Government Policies and Export Promotion by Professor Adeola ADENIKINJU

Government Policies and Government Policies and Export PromotionExport Promotion

by

Professor Adeola ADENIKINJU

Introduction Emerging Issues Journey so far (Attempts and Outcomes) The Challenges Export Performances Nigeria’s Experience Lessons learnt and Plan for the future

“We cannot afford to forget that public order, personal security, economic and social progress and prosperity are not the natural order of things, that they depend on ceaseless effort and attention from an honest, effective government, that the people must elect” Lee Kuan Yew (cited in Asiodu, 2013).

“The rise of the South has resulted not from adhering to a fixed set of policy prescriptions, but from applying pragmatic policies that respond to local circumstances and opportunities … and an openness to trade and innovation”. (HDR, 2013)

“Nevertheless, many of these countries have also begun to benefit from South–South trade, investment, finance and technology transfer. E.g. positive growth spillovers from China to other countries, particularly close trading partners”. (HDI, 2013)

“Today, as a result of reduced trade barriers and lower transport costs, the production of manufactures is fragmented across borders, with many countries trading intermediate goods … Changes in information technology have made services increasingly tradable. The result has been a remarkable rise in intra industry and intra firm trade”. (HDI, 2013)

In spite inconclusive empirical evidence, export is seen as engine of growth

MICs view aggressive export performance as a channel to harness forces of globalization

HDR data confirms recent stellar performance of the MICs

MICs vary in terms of structure of economy, geography, endowments, and levels of development. Evidence reveals dependence on resource-based primary exports susceptible

to high price volatility low to medium technology intensive manufactured exports increasing trade, investment and capital flows among

countries in the South

trade patterns show a rising trend previously observed between the North and South countries Between 1995and 1996, only 6 countries in the South

has significant trade relationship with more than 100 countries

By 2006 that figure has climbed to more than 15 countries

What are the exogenous and endogenous determinants of exports performance?

Are trade policies independent of countries’ specific circumstances that then limit scope for imitation and replication of policies?

How to balance the roles of market and the state in economic development and export performance.

Most MICs are still stuck in: low technology low skill natural resource intensive low productivity intensive technology

manufactured production and exports

Share of Primary Export in Total Export (percent)

Share of Resource-based Manufactured

Export in Total Export(percent)

Share of Low Technology

Manufactured Export in Total

Export(percent)

Share of Medium- Technology


Export(percent)

Share of High- Technology


Export(percent)

Group 2005 2009 2005 2009 2005 2009 2005 2009 2005 2009World 14.8 16.0 16.2 17.1 15.3 14.9 32.9 30.8 19.7 19.4

Developed countries 9.3 10.6 16.2 17.4 13.2 13.1 40.0 37.7 19.9 19.3

Developing countries 23.6 23.2 16.3 16.7 18.6 17.3 21.4 21.6 19.3 19.5Region East Asia and the Pacific 6.8 6.6 10.9 11.8 23.7 22.9 24.3 24.5 33.8 32.9Europe 33.1 32.9 23.8 23.2 16.5 13.5 22.3 24.4 3.7 5.1Latin America and the Caribbean 31.4 35.0 21.0 22.3 10.9 7.9 26.6 23.5 8.9 8.2Middle East and North Africa 55.7 53.0 19.6 18.3 9.4 9.1 11.3 12.9 3.1 4.0South and Central Asia 40.1 23.8 20.7 28.0 26.7 26.8 9.2 13.4 2.8 7.1

Sub-Saharan Africa 36.2 56.9 29.8 19.4 8.5 6.3 17.0 13.2 3.2 2.1Income High income non-OECD 22.0 23.0 14.4 15.9 14.4 11.5 20.2 19.4 28.0 27.8

Upper middle income 32.3 33.1 20.9 21.9 12.8 11.1 23.5 22.9 9.7 9.0

Lower middle income 15.4 14.5 13.7 13.3 27.1 25.7 21.3 22.8 22.1 22.8Low income 42.9 41.6 12.9 12.4 31.4 28.1 5.7 7.9 2.9 5.6Least developed countries 39.1 64.3 23.2 13.8 27.1 5.8 3.8 4.9 0.6 1.4

