By SpringsNewsNG

Nigeria’s non-oil export sector is underperforming, but the sharp depreciation of the naira has created an illusion of growth. While figures in local currency paint a picture of booming exports, a closer analysis in dollar terms tells a different story.

Inflated Growth in Naira Terms

The Nigerian Export Promotion Council (NEPC) recently reported that non-oil exports generated N9.65 trillion in 2024, a significant rise from N3.14 trillion in 2023. At first glance, this suggests remarkable growth. However, when converted to dollars, the numbers show only a marginal improvement.

In dollar terms, Nigeria’s non-oil export revenue stood at $5.45 billion in 2024, up by just 20.79 percent from $4.52 billion in 2023. The devaluation of the naira distorts the real picture—what seems like exponential growth in naira is merely a modest gain in actual value.

For instance, a $2 billion export in 2024 translates to over N3 trillion, whereas the same amount in 2019 was worth just over N600 billion due to the stronger exchange rate. This discrepancy highlights how currency fluctuations, rather than real sectoral improvements, are driving the increase in naira-denominated export figures.

Weak Trade Performance

Despite the apparent growth in non-oil exports, Nigeria’s overall trade structure remains heavily oil-dependent. Data from the National Bureau of Statistics (NBS) shows that non-oil exports accounted for an average of just 10.88 percent of total exports from January to September 2024.

• In 2023, non-oil exports made up only 9.17 percent of total exports, slightly up from 8.94 percent in 2022.
• Comparatively, non-oil exports were 11.97 percent of total exports in 2019 and peaked at 12.68 percent in 2020 during the COVID-19 trade disruptions.
• The sector’s contribution has been in steady decline since 2020, contradicting the impression of strong export growth.

This trend contrasts sharply with other countries. For example, in Indonesia, non-oil exports made up 25.49 percent of the country’s exports to China in 2023. In Vietnam, mobile phones alone accounted for 21 percent of total exports, while textiles and electronics contributed 24 percent of total trade.

A Declining Trend in Dollar Terms

Nigeria’s non-oil export earnings in dollar terms have declined over the years, despite the weaker naira.

• In 2019, Nigeria earned $8.23 billion from non-oil exports, with the exchange rate at N305.99 per dollar.
• By 2022, earnings had dropped to $6.03 billion, even though the naira had depreciated to N423.98 per dollar.
• In 2024, despite an average exchange rate of N1,767 per dollar, non-oil export revenue was just $5.45 billion.

This decline highlights that Nigeria is earning less in actual value, and the reported increase in naira terms is mainly due to currency depreciation, not increased productivity or trade competitiveness.

Structural Imbalance in Nigeria’s Trade

Crude oil remains the backbone of Nigeria’s exports. According to the latest NBS data, crude oil accounted for 65.44 percent of total exports in 2024, followed by liquefied natural gas and other petroleum gases.

In contrast, non-oil exports are primarily made up of agricultural products such as cocoa, sesame seeds, soybeans, and cashew nuts, alongside a few manufactured goods. Over the years, the sector has struggled to cross the 10 percent threshold of total trade.

The Central Bank of Nigeria (CBN) acknowledged in January 2024 that the rise in non-oil export earnings was largely driven by increased sales of agricultural products, rather than industrial or high-value goods.

Despite the apparent revenue boost from a weaker naira, Nigeria’s non-oil sector remains structurally weak and uncompetitive compared to global peers.

Challenges Hindering Non-Oil Export Growth

Industry experts attribute Nigeria’s poor non-oil export performance to several structural and economic barriers:

1. High Cost of Production – The cost of borrowing, inflation, and expensive infrastructure make Nigerian goods uncompetitive globally.
2. Regulatory Challenges – Many ministries, departments, and agencies impose strict and often conflicting regulations that frustrate exporters.
3. Rising Logistics Costs – High diesel and petrol prices, poor road networks, and widespread insecurity increase transportation costs, making exports less profitable.
4. Unreliable Electricity Supply – Manufacturers struggle with high electricity tariffs and unstable power, further driving up production costs.
5. Weak Export Incentives – Delays in government export support programs discourage businesses from investing in non-oil exports.

Odiri Erewa-Meggison, Chairman of the Manufacturers Association of Nigeria Export Promotion Group (MANEG), pointed out that Nigeria’s non-oil sector remains weak due to poor industrial structure and high production costs.

CBN’s View on Naira Devaluation and Exports

The CBN floated the naira in 2023 to reduce import demand and encourage exports. However, CBN Governor Olayemi Cardoso has warned that without strong economic fundamentals, a weaker naira alone cannot drive export growth.

“Until the fundamentals are fixed and in place, you will continue to sub-optimise,” Cardoso said after the Monetary Policy Committee meeting in October 2024.

He emphasized that as long as Nigeria remains a monolithic economy dependent on oil, the country will struggle to achieve a strong exchange rate and competitive exports.

Trade expert Obiora Madu also noted that Nigerian products remain expensive in the international market, as poor infrastructure continues to inflate production and export costs.

Can Nigeria Achieve Sustainable Non-Oil Export Growth?

The NEPC has set a 30 percent growth target for non-oil exports, but it remains unclear whether this target is based on volume or revenue. Given the distortions caused by currency fluctuations, a rise in naira earnings does not necessarily translate to real growth in trade volume.

Without addressing structural inefficiencies, high production costs, and regulatory bottlenecks, Nigeria’s non-oil export sector will remain weak—regardless of what the naira says.