export manufacturing- a strategic imperative for nigeria.pptx

Manufacturing For Export.

A Strategic Imperative

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Objectives

Discuss the opportunities and economics of Export Manufacturing

Explain the regulatory requirements for Export Manufacturing

Identify the strategies for success and compliance

Discuss the challenges and possible solutions

Evaluate available incentives for Export Manufacturing

At the end of this presentation, participants will be able to:-

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Contents

Overview of Nigerian Export Manufacturing

Opportunities in Export Manufacturing

Incentives and Economic Benefits

Managing the Challenges of Export Manufacturing

Practical Strategies for Success and Compliance

Best Practices – Using Resources Available for Exporters

Case Study/Conclusions

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What is

Hippopotomonstrosesquippedaliophobia

the fear of…………?

“fear of long words”

Phobia the fear of

something.

Participation

What you put in is what you get out

5

"Tell me, I will forget.

Show me, I may remember.

Involve me, I will understand."

~Chinese Proverb

Contents








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Overview of Nigerian Export

Manufacturing.

• Class Quiz

• Definitions

• Overview

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TRUE OR FALSE!

• Economic growth =

Gross Domestic Product

(GDP) in one year

GDP = total amount of final

goods and services

produced in one year.

Higher GDP = Better the

quality of life

Human Capital = the

Value that humans

bring to the

marketplace

The more capital goods

a country has = the

more money they can

make!

The more entrepreneurs a

country has, the higher the

country’s GDP will be?

1

2

34

5

6

• TRUE

• TRUE

• TRUE• TRUE

• TRUE

• TRUE

Capital Goods :-

All of the factories, machines, technologies, building

and Property needed by businesses to operate.

Every Investments in Capital Goods

impacts the Country GDP.

The More Capital Goods a Country has = The More

goods they can produce= the more money is

made.

Basic Definitions:

• What is an Export ?

An export is a function of international trade whereby goods produced

in one country are shipped to another country for future sale or trade.

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The ability to export goods helps an economy to grow by selling

more overall goods and services.

The sale of such goods adds to the producing nation's gross output.

Exports are one of the oldest forms of economic transfer, and occur

on a large scale between nations that have fewer restrictions on trade,

such as tariffs or subsidies.

http://www.investopedia.com/terms/t/tariff.asp

http://www.investopedia.com/terms/s/subsidy.asp

Basic Definitions:

• What is Manufacturing?

Any Operation that uses components, parts or raw materials to

make a finished good. These finished goods can be sold directly

to consumers or to other manufacturing businesses that use them

for making a different product.

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Manufacturing businesses in today's world are normally

comprised of machines, robots, computers and humans that

all work in a specific manner to create a product.

Manufacturing plants often use an assembly line, which is a

process where a product is put together in sequence from one

work station to the next. By moving the product down a production

line.

Basic Definitions:

• Export Manufacturing?

Is the production of Goods for Export to earn Value for the

Economy of a nation.

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Using majorly, locally sourced resources./ (Gift of Nature)

Resources described in 5M’s mainly as:

Materials

Value’s are described in

Manpower

Money

Machines

Methods.

Gross outputs/GDP

Basic Definitions:

• Gift of Nature?

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Natural Resources important to Country

This Resources are transformed to produce

Goods and services at cheaper cost.

Countries with more resources can trade them

with other country to make more money for the

economy

Nigeria's Gift of Nature?

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Cement production

Limestones- Ogun state has the largest

deposit, others are Kogi state, Edo

state, Cross River state Enugu state and

Ashaka in Gombe state

Tomato production

Kano, Jigawa, Katsina, Zamfara, Sokoto, Kaduna, Bauchi, Gombe, Taraba.

