Nigeria has abundant resources and a large domestic market that provide major opportunities for export growth and improved trade competitiveness. However, the country’s exports are currently concentrated around crude oil, which accounts for over 90% of export earnings. To drive inclusive economic growth, Nigeria must implement multifaceted strategies to diversify its export base into new products and services while also maximising value in existing export industries.
Diversifying Exports into New High-Potential Sectors
Nigeria can tap into several emerging industries to increase and diversify its exports. Targeting these high-potential sectors will enable the country to reduce dependence on crude oil exports and create more jobs.
Information Technology Services
The information technology industry has become a major source of exports and growth for developing economies. As one of Africa’s tech hubs, Nigeria can expand the export of IT services. Strategies include:
- Investing in tech infrastructure and digital skills to improve the quality and scale of IT service offerings for export.
- Providing incentives for IT firms to deliver digital services to international clients and offshore contracts
- Developing IT clusters like Yaba in Lagos to encourage collaboration and innovation
- Promoting Nigerian IT expertise globally through international conferences and expos
- Working with large international IT service firms to establish delivery centres in Nigeria.
- Offering tax holidays and other benefits to motivate IT companies to export services.
With strong technology talent and English proficiency, Nigeria can exponentially grow its IT exports.
Nigeria’s film, music, fashion, and cultural creative sectors have major export potential. Strategies such as:
- Providing low-cost financing and venture capital to scale up creative businesses
- Establishing shared creative industry infrastructure like film hubs and digital studios
- Improving intellectual property protections and licencing frameworks
- Promoting Nigerian creative content and designs through global marketing campaigns
- Sponsoring Nigerian artists to showcase at top international platforms and events.
- Forming creative industry partnerships and co-production treaties with major markets
- Training programmes to enhance the business expertise of creative entrepreneurs.
Nollywood is already the world’s second-largest film producer. With targeted support, Nigeria can significantly boost the export of film, TV, music, fashion, cultural goods, and other creative services.
Nigeria is endowed with fertile land and farmers that can drive higher-value agricultural exports, including:
- Processed Fruits, Nuts, and Vegetables: With abundant produce, investing in processing and packaging capabilities can open export opportunities.
- Herbs, Spices, and Extracts: Nigeria can expand exports of herbs, spices, natural food flavours, and colours by meeting quality standards.
- Organic Foods and Beverages: High demand for health foods globally creates prospects to export certified organic produce.
- Specialty Crops: Nigeria can tap niche export markets for ethnic crops like hibiscus, moringa, shea, etc.
- Livestock and dairy: meat, poultry, eggs, milk, cheese, etc. have export potential if supply chains are upgraded.
- Expanding cold storage and logistics infrastructure to export perishable produce.
- Facilitating export-oriented contract farming through out-grower schemes
- Supporting farmers and exporters to meet international quality certifications.
- Providing low-cost financing for agro-processors looking to export
- Building a globally competitive brand for Nigerian agricultural exports
Exporting higher-value and processed agricultural goods can earn more foreign exchange compared to raw commodity exports.
Boosting Exports in Existing Industries
While diversifying into new sectors, Nigeria must also maximise export revenues, quality, and competitiveness in existing export industries.
Oil and Gas
Despite economic diversification efforts, oil and gas exports will remain vital income sources for Nigeria. Strategies for optimising oil and gas exports include:
- Improving security and reducing pipeline vandalism will increase export volumes.
- Investing in new oil and gas infrastructure and expanding production capacity.
- Supporting local companies to move up the oil and gas value chain into exporting petroleum products.
- Developing massive natural gas fields and accelerating LNG projects to grow gas exports
- Offering incentives for oil companies to establish refineries and petrochemical plants that can export products.
- Enhancing skills and capabilities in related professional services like seismic mapping to increase exports
Maximising revenues from current oil and gas resources can provide capital to develop emerging export industries.
Cocoa and Commodities
Although facing production challenges, cocoa and commodities like rubber, cotton, and grains still offer major export opportunities. Improvement strategies include:
- Supporting smallholder farmers with inputs, training, and rehabilitation programmes to increase yields.
