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THE IMPACT OF VALUE ADDITION IN NON-OIL EXPORT PRODUCTION NIGERIA 2009-2018
CHAPTER ONE
Nigeria is rich in different natural resources and these resources can be used as raw materials which are very useful for the manufacturing of finished goods being sent back for consumption today. The country is yet to make substantial profit that is commensurate to the raw materials been exported since the colonal era till present date (Adekoya, 2018). Some personnel that serves as bridge between the exporters and the markets for their goods, emphasizes that the manufactured products imported were manufacture from the raw materials exported to other countries. It is necessary for the country to know that these raw materials can be processed for revenue and exploitation. Nigeria gets very small income out of their major addition to the West Africa region of over $40 billion market as most sales remains with the external market which, are imported goods. (Adekoya, 2018)
Countries trade with one another as it is necessary and beneficial. This emphasizes the bond between Nigeria and some countries due to their inter-country trade relationship. However, Nigeria’s revenue from exportation has been relatively stagnant without any visible change over the decades. There has been a continuous trade price margin without growth even though there are enough occasions for a positive change from a more detailed acted on improving the locally made goods been exported.
Nigerian goods are hyped as the world’s most vital locally made products been exported with reference to cocoa, crude oil, cassava, etc., as in most developing countries due to the rich agricultural sector of the country(ODEBODE, 2008).
Value addition is the changing or conversion of primary goods into intermediate or finished goods for its outmost satisfaction of derived value. For example, the local crude when drilled, are processed to state of liquefaction and not totally separated and refined into the end products of PMS and others. Nigeria’s focus is on the revenue from exports products which are mainly raw materials while billions of dollars are been neglected in turning away from the value than be obtained from these products. For instance, Africa produces about 70% of global trade in cocoa production and Nigeria is one of the major producers (Centre, 2018). The globally value of unprocessed cocoa is viewed to yield $10billion compared to the yield of the total manufactured goods from its raw material as $200billion annually with chocolates alone yielding $100billion. This shows that Africa is responsible for about 70% of the global cocoa production but surprisingly only enjoy less than 5% of the entire income from the value chain.(Faminu, 2019)
Same could be said of the leather industry as OgbonnayaOnu, Minister of Science and Technology puts it that the industry will be valued at about $900million in years to come exports, provided that improved actions are taken and valued added to the export processes. Nigeria’s leather export is valued between $600million and $800million annually but it can valued higher if improved on as leather footwear alone can possibly yield $150billion(Faminu, 2019).
Value addition to exported goods cannot be overstated as the solution for economic development and GDP as raw materials are transformed into finished products. This will lead to job creation and a means to tackle unemployment rate in the country. Foreign expatriate can be employed to assist or train local experts on how to produce these goods whenever local manpower/experts are not good enough.
Definitely, incorporation of value addition to export goods will require some fundamental facilities, utilities and infrastructure as infrastructure is the primary necessity of a successful manufacturing sector and needs good investment.
It is vital to be current with the international developments in the areas of technology and digital developments. It is important to try increase the competitiveness by closing the infrastructural gap through more funding for research and development purposes to assist creation and development of intellectual property together with advancing the economy sector to attract investors.
Converting raw materials to finished produces through processing, cooling, drying, extracting, packaging or other types of value addition that distinguishes the end product from the original raw material has a value chain reaction that yields revenue and also creates jobs and improve the Gross Domestic Product (GDP). By 2018, Nigeria’s GDP had 21.21% from Value addition. Over the past 35years the highest value recoded was 48.57 in 2002 and 20.24 in 2104 was the lowest. This recordings verifies that when a policy that focuses on value addition is in place, the nation’s economy has the tendency to excel.
In addition, there has been some advice by experts that there should be a level of working together between the government agencies, investors and industries as it will help to improve productivity and innovations in the manufacturing industry.
It is from this point of view this research applauds ongoing plans by the government to educate farmers on value addition to their produces in conformity with international best practices in other to make them exportable. This research opines that this is the right time for Nigeria to fix the issues between production, processing and exports from the grassroots. We advocate that the right step to take is by educating the farmers and adding value to farm produce before it is been sold to the target market.
States are classified as living or dying political economies and Nigeria is regrettably classified as a dying political economy (Projectsxtra, 2020). Hence, the West calls for bilateral and multilateral trade initiatives with the sub Saharan African nations, mainly to improve the economies of Africa.
For a long time, Nigeria has remained an exporter of raw agricultural produce and attempts to add value to the produce before exporting them have been half hearted with minute results. Even crude oil which is the sustenance of nation’s economic is been exported without been refined which would have served as value addition. Thus implies that the nation is not gaining from these products as the prices are literally fixed by the buyers. These buyers add value to the products and the finished products are sold to the country at a price fixed by the buyers. We can say that the country has not been able to adequately utilize the profits from the real value of the exported produce as it has been unable to fully utilize its ability in terms of value addition. Cocoa, cotton, groundnut, and palm oil were the mainstay of the economy during the pre-independence and immediate post-independence Nigeria, but they were all exported in their natural form without any form of value addition. Perhaps, weakness to add value to our produce has been detrimental to the nation more than it can envisage in the agricultural sector leading to poor returns yielded which has made agriculture less enticing. The nation needs to recognise the act of value addition, so as to improve the sector and expand her exportation.
Recently, domestic value added in exported produce has become a major means of a nation’s global competitiveness and Nigeria has no role on this front. Many of these countries have already started carving places for themselves in the international market rather than focusing only on their economy. But, this act cannot be found in Nigeria, rather her economy is experiencing a slump per decade.
Nigeria economy is constantly deteriorating and this one of the major reason it is rated as one of the countries with high poverty level. Other rich countries have recognised this and are engaging it with resounding improvement and results. Only the final products such as chocolates, cars, jewels etc. are often exported by them. It will be outstanding if Nigeria can actually focus on adding value to its raw products instead of exporting them in their raw form. South Africa and Botswana use the policy of “benefication” to reduce exportation of their natural resources in its raw form and use these resources to bring about industrialization.(Hausmann, 2014)
The major objective of this research is to identify the impact of value addition in non-oil export, production and its impact in the Nigeria’s economy. The specific objectives will be as follows;
The study will tend to answer the questions as follows:
The study hypotheses will be calculated using the following guide:
Value addition on exported products from a country is an important source of revenue from trade, thereby acting as a key player for development policies. This study will therefore be of high value to policy makers of the country, as it will elaborate on the importance of value addition to Nigeria’s non-oil export products and the wealth of resources being overlooked by continuous export of raw produce.
To the education sector, this study will contribute its quota to academic research. This work considers the acts that may be important for countries to concentrate on in order to improve more domestic value on their exports and the actions to be implemented to foster more domestic processing firms.
The scope of this study will be streamlined to Nigeria. It will focus on a 9years time scale and attentions will be from 2009-2018 during the administrations of both Former President Goodluck Ebele Jonathan and the Incumbent President, Muhammadu Buhari GCFR.
This research will analyze the impact of export value addition on non-oil export and Nigerian economy.
The research work is surely not void of limitations as the researcher faced some setbacks in the cause of this work. The limitations include data sourcing, data inconsistency as a result of poor form of information management in Nigeria. However, other limitations that prevent the researcher from carrying out a more effective work still exist. Time factor is a key limitation.