currently being imported due to a significant fall in their export value.
Manufacturing industries provided only 1% of the overall value. This highlights the fact that the ordinary Nigerian manufacturer is not yet prepared for international marketing. Recognising the dangers of relying largely on imported goods, the Federal Government has taken steps to foster non-oil growth.
The Nigerian Export Promotion Council (NEPC) was founded by Decree No. 26 of 1976 to drive export growth and intensification. In January 1990, the Nigeria Export and Import Bank (NEXIM) was founded to strengthen Nigeria’s non-oil export economy.
Export will have a positive impact on the quality of local production.
1.2 Statement of Problem
Despite its vast endowment of rich natural human and material resources, Nigeria’s economy is currently in a fragile position. This weakness stems from:
a. Dependence on oil for around 95% of its foreign exchange revenues, making it vulnerable to poor development in the global oil market. Oil is a highly politicised commodity and thus extremely volatile in nature.
b. Low economic value-added operations in manufacturing. Aside from oil, the majority of our exports are raw commodities that generate profits for the exporters.
Given Nigeria’s terrible economic situation, which has a significant impact on the population, a number of questions must be addressed.
1. To what extent does Nigeria participate in the export marketing of locally created items, which have been identified as the only answer to its economic issues and to improve the standard of life of its people?
2. How many organisations are aware of the export potential of locally created goods?
3. How do private and public investors contribute to the development of the economy’s manufacturing sector?
4. What challenges are organisations facing in developing successful export marketing for locally created products?
5. Has the country created an enabling environment for the production and export of domestically manufactured goods?
1.3 PURPOSE OF THE STUDY
The reasons for conducting this study endeavour include:
a To assess the impact of domestically manufactured goods exports on the national economy.
a. Reduce the balance of payment deficit by exporting locally
produced items.
c. It tries to reduce the high level of reliance on imported items.
d. Tax-free interest on export loans.
e. Increased capital tax depreciation allowed for manufactured exports.
f. A development fund established to support exporters.
g. Adjust the fund to provide greater monetary subsidies to exporters.
1.4 Significance of the Study
This research is proactive in character, as there has been little work done to promote locally created products for export. Currently, activity in the sectors is low due to the release of the national policy on manufactured product exports;
however, export marketers have identified these products, analysed their potential in the international market, and confirmed their uses and economic importance.
The Millennium World Trade Organization’s commentaries present a challenge to any decent export marketer, and an attempt will be made to determine how best to sell these products abroad.
This study is significant because it raises awareness and reveals the importance, issues, and opportunities involved with export marketing of locally created items. It will also highlight the demands of exporters, as well as government-sponsored promotional efforts and incentives to attract investment in the sub-sector.
It is intended that, in addition to serving as a partial academic fulfilment requirement for a bachelor’s degree, the study will raise awareness among organisations that have not previously considered export marketing orientation in light of its economic benefits.
Encourage those who are already involved in export marketing, and finally, based on the findings, I hope to make recommendations that will allow the firms to improve their performance so that their cooperative objectives are not only met efficiently, but also their contributions to Nigeria’s economy and social development are felt.
1.5 RESEARCH QUESTIONS.
(a) How would the export of locally created items benefit the national economy?
(a) How would the export of locally manufactured products affect the dependability of imported goods?
(c) To what extent would locally manufactured products minimise the balance of payments deficit?
(d) How will enhanced quality of locally created items affect export?
1.6 Research Hypothesis
Hl: Exporting locally created products will boost the national economy.
HO: The export of locally produced items will assist
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