Low-technology manufactured exports,

(US$ billions)

Medium-technology manufactured exports,

(US$ billions)

High-technology manufactured exports

(US$ billions)

Technology Manufactured Exports(US$ billions)

Group 2005 2009 2005 2009 2005 2009 2005 2009World 1,501 1,720 3,228 3,558 1,931 2,239 6660 7517Developed countries 801 867 2,424 2,492 1,205 1,280 4430 4639Developing countries 700 853 805 1,066 726 960 2231 2879Region East Asia and the Pacific 444 575 455 613 633 824 1532 2012Europe 76 82 103 148 17 31 196 261Latin America and the Caribbean 61 53 149 157 50 55 260 265Middle East and North Africa 52 69 62 98 17 30 131 197South and Central Asia 58 64 20 32 6 17 84 113Sub-Saharan Africa 8 9 16 19 3 3 27 31Income High income non-OECD 159 151 223 256 310 367 692 774Upper middle income 162 172 297 354 122 140 581 666Lower middle income 358 505 281 449 292 448 931 1402Low income 22 25 4 7 2 5 28 37Least developed countries 9.2 2 1.3 1.7 0.2 0.5 10.7 4.2

Share of Low-technology

Manufactured Export in Total Technology

Export

Share of Medium-technology


Export

Share of High-technology


Export

Group 2005 2009 2005 2009 2005 2009World 22.5 22.9 48.5 47.3 29.0 29.8Developed countries 18.1 18.7 54.7 53.7 27.2 27.6Developing countries 31.4 29.6 36.1 37.0 32.5 33.3Region

East Asia and the Pacific 29.0 28.6 29.7 30.5 41.3 41.0Europe 38.8 31.4 52.6 56.7 8.7 11.9

Latin America and the Caribbean 23.5 20.0 57.3 59.2 19.2 20.8

Middle East and North Africa 39.7 35.0 47.3 49.7 13.0 15.2South and Central Asia 69.0 56.6 23.8 28.3 7.1 15.0Sub-Saharan Africa 29.6 29.0 59.3 61.3 11.1 9.7Income High income non-OECD 23.0 19.5 32.2 33.1 44.8 47.4Upper middle income 27.9 25.8 51.1 53.2 21.0 21.0Lower middle income 38.5 36.0 30.2 32.0 31.4 32.0Low income 78.6 67.6 14.3 18.9 7.1 13.5

Least developed countries 86.0 47.6 12.1 40.5 1.9 11.9

Population: > 165 million (mostly youths) Diverse and sometimes rancorous multiethnic

groups GDP - USD 242.4 billion (2nd largest economy

in SSA) Per capita GDP USD1,474 Average GDP growth - over 7% (last 10 years) Electric Power production 4120 MW (2013

figure) 62% of population live below $1 per day

Structure of Economy (%), 2011: Primary sector: 55 Secondary sector: 6 Tertiary Sector: 39

Structure of Exports (%), 2011: Oil and gas : 99% Non-oil exports : < 1%

China Brazil Malaysia

South Africa

Nigeria

Share of manufacturing in GDP (%) 2005

33.5 20.4 29.8 18.6 5

Share of MVA per capita ($,2006)

495.9 748.7 1430.3 575.9 19.1

Manufacturing export per capita ($, 2005)

556 463 4753 703 4

Share of MVA in GDP %, 2005

34.1 20.4 32.2 16.3 4.1

Share of manufactured exports in total exports (%)

95.1

72.8 85.5 70.2 2.5

GDP per capita $ 2008 5300 9700 7027 10,600 2,200

Institutions and Policies for Export Promotion and Diversification

Agency Mandate Relevant Activities

Federal Ministry of Finance

• Formulates of the monetary and fiscal policies of the Nigerian economy.

• Determines of loans/advances for production.

• Determines the cost of

money/exchange rate.

Currently, it initiates and implements export policies and incentives including the New Export Expansion Grant EEG in collaboration with the Nigerian Export Promotion Council (NEPC).


