Revenue from exportation of food items and other non-oil products is fast shrinking with the latest report showing a drop of $438.82m in three months, IFEANYI ONUBA reports

The current economic challenges facing the country have taken its toll on the non-oil sector as earnings from exporters witnessed a decline of $438.82m in the second quarter from $1.02bn recorded in the first quarter of this year to $576.97m.

When converted based on the official N305 exchange rate of the Central Bank of Nigeria, the $438.82m translates to a total of N133.8bn.

Statistics obtained from the CBN revealed that the decline of $438.82m (N133.8bn) by the sector represented a drop of 43.2 per cent when compared to the amount earned within the first quarter of the year.

The decline in earnings from the non-oil products, according to finance experts, is a reflection of the significant drop in economic activities occasioned by the fall in productive capacities of industrialists.

The National Bureau of Statistics had last Wednesday released the Gross Domestic Product figures for the second quarter of 2016 with the GDP growth rate sliding from -0.36 per cent in the first quarter to -2.06 per cent year-on-year.

It also released the capital importation report for the second quarter, the unemployment statistics report, the inflation report for the month of July and the labour productivity report for the month of July, all of which painted a negative picture of the Nigerian economy. Specificaly, the inflation rose as high as 17.1 per cent from 16.5 per cent; the unemployment rate increased to 13.3 per cent from 12.1 per cent; and investment inflows dropped to its lowest level at $647.1m from $710m.

A recession is defined as a significant decline in activities across the economy, lasting longer than a few months. It is visible in industrial production, employment, real income and wholesale retail trade.

The technical indicator of a recession is two consecutive quarters of a negative economic growth as measured by a country’s GDP.


According to the CBN economic report for the second quarter, the decline in earnings by exporters for the non-oil sector was blamed on significant declines from manufactured items and food products as well as mineral exports.

The report stated, “Provisional data showed that the total non-oil export earnings, at $576.97m, fell by 43.2 per cent, below the level ($1.02bn) in the preceding quarter.

“The development, relative to the preceding quarter, was attributed, mainly, to the significant decline in receipts from manufactured and food products as well as minerals export.”

A sectoral breakdown of proceeds from the non-oil export earnings showed that receipts from agricultural, minerals, industrial, manufactured products, food products and transport sectors stood at $196.87m, $185.51m, $84.34m, $79.44m, $30.68m and $0.12m, respectively during the period.

The report also put the percentage shares of agricultural, minerals, industrial, manufactured products, food products and transport sectors in the total non-oil export proceeds at 34.1 per cent, 32.2 per cent, 14.6 per cent, 13.8 per cent, 5.3 per cent and 0.02 per cent, respectively.

It said the invisible sector accounted for the bulk (34.1 per cent) of total foreign exchange disbursed in the second quarter of 2016, followed by the industrial sub-sector (22.5 per cent).

The contributions of other sectors in a descending order included: minerals and oil sub-sector, 23.3 per cent; manufactured products, 11.3 per cent; food products, 6.3 per cent; transport sector, 1.7 per cent; and agricultural products, 0.8 per cent.

Analysts said the lack of confidence in the economy by both local and foreign investors owing to inconsistency in policies was one of the reasons for the decline in the non-oil export earnings.

For instance, the Director, Research and Advocacy, Lagos Chamber of Commerce and Industry, Mr. Vincent Nwani, said that currently, about $10bn of manufacturers’ funds had been stuck in foreign countries because the owners of these funds had no confidence in the economy.

He said, “We have about $10bn stuck in one country or the other earned by our members. Some of them are not manufacturers; some are agriculturists or merchants of different products.

“They cannot bring it in because the business confidence, the manufacturing confidence, industrial confidence is negative. Until we do something to boost this confidence, all this money will be stuck abroad.

“Even Nigerians that are living in the Diaspora were able to bring in $23bn in 2013. Last year, we saw about $5bn; this year, it is going to be less than $3bn. This is what negative confidence can do to an economy.”

The Executive Director, Nigeria Export Promotion Council, Mr. segun Awolowo, said the agency was mindful of the challenges facing the sector, adding that this was why it commenced its zero to export initiative.

The initiative, he noted, was one on the programmes of NEPC that focused on creating new generation of Nigerian exporters to effectively participate in the non-oil export sector.