- Strengthening commodity trading through initiatives like the Nigeria Commodity Exchange (NCX).
- Investing in crop storage, haulage, and logistics to minimise post-harvest losses.
- Building processing plants to add value through intermediate products like cocoa paste, liquor, and butter.
- Collaborating with commodity buyers to meet sustainable and certified production standards
- Establishing commodity clusters and economic zones to improve competitiveness
Optimising production and digging further down commodity value chains can significantly boost export earnings, even from traditional cash crops.
Nigeria has substantial potential to expand manufactured exports in agro-processing, cement, plastics, machinery, and other segments. Strategies include:
- Addressing critical infrastructure gaps such as electricity, ports, and rail networks that raise production costs
- Providing tax incentives and export credits to stimulate export-oriented manufacturing
- Resuscitating existing manufacturing clusters and establishing new zones nationwide
- Facilitating technology and skills transfer partnerships between Nigerian firms and multinational corporations
- Creating frameworks for local machinery and equipment finance and leasing to upgrade manufacturing
- Strongly enforcing bans on the importation of products also manufactured locally.
With its large population and resources, Nigeria can become a competitive global manufacturing hub. However, it must improve the industrial environment and provide support for companies to profitably produce and export at scale.
Improving the overall business environment
To drive export growth across sectors, Nigeria must also continuously reform and optimise the broader operating environment for international trade.
Trade policy reforms
Nigeria’s trade policies and tariff regimes should maximise export competitiveness. Recommendations include:
- Pursuing bilateral and multilateral agreements that guarantee lower tariffs and non-tariff barriers for Nigerian exports in foreign markets
- Strategically reducing import duties and export incentives to cut costs of imported inputs and machinery for export sectors.
- Simplifying and digitising export documentation, licencing procedures, and customs clearance to facilitate trade.
- Establishing export-import banks, export credit guarantees, and export-oriented logistics zones nationwide
Progressive trade reforms and incentives can significantly improve export competitiveness.
Access to Finance
Limited financing hinders the ability of exporters to achieve optimal scale and service international markets. Strategies for improving access to finance include:
- Increasing lending to the real sector through policies like lower interest rates
- Developing dedicated export financing schemes and export credit guarantees through the government and financial institutions
- Establishing private sector-led export-import banks
- Creating specialised funds to provide low-cost capital for exporting SMEs
- Promoting alternative finance such as venture capital, private equity, and development funds for export sectors
- digitising trade financing through blockchain, supply chain finance, and online lending innovations.
With improved financing, Nigeria’s exporters can more effectively fulfil international orders and expand to new markets.
Efficient ports, airports, roads, rail, ICT networks, and other infrastructure are essential for export competitiveness. The government should:
- Increase infrastructure budget allocation and allow private investment through PPP models.
- Accelerate ongoing projects such as deep seaports and dry port construction.
- Upgrade and maintain key export transport networks like the Lagos-Kano rail line.
- Support export processing zones and clusters with dedicated power, water, gas supply, and other common facilities.
- Incentivize infrastructure investment in less-developed regions to spread export opportunities.
Modernising trade-related infrastructure will enable exports to move quickly and cheaply across Nigeria and overseas markets.
Education and training programmes must continuously build a workforce ready for increasingly complex export industries. Recommendations include:
- Expanding vocational education tailored to current and emerging export sectors
- subsidising higher education and professional training in priority fields like agriculture, manufacturing, and ICT.
- Instituting apprenticeships, mentoring schemes, and entrepreneurship education to develop workplace skills.
- Introducing specialised export training courses through industry partnerships.
- Aligning university curricula with export industry needs and promoting business education
Workforce skills are imperative to sustain export competitiveness as technologies and demand patterns evolve globally.
With strong leadership and coordinated efforts across stakeholders, Nigeria can make remarkable strides in expanding and diversifying its exports. Implementing the strategies outlined across trade policy, infrastructure, finance, emerging sectors, and traditional industries will unlock the nation’s immense potential to become a globally competitive exporting powerhouse. The outcome will be increased wealth creation, economic growth, and gainful employment for Nigeria’s booming population.