Agency Mandate Relevant ActivitiesNIGERIAN COSTOMS SERVICE

• Controls and manages the administration of the customs and excise laws.

• Carries out anti-smuggling operations at the ports and borders in order to forestall importation and exportation of contrabands and goods injurious to the health and security of the nation.

• Export development• Advising manufacturers on

packaging, product design and adaptation;

• Advising exporters on appropriate strategy to adopt to penetrate target markets;

• Advising on pricing and costing for export

• Export financing and incentives

• Human resources training and development activities

• Co-ordination and co-operation with multilateral institutions


Agency Mandate Relevant ActivitiesFEDERAL MINISTRY OF COMMERCE

• responsible for articulating of trade policies for Nigeria within the world trade organization framework

NIGERIAN EXPORT PROMOTION COUNCIL

• To promote the development and diversification of Nigeria's export trade

• to assist in promoting the development of export-related industries in Nigeria



THE NIGERIAN EXPORT-IMPORT BANK (NEXIM)

• Provision of export credit guarantee and export credit insurance facilities to its clients

• Establishment and management of funds connected with exports

NIGERIAN INVESTMENT PROMOTION COMMISSION (NIPC)

• Co-ordinate, monitor, encourage and provide necessary assistance and guidance for the establishment and operation of enterprises in Nigeria.

• Initiate and support measures which shall enhance the investment climate in Nigeria for both Nigerian and non-Nigerian investors



THE NATIONAL AGENCY FOR FOOD AND DRUG ADMINISTRATION AND CONTROL (NAFDAC)

• Regulate and control quality standards for Foods, drugs, Cosmetics, Medical Devices, Chemicals, Detergents and packaged water imported, manufactured locally and distributed in Nigeria

• Control the exportation and issue quality certification of food, drugs, medical devices, bottled water and chemicals intended for export

• Undertake inspection of imported food, drugs, cosmetics, medical devices, bottled water and chemicals

Performance Indicators Baseline 2010

Baseline 2011

Ease of Doing Business ranking (1=most business-friendly country)

134 133

EIU Business Environment, Global ranking N/A 75 of 82WEF: Global Competitiveness Index 127 127Time required to start a business (days) 31 NATime required to enforce a contract (days) 457 NATime required to register property (days) 82 NA% Tele-densityFixedMobile

0.7562.36

0.5168.49

% population with internet access 24.43 29Cost of broadband access (1 mbs/annum) $500 $150Speed of broadband (mb/sec) 0.55 1.0Inflation rate (%) 14 11NSE Market capitalization (N’Billion) 7,913.75 6,532.6% pre and post-harvest loss of agricultural products 40 40% of adoption of new improved varieties of seeds and brood stock

<5 5

% of federal roads in good conditions 31 31.5Capacity of local design and fabrication of machines and equipment %

5 10

Average number of hours of power availability per day 8 12Number of bio-technology products delivered 2 1Number of industries using R&D products 35 88

Lessons Learnt› Export policies cannot be effectively conducted outside overall

economic development strategy› Unfavourable business environment

Plan for the future› Integrating sectoral planning, compared to the past where limited data

affected quality of policy› Cluster-based approach to industrilaisation› Creating strong, efficient and effective public service institutions› Tackling corruption› Development of ICT and its promotion and diffusion across sectors of

the economy› Incorporation of M&E formally into governance institutional structure

Review extant laws setting up export promotion agencies and address other inhibiting factors to export

Remove barriers to Doing Business › government should provide the supportive environment for entry and exit of business

Governance Issue › rule of law, respect for the sanctity of contract, property rights, efficient and prompt

administration of justice, zero tolerance for corruption

Return to Planning and submission to the discipline of planning, respecting pre-determined priorities in the utilization of national resources.

Provision of adequate and qualitative Public Goods Provision of Support Services

› ICT, power, export market information services, aligning diplomatic and economic interests.

Concerted efforts by the MIC to influence the governance structure of institutions regulating global trade

Documents

Government Policies and Export Promotion by Professor Adeola ADENIKINJU