Nigeria's Gift of Nature?15

Oil Palm production

The main oil palm producing states

are: Cross River, Akwa Ibom, Ekiti,

Delta, Bayelsa, Ogun, Rivers,

Anambra, Ondo, Enugu, Imo, Oyo,

Abia, Edo, Ogun, with Cross River,

Delta, Ondo and Edo

Highest producing states in the country

are : Ondo, Osun, Cross River, Ekiti,

Oyo, Edo, Ogun

Cocoa production

Nigeria's Gift of Nature?16

Bitumen / Oil Sand reserves

Bitumen deposits are found in Lagos State, Ogun State, Ondo State, and Edo State.

Groundnut production

Niger, Kano, Jigawa, Zamfara,Kebbi, Sokoto, Katsina, Kaduna, Adamawa, Yobe, Borno, Taraba, Plateau, Nasarawa, Bauchi, and Gombe States

Basic Definitions:

A company which apart from manufacturing certain

products is also exporting the product.

This company might sell the same product for local

consumption but also sells the same in other

countries too for profit.

Examples: Dangote , Unilever, 7UP, PZ etc.

• Manufacturing Exporter ?

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Facts : Nigeria’s non-oil export up by 50% –NEPC

Product FOB Value

1. Cocoa & Cocoa Preparations $417,900,987

2. Processed Leather $333,011,697

3. Rubber $143,871,586

4. Cashew Nuts & Edible Fruits $55,363,190

5. Plastics, Polybags $53,491,233

6. Sesame Seeds & Oil $104,054,165

7. Aluminum & Articles $64,022,090

8. Sea Foods $48,141,669

9. Cotton Yarns & Woven Fabrics $31,754,740

10. Gum Arabic $37,154,951

11. Others $539,934,012

Nigeria earned a staggering $3 Billion from

non-oil exports in 2011. About N468 Billion.

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Facts: NBS Reported - 2015 Wasn't Bad for

Manufacturers

Sector contributed N8.97 trillion to the nation's economy in 2015,

Up by N28 billion compared to the N8.69 trillion in in 2014 (GDP).

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Oil refining dropped N248.02B in 2015 vs N385.82B in 2014.

Cement production N749.93B in 2015 vs N604.61B in 2014.

Food, beverages and tobacco N4.29 trillion in 2015 vs N4.24 trillion in 2014.

Textile, apparel, and footwear N1.87 trillion in 2015 vs N1.82 trillion in 2014.

Facts:• Nigeria Manufacturing Activities ..!

Have significant impact on the economy of a nation.

Accounts for a substantial proportion of total economic activities.

Accounts for about 10% of the national GDP annually

Creates employment about 12% of the labour force in the formal sector of

the nation’s economy.6/15/2016

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Export Manufacturing – A strategic Imperative?

The ‘zero oil’ plan and

an export revolution

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The Nigerian Case.!

Nigerian Case Story - An export revolution and the Zero Oil Plan.

• Oil is down! Pressure on the Naira! Slowing growth! What will Nigeria’s response be?

• This is the chatter all across the country on shop floors, in markets, within business

circles, and in classrooms.

• A close look reveals we may be focusing on the symptoms and not the cause.

• Nigeria does not have an oil price problem, Nigeria has a “failure to export” problem!

• We have little control over the ups and downs in global crude oil markets

• What we do control however is what Nigeria chooses to export, and where we choose to

make money internationally.

Export Manufacturing – A strategic Imperative?

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“Nigeria must begin to behave as if we have no more oil”. –PMB 2015

• Hence the need for a Zero Oil economic agenda, essential to build a strong Nigerian

economy for the future.

• For years Nigeria has imported thousands of goods worth over US$50 billion a year,

which we pay for mainly with crude oil proceeds of over US$70 billion each year.

• In the past two years crude oil prices have fallen 60% and Nigeria’s earnings have

likewise fallen by at least US$35 billion, inevitably leaving a financial hole in the

economy.

Export Manufacturing – A strategic Need?

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• The pressing question now is how to fill this funding gap- and the answer is simple:

• Nigeria must find new things to export quickly, in large commercial scale.

