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 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.