Breaking News

What prospects for the non-oil export?


Apparently, advanced countries today invest tangibly in their export sub-sectors to enhance optimum economic growth and development. In that capacity, they put infrastructure in place to drive the export sector, even as they provide incentives to get exporters to stay afloat. While Nigeria is not alien to export trades, there are challenges facing local exporters. Such challenges include lack of adequate funds to finance the business and abandonment of legitimate claims, which bring adverse consequence on the nation’s economy in different ways.

Accordingly, abandonment of legitimate cargo claims became worrisome to government and Nigerian Shippers Council (NSC) decided to tackle the problem through the creation of Cargo Defence Fund (CDF), with a view to enhancing growth of the non-oil export sector of the economy, by helping local importers and exporters to recover genuine cargo claims. The structural framework of the CDF aims at protecting Nigerian traders involved in export trades in order to curtail capital flight from the economy.

Statistics obtained from the office of CDF show that over 400 cases have been handled by the body. Besides, the fund provides numerous benefits on export trades for Small and Medium Enterprises (SMEs), even as trade on cocoa is already developed in the country. This implies that Nigeria enjoys a developed trade in the area of cocoa exportation. In the past, Nigeria had groundnut pyramid, cotton, which added great monetary value to non-oil export sector and the economy at large. We also have trades that are developing like cashew nuts and pepper.

At present, Nigeria exports cashew nuts with fluid inside the nuts that is very useful in the automobile industry. We also have solid mineral trade that is coming up. In those areas, officials of CDF looked into how to improve the quality of services to those trading for optimal economic benefits.

Speaking with Sunday Business, the executive secretary of CDF, Mrs. Azuka Ogo, said, “We have entered into a memorandum of understanding (MoU) with Nigerian Insurance Association, that is underwriters themselves. We look at the trade and assess the risks the trades are exposed to and agreed on how to minimise the risks, not just between the CDF and the underwriters, but also with government and non-governmental agencies as well. After that, we think of how to package adequate cover for the risks these commodities are exposed to. Once we work out an agreement, we structure a cover, because the underwriters provide the cover. We work closely with insurance firms and NEXIM as well”.

“If an exporter had invested so much in transaction which did not generate any revenue, he may no longer have funds to put into the process of recovering claims. Government wants local exporters to access the funds to pursue legitimate claims conclusively everywhere anywhere in the world.”

All import, according to her, must be insured in Nigeria because it is by law, but export should be made flexible for the buyer and seller to decide the shipping method they want. “There is need for Nigerian exporters to consider formalisation of their processes because they stand to benefit more from incentives provided by government for export traders. They should trade in line with government’s procedure put in place for exports. For instance, people still importing informally stand to loose in the long-run because it is cheaper to pay import duties and bring in their goods and excise to take out commodities. Accessibility to loans and credit facilities are also provided through micro-finance scheme, Bank of Industry (BOI) because export adds values to economic growth”, Ogo stated.

CDF also provides legal and technical advice, general risk bearing advice, promotes mediation as dispute resolution mechanism, encourages arbitration while litigation is used as the last option. But the requirements are not always the same. “Some exporters may come for refund of containers deposit. For instance, if an exporter has about N500, 000 tied down in a claim, that is a lot of money especially if there are 10 to 15 containers. Some could be damaged cargo, which the insurance company has not paid the indemnity. We help them out with the insurance company by looking at the insurance cover and the terms to know if the claimer is entitled to recovery or not. In some cases, we go to court against the shipping companies or the partner abroad depending on the nature of the problem, in which case we fund litigation”, she stressed.

Giving insight into the activities of CFD, Ogo said, “We have cases in Germany, Poland, Belgium , Netherlands and in different parts of the world. We had a case where we were told the buyer was in China, whereas, we discovered, he was somewhere else. We had another case where we were told the buyer was in Italy, but he was not traceable in Italy. We have cases in different countries, but what we do is first trace the buyer through our wide network and contacts abroad, including Nigerian embassies and chambers of commerce. There are international institutions handling this kind of cases. If mediation works, we explore it, if it does not, we try litigation, after which we follow criminal prosecution as the last option. We also check the credit rating of the buyer to know the viability to pay. In cases where the companies went bankrupt, we filed our case in the list of creditors”.

The CFD executive secretary added: “NEXIM provides a cover for buyers and Nigerian exporters should buy into that cover so that when they face this kind of situation, NEXIM would be able to re-inburse them up to a meaningful percentage. We enlighten exporters by going round the country with our products and organising programmes where we often invite officials of the CBN and other bankers to talk on secure payment methods and risks bearing facilities in export trade. We have been to Kano, Aba, Gombe, Jos, Abuja and Port Harcourt . Often we zone enlightenment programmes to ensure wider coverage.”


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.