If Nigeria broadens and grows its export basket, a positive chain reaction ricochets throughout

the economy.

The logic follows – when you grow exports, national output (agriculture, industry, solid

minerals) will also grow; local businesses will grow; supporting infrastructure will expand; and

jobs and investments will definitely follow.

The overall macro impacts result in growing foreign reserves (from export forex) and a more

resilient economy is assured.


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• Our country for decades has primarily exported one product, crude oil, which really is

a perishing asset.

• It is for this reason that the government prioritizes Nigeria’s economic diversification.

• – the Zero Oil plan.

• What else could we export? Who would buy? How much could we make?

• These are the questions to be answered under any roadmap to change this

age-old dependence on one single export commodity.


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Export Manufacturing:

- How are we focusing local efforts with

Industrialization.?

The NIRP is promoting Nigeria's industrialization:

Focusing on labor intensive low and medium technology manufacturing

Building up core base industries that are essential for advanced industries.

Using the large Nigerian market demand to deepen industrial capacity of local

firms.

Strategically using key manufacturing sectors as technology drivers of the

economy 6/15/2016

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6/15/2016DA/ICAN 2016

27 #Budget 2016- Current Nigeria Plan

Exporting- What are the Basic Requirement.?

1. Registered Business name and Office

2. Registration with the NEXP

3. Registration of Form NXP

4. Special licenses and permits-Local

5. Licenses from target foreign country

6. Tax certificates

7. Insurance covers 6/15/2016

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“The best way to predict the future is to

invent it.”- Alan Kay, father of the personal computer

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- Vince Lombardi

“Dictionary is the only place

that success comes before

work.”

Where Can you find success

before work.????

Contents






Best Practices – Using Resources Available for

Exporters

Case Study/Conclusions6/15/2016

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Men cannot not live by exchanging articles, but

producing them. They live by work not trade.

- John Ruskin

WEF- Productivity and Prosperity Report

SWOT

SECTORIAL OPPORTUNITY

CURRENT FOCUS

HOME MADE CONSUMPTIONS

Opportunities in Export Manufacturing:

Global Competitiveness Index:

Top 9 in Africa

9243

58

71 99

96

TunisiaSouth Africa

Ivory Coast Kenya

Rwanda

Botswana

Morroco

Algeria Zambia

91

72

87

Global Competitiveness.

- the 10 Golden Rules..!

Provide a stable and

predictable legislative

environment

Maintain linkage between wage

levels and productivity

Create a flexible and

resilient economic

structure

Ensure quality, speed and

transparency of governance

Make investments in traditional

and technological infrastructure

Make the country an attractive

place for Foreign Direct

Investment

Encourage private savings

and domestic investment

Make the country an

aggressive exporter

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Invest heavily in

education and regular

training of workforce.

Maintain a balance

between local and

global activities.

Source:www.imd.ch

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•Abundant raw materials , ~ 44 solid minerals in commercial quantity

•Large market, ~ 170m,

7th most populated in the world , /#4 by 2050,

USD100bn consumer spend pa

•Strategic location (Gulf of Guinea)

•Abundant labour, ~ 69m, largest in Africa

•International /regional political clout

Opportunities in Export Manufacturing: Analysis

Current STRENGTHS

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•Infrastructure deficit/high cost of doing business

•High interest rates/ cost of capital

•Policy inconsistency

•Few/No institutions to drive industrialization

•Low industrial skills and innovation

•Low consumer purchasing power

•Low patronage of ‘Made in Nigeria’ goods

Opportunities in Export Manufacturing: Analysis

Current WEAKNESSES

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•Potential to be #1 in Africa

•Build up labour-intensive sectors.