He said, “The Federal Government’s fiscal strategy framework for the next three years is based on non-oil.

“Recent developments on global commodities market have triggered a wakeup call on the need for us to accelerate the diversification of our economy, moving away from an over dependence on oil as our main source of revenue.

“Since peaking in June 2014, the price of crude oil has fallen roughly by 60 per cent. Nigeria lost $30b in oil revenue between 2014 and 2015.”

He said that the effective implementation of its new strategy on non-oil exports would enable the country to increase its foreign exchange reserves to $150bn within the next 10 years.

He said, “We have about $10bn stuck in one country or the other earned by our members. Some of them are not manufacturers; some are agriculturists or merchants of different products.
“They cannot bring it in because the business confidence, the manufacturing confidence, industrial confidence is negative. Until we do something to boost this confidence, all this money will be stuck abroad.
“Even Nigerians that are living in the Diaspora were able to bring in $23bn in 2013. Last year, we saw about $5bn; this year, it is going to be less than $3bn. This is what negative confidence can do to an economy"

FIRS' half-year non-oil revenue collection hits N2.43trillion



The Federal Inland Revenue Service (FIRS) total revenue generation through taxation in the first half of the year has risen to about N2.43 trillion.
The figure represents an increase in the revenue collection performance of N499.2 billion when compared to the total collection of N1.94 trillion for the corresponding period last year.
Non-oil revenue amounted to about N838.58 billion, while receipts from oil taxes accounted for N1.60 trillion

http://www.premiumtimesng.com/business/93607-firs_non-oil_revenue_goes_up.html

IFEANYI ONUBA reports

http://punchng.com/recession-fgs-non-oil-revenue-shrinks-n134bn/

aresa:



Our non oil revenue actually almost doubled from last year's number...

Take your kabukabu story back to where you get it from....

Back to sender...

kenny987:
The non oil revenue they are supposed to be growing? Economic disaster is all these dolts have to deliver!

Some zombies must earn their pay by hook or crook sha. It has come to d point of comparing reports from Punch with Premium Times and d sole deciding factor is d name of d reporter for Punch. An Igbo man doing his job and certified by his bosses before going to print for onward publication is labelled IPOB because his report confirms d dire straits Nigeria has been plunged into by inept quacks in office. What ever happened to focusing on the message n not d messanger?

Just when you think you've seen n heard it all they come again to idiotically shift goal posts, it's now on the basis of the name of the reporter! I pity some kind people cos their own don enter market!

mrvitalis:
I need an economist here to tell me if it is possible for weak local currency to slow export down
From my basic economics... A time like this. . Local manufacturers will prefer to export and make more profit than sale locally... That's why garri is expensive.. . Most people now prefer to export cassava as cassava chips and earn 350 dollars per ton which is is over 120k thanks process to garri and earn 60k to 70k

This report has for me no economics theory backing

Tell me local production has slowed I will say yes. . For those who import raw materials. .. But if u source ur raw materials from Nigeria... Production is too sweet now. ..

If I was in the management team of any company I will say we go to vertical integration
That's the sure way to make much money now

4Play:


The problem for exporters are varied. If they keep their dollar earnings abroad instead of bringing it back and converting it to naira, they see the naira value rise as the naira falls against the dollar. (So $1m in export earnings would be worth N400m whereas last year it would be N200m).

If they also bring it back, there is no guarantee they will be able to take it out of the country given all the bureaucratic hassle the CBN has imposed. Also, with the divergence between the official and black market prices of the dollar, most exporters would see the latter as the fair market value of their export earnings, but there are all sorts of restrictions that may apply to them. Despite the announcement over floating the currency, the CBN still maintains undue influence over the exchange rate, hence the big divergence between the inter-bank rate and the black market rate.

mrvitalis:

Why will an exporter want to take his money out of Nigeria? ??

4Play:


You might want to purchase something abroad or diversify your savings to protect against currency risk. Some exporters could even be foreign owned export bizs

The irony of restrictions on capital mobility is that if you impose restrictions on taking money out, people will be reluctant to bring money in. What the government's policies have done is reduce diversification away from oil dependence.

aresa:
[s][/s]



We know ipob zombies have to do what they do best which is to always let us know how bitter, gloomy, angry and negative they are against Nigeria so of what relevance is your pointless, illogical and lame rant?