Transcript Government Policies and Export Promotion by Professor Adeola ADENIKINJU

Government Policies and Export
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.

Stable real exchange rate
Improved Governance
Reduction in anti-export bias
Rising primary school
enrollment
Growing linkage with global
economy
Government retreat from the
commanding heights of the
economy
Reduction in wars and
political instability
Export promotion initiatives
Outcomes so far
Implementation
Macroeconomic stability
Economic growth rate has
increased (lower volatility
and sustained performance)
Most countries economies
remain undiversified
Export structure remains
highly concentrated
(composition and extent
markets)
Share of Africa in global trade
remains low
Low national savings and
investments rates

Most MICs are still stuck in:
 low technology
 low skill
 natural resource intensive
 low productivity intensive technology manufactured
production and exports
Internal Challenges
High Poverty rates
Rising rate of urbanization with
concomitant pressures on
infrastructure
Rising costs of security
Weak institutions
Low productivity
Orientation towards domestic
market
External Challenges
There is asymmetric power in
global trade
Increasing troubled global
economic environment in the
OECD has increased anti-trade
measures
Share of Primary
Export in Total
Export (percent)
Group
World
Developed countries
Developing countries
Region
East Asia and the
Pacific
Europe
Latin America and
the Caribbean
Middle East and
North Africa
South and Central
Asia
Sub-Saharan Africa
Income
High income nonOECD
Upper middle income
Lower middle income
Low income
Least developed
Share of Resourcebased Manufactured
Export in Total
Export(percent)
Share of Low
Technology
Manufactured Export
in Total
Export(percent)
Share of MediumTechnology
Manufactured Export
in Total
Export(percent)
Share of HighTechnology
Manufactured Export
in Total
Export(percent)
2005
14.8
9.3
23.6
2009
16.0
10.6
23.2
2005
16.2
16.2
16.3
2009
17.1
17.4
16.7
2005
15.3
13.2
18.6
2009
14.9
13.1
17.3
2005
32.9
40.0
21.4
2009
30.8
37.7
21.6
2005
19.7
19.9
19.3
2009
19.4
19.3
19.5
6.8
33.1
6.6
32.9
10.9
23.8
11.8
23.2
23.7
16.5
22.9
13.5
24.3
22.3
24.5
24.4
33.8
3.7
32.9
5.1
31.4
35.0
21.0
22.3
10.9
7.9
26.6
23.5
8.9
8.2
55.7
53.0
19.6
18.3
9.4
9.1
11.3
12.9
3.1
4.0
40.1
36.2
23.8
56.9
20.7
29.8
28.0
19.4
26.7
8.5
26.8
6.3
9.2
17.0
13.4
13.2
2.8
3.2
7.1
2.1
22.0
32.3
15.4
42.9
23.0
33.1
14.5
41.6
14.4
20.9
13.7
12.9
15.9
21.9
13.3
12.4
14.4
12.8
27.1
31.4
11.5
11.1
25.7
28.1
20.2
23.5
21.3
5.7
19.4
22.9
22.8
7.9
28.0
9.7
22.1
2.9
27.8
9.0
22.8
5.6
Low-technology
manufactured
exports,(US$ billions)
Group
World
Developed countries
Developing countries
Medium-technology
manufactured
exports,(US$ billions)
High-technology
Technology Manufactured
manufactured exports Exports(US$ billions)
(US$ billions)
2005
1,501
801
700
2009
1,720
867
853
2005
3,228
2,424
805
2009
3,558
2,492
1,066
2005 2009
1,931 2,239
1,205 1,280
726
960
2005
6660
4430
2231
2009
7517
4639
2879
444
76
575
82
455
103
613
148
633
17
824
31
1532
196
2012
261
61
53
149
157
50
55
260
265
52
58
8
69
64
9
62
20
16
98
32
19
17
6
3
30
17
3
131
84
27
197
113
31
159
162
358
22
9.2
151
172
505
25
2
223
297
281
4
1.3
256
354
449
7
1.7
310
122
292
2
0.2
367
140
448
5
0.5
692
581
931
28
10.7
774
666
1402
37
4.2
Region
East Asia and the Pacific
Europe
Latin America and the
Caribbean
Middle East and North
Africa
South and Central Asia
Sub-Saharan Africa
Income
High income non-OECD
Upper middle income
Lower middle income
Low income
Least developed countries
Share of Lowtechnology
Manufactured Export
in Total Technology
Export
Share of MediumShare of Hightechnology
technology
Manufactured Export in Manufactured Export
Total Technology Export in Total Technology
Export
Group
World
Developed countries
Developing countries
Region
East Asia and the Pacific
Europe
2005
22.5
18.1
31.4
2009
22.9
18.7
29.6
2005
48.5
54.7
36.1
2009
47.3
53.7
37.0
2005
29.0
27.2
32.5
2009
29.8
27.6
33.3
29.0
38.8
28.6
31.4
29.7
52.6
30.5
56.7
41.3
8.7
41.0
11.9
Latin America and the Caribbean
23.5
20.0
57.3
59.2
19.2
20.8
Middle East and North Africa
South and Central Asia
Sub-Saharan Africa
Income
High income non-OECD
Upper middle income
Lower middle income
Low income
39.7
69.0
29.6
35.0
56.6
29.0
47.3
23.8
59.3
49.7
28.3
61.3
13.0
7.1
11.1
15.2
15.0
9.7
23.0
27.9
38.5
78.6
19.5
25.8
36.0
67.6
32.2
51.1
30.2
14.3
33.1
53.2
32.0
18.9
44.8
21.0
31.4
7.1
47.4
21.0
32.0
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 $1 per day