•Produce locally for domestic consumer market

•Become the manufacturing hub for Ecowas & Africa

•Attraction of Investments

•Diversified Exports

Opportunities in Export Manufacturing:Analysis

Current OPPORTUNITIES

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Current THREATS

•Recent large oil/gas discoveries globally

•Increased competition on industrialization

•Trends in trade policies – globalization & regionalization

•Insecurity6/15/2016DA/ICAN 2016

Opportunities in Export Manufacturing:Agriculture

Agro Allied

Agro Processing

Raw materials

Processed and Packed Foods Live stocks

Beverages

Food and Drugs

Metals and Solid Minerals Iron ore

Coal

Bitumen

Petro Chemicals( oil and Gas Related.)

Light Manufacturing and Constructions

We abandoned agriculture, for petroleum;

Now, we have to go back – Buhari6/15/2016

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Development and Growth Opportunity Micro/Small/Medium Enterprise.

Nigeria Current Focus Solid minerals

Agriculture.

NEPC Researched and confirmed Nigeria has

Over 5000 Exportable Products.

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Nigeria Focus- Solid minerals and Agriculture.

Nigeria can generate N5trn annually from solid minerals

— Ass of Metal exporters/ Vangaurd News 2016

Nigeria’s global agriculture exports could take-off at a rate

similar to Brazil’s, with $59 billion in export revenues by 2030.

- PwC report.

If we take agriculture seriously and deliberately build our

capacity in production, processing and marketing of

agricultural products, we can generate and earn $40bn

annually as revenue.”

-Experts

We abandoned agriculture, for petroleum;

Now, we have to go back – Buhari6/15/2016

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Nigeria exports primarily crude oil and gas.

Importing value-added petroleum based

products.

Therefore, enormous opportunities exist for the Oil &

Gas sector Export Manufacturing. Investing heavily in

Petrochemicals, Methanol, Fertilizers, Refineries, and

other Gas based processing activities is Imperative.

Nigeria Oil and Gas.


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Will you buy

Made in Nigeria Goods?

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#Charity Begins @ Home…!

Do we want made in Nigerian Goods.?

NOI recent public poll suggest YES…!

About 97 per cent of Nigerians

have said they would buy locally

made products in order to

strengthen the country's

economy.6/15/2016

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NOI recent public poll suggest YES…!

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In conclusion,

This poll has clearly revealed some cheering findings indicating the willingness of

Nigerians to buy made in Nigeria products.

Economic climate for local manufacturers needs focused Improvements.

Power and support Infrastructures.

Limited access to credit

High cost of funds.

However, with concerted efforts on policies targeted towards the power sector,

access to finance and currency stability, the manufacturing sector may be able to

bounce back from the woods.

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Contents







Exporters


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What are the Incentives and Economic Benefits

of Exporting Nigerian Manufactured Goods.?

Macro Economic Goals.

Employment Generations

Infrastructural Expansion and development

Technology Development

Tax Incentives

Export grants ie Export Expansion Grant6/15/2016

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Export Expansion Grant:

Created to complement export promotion drive.

Supported by an ACT of Law since 1986. -Export Incentives and Miscellaneous

Provisions Act detailed as

•Export Development Fund

•Export Expansion Grant

•Export Adjustment Scheme Fund

Export Expansion Grant (EEG) is still Operational and administered by the Nigerian

Customs Service (NCS).

EEG is issued to non-oil exporters to reduce production, distribution and logistics

(Production) costs which will enable them compete effectively in the international

market.

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Export Expansion Grant:

The grant ranges from 10 per cent to 30 per cent of the Freight On Board value of the

products being exported with a confirmation that the export proceeds have been

repatriated.

The amount received by the exporter also depends on the categorization of the

exporter among others.

EEG was paid to beneficiaries in cash.

From 1999, the grant came in form of Negotiable Duty Credit Certificates (NDCCs)

issued by the NCS.

The NDCC is a negotiable instrument that can be used to settle or reduce import and

Excise Duties. 6/15/2016

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Contents







Exporters


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The Challenges of Export Manufacturing

Includes: Capital

High cost of fund

Lack of long term facility

Government Policy.

