Nigeria’s push to grow non-oil exports is facing significant challenges, with poor data access, unstable supply chains, quality issues, and financing difficulties creating major roadblocks for businesses looking to expand globally.
Exporting Challenges for Nigerian Businesses
For many Nigerian businesses, breaking into international markets is an uphill battle. Urena Iheme, CEO of Fefereti Group, experienced this firsthand. After attending a trade fair in Houston, she secured repeat orders for her chin chin (a popular Nigerian snack). However, scaling up production to meet demand became a serious challenge.
“The biggest issue is maintaining a stable supply chain,” Iheme explained.
She supplies in-flight snacks to Air Peace but is ambitious to expand into European and other African markets. However, getting products into these regions has been difficult.
“Nigerians and other Africans are the primary consumers of chin chin, yet African markets are some of the hardest to penetrate. Moving goods remains a huge challenge,” she noted.
Another hurdle is quality control. Iheme pointed out that while Nigerian palm oil faces rejection in European markets, Ghana’s is widely accepted. She attributes this to better quality and processing standards. To address these issues, she proposes establishing an export processing center to help Nigerian food products meet international benchmarks.
Data Gaps Hindering Growth
Access to reliable market data is another major obstacle. Patrick Ulayi, Managing Director of Alliance & Frontier Limited, emphasized that businesses struggle to make informed decisions without accurate trade data.
“Data is crucial. With it, you can scale effectively and attract financing,” he said.
Banks and investors require concrete trade figures before providing capital. Exporters often struggle to secure funding without proper records of transaction history, trade volumes, and market forecasts.
Government policies, financing constraints, and Western trade protectionism further complicate market entry. Many European regulations require that certain trade activities remain within their region, making it harder for African exporters to compete.
“We’ve always exported raw materials, but the focus should now shift to processing them locally before export,” Ulayi added.
Foreign Exchange (FX) Struggles
Beyond knowledge gaps, managing FX demands is another major concern. Exporting comes with significant financial burdens, and FX liquidity shortages continue to disrupt trade.
Emmanuel Nwalor, Team Lead for Export and Agriculture at Fidelity Bank, explained that Nigeria’s FX challenges stem from a negative trade balance. He noted that import abuses have drained FX inflows, worsening the situation.
“The more exporters we have, the more foreign exchange comes into the country,” he said.
The Central Bank of Nigeria (CBN) has introduced several measures to boost FX inflows, including clearing FX backlogs, revising international money transfer operator (IMTO) guidelines, and liberalizing the FX market. However, research from PwC warns that FX instability may persist in 2024 unless supply challenges are resolved.
Many Nigerian businesses also struggle with export financing. Unlike importers who pay upfront, exporters often depend on international buyers, which can be risky.
“If transactions aren’t structured properly, exporters can ship goods and never get paid,” Nwalor explained.
While Nigerian banks offer export financing, accessibility remains a major issue. Banks require clear business models before approving funds.
“If a bank understands your supply chain from start to finish, they’ll fund you. But if your operations aren’t structured, you’re too risky,” Nwalor added.
Logistics: A Persistent Bottleneck
Poor logistics remain one of the biggest challenges in Nigeria’s export sector. Frank Ojadi, Professor of Operations Management at Lagos Business School, identified logistics as a critical failure point.
“One major issue is moving products efficiently within Nigeria and out of the country,” he said.
High transportation costs and delays at Nigerian ports significantly increase export expenses. Ojadi stressed that these logistical problems are man-made and date back to colonial times.
He referenced Nigeria’s historical groundnut pyramids, which were not a sign of surplus production but a consequence of poor transportation infrastructure. Limited railway systems prevented groundnuts from reaching ports on time, leading to stockpiling.
“If logistics don’t improve, Nigeria’s export challenges will persist,” he warned.
Why Expanding Exports Matters
The struggles of individual businesses reflect a larger economic issue: Nigeria’s overdependence on crude oil.
The latest National Bureau of Statistics (NBS) report shows that crude oil accounted for 68.87% of Nigeria’s total exports in Q4 2024, generating N13.78 trillion in revenue. In contrast, non-oil exports—dominated by agricultural products like cocoa, soybeans, and cashews—make up less than 10% of total trade.
“Our FX crisis stems from importing more than we export,” Nwalor stated. “The more businesses we support in exporting, the more dollar inflows we generate, reducing pressure on the naira.”
To diversify Nigeria’s export base, experts recommend:
- Strengthening local processing industries
- Improving logistics and infrastructure
- Enhancing access to market data
- Expanding export financing options
- Aligning Nigerian products with global quality standards
Addressing these bottlenecks will be key to unlocking growth and economic stability as Nigeria seeks to boost non-oil exports.