Structure of Economy (%), 2011:
 Primary sector: 55
 Secondary sector: 6
 Tertiary Sector: 39

Structure of Exports (%), 2011:
 Oil and gas : 99%
 Non-oil exports : < 1%
China
Brazil
Malaysia South
Africa
Nigeria
Share of manufacturing in 33.5
GDP (%) 2005
20.4
29.8
18.6
5
Share of MVA per capita
($,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
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).
money/exchange rate.
Institutions and Policies for Export Promotion and Diversification
Agency
Mandate
Relevant Activities
NIGERIAN 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 cooperation with multilateral
institutions
Institutions and Policies for Export Promotion and Diversification
Agency
Mandate
FEDERAL MINISTRY OF
COMMERCE
• responsible for
articulating of trade
policies for Nigeria
within the world trade
organization framework
• To promote the
development and
diversification of
Nigeria's export trade
• to assist in promoting
the development of
export-related industries
in Nigeria
NIGERIAN EXPORT
PROMOTION COUNCIL
Relevant Activities
Institutions and Policies for Export Promotion and Diversification
Agency
Mandate
• Provision of export credit guarantee
THE NIGERIAN
and export credit insurance facilities
EXPORT-IMPORT BANK
to its clients
(NEXIM)
• Establishment and management of
funds connected with exports
NIGERIAN
• Co-ordinate, monitor, encourage and
INVESTMENT
provide necessary assistance and
PROMOTION
guidance for the establishment and
COMMISSION (NIPC)
operation of enterprises in Nigeria.
• Initiate and support measures which
shall enhance the investment climate
in Nigeria for both Nigerian and nonNigerian investors
Relevant
Activities
Institutions and Policies for Export Promotion and Diversification
Agency
Mandate
Relevant Activities
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)
EIU Business Environment, Global ranking
WEF: Global Competitiveness Index
Time required to start a business (days)
Time required to enforce a contract (days)
Time required to register property (days)
% Tele-density
Fixed
Mobile
% population with internet access
Cost of broadband access (1 mbs/annum)
Speed of broadband (mb/sec)
Inflation rate (%)
NSE Market capitalization (N’Billion)
% pre and post-harvest loss of agricultural products
% of adoption of new improved varieties of seeds and brood stock
% of federal roads in good conditions
Capacity of local design and fabrication of machines and
equipment %
Average number of hours of power availability per day
Number of bio-technology products delivered
Number of industries using R&D products
134
N/A
127
31
457
82
133
75 of 82
127
NA
NA
NA
0.75
62.36
24.43
$500
0.55
14
7,913.75
40
<5
31
5
0.51
68.49
29
$150
1.0
11
6,532.6
40
5
31.5
10
8
2
35
12
1
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
›

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
›

government should provide the supportive environment for entry and exit of business
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