Enabling Environment

Investment Promotions and Incentives

Product Standards and Local Patronage.

Processing and Packaging

Safety and Quality standards.6/15/2016

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Skills and Technology

Industrial Skills

Machinery and Technology acquisitions and exploits

Infrastructural Deficit

Power, Power and Power.

Transport- Rail, Road and Sea.

Export Rules and Regulations

Business rules and regulations

Legal requirements

The Challenges of Export Manufacturing

Includes:

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Contents








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Export Manufacturing- Practical Strategies

for Success and Compliance

Establish Manufacturing Centers

• Focus Small-Medium-Large Industries

• Focus on simple to complex products

• Satisfy local markets before others.

• Exploit Export processing platforms.

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Exploit Trade Shows and Manufacturers forums

• Platform to brings together All stake holders

• Producers platforms for best practice and common

challenges.

Expand Research and Focus Product Presentations

• Designs and Packaging

• Safety and Quality Standards6/15/2016

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Exploit and Follow Governance Requirements.

• Export Documentations and Regulatory compliance (eg SON)

• Export Promotions

Explore and Exploit Globalizations and Technology

• Adopt Global Best practices

• Use and Exploit Technology

• Deploy Representations and administrations in Foreign markets.

• Education, Research and Training for Highly Skilled Labor



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The SON Certifications:

Before a product is certified for local consumption or for export, it is

required that such product should pass through what we call

Mandatory Conformity Assessment Programm, MANCAP (Local

product),

Standard Organization of Nigeria Conformity Assessment

Programm, SONCAP, (Importing and Exporting standards).”

To assure credibility and values for

acceptance in the global market

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The SON Certifications

The Conformity exercise combines document verification, sample collection for lab

analysis, and physical inspection to assess the conformity of each shipment. If

conformity is established, a mandatory Certificate of Conformity (COC)

The certificate prevents the shipment from being rejected and allows importers to

clear their goods efficiently.

To assure credibility and values for

acceptance in the global market

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The SON CertificationsConformity assessment programs provide

numerous advantages for both Governments as well as exporters and importers.

For Governments

Eliminates customs bottlenecks in importing country

Reduces storage issues at ports

Guarantees all imported products are compliant with international & local standards

Reinforces consumer safety

Builds local customs competencies through training and capacity building programs

Ensures conformity with WTO Technical Barriers to Trade agreement

For Exporters / Importers

Faster Customs clearance

•Reduces need for local laboratory analysis or additional testing

•Offers better consumer protection against dangerous, substandard or counterfeit products

•Protects local industry from unfair competition due to poor quality imports6/15/2016

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Contents








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Exporters-On hand help from NEPC

1. Provide a list of Exportable Products

2. Provides technical support to exporters in the following areas

•Ensure proper documentation of export transactions

•Business Registration and inclusion in data base.

•Quality and Standards- monitors the quality and standards of products.

•Payment-: helps suggest the best and most secure payment methods.

•3. Organize Trade Fairs and Exhibitions

.

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Exporters- On hand help from NEPC

4. Bring Exporters together

5. Provides information on product sourcing

- information on where to find exportable products in Nigeria.

6. Administer Grants and Incentives

- Registered Exporters can easily access grants

-Exporters of agricultural products receive a lot of incentives regularly.

7. Help to simplify the export procedure

- Mostly for starters.

.

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Exporters- On hand help from NEPC

.8. Carry out research and studies

- regular studies and research.

9. Help to solve problems

-go-to agency for complaints and solutions.

10. Create awareness and publicity

- local and international advertisements.

11. Provide Financial Support

- useful information on where to get loans easily.

-May also give guarantee on loans.6/15/2016

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The Ghana Case Of Cocoa

The cocoa industry has been the mainstay of the Ghanaian economy and provides the second

largest source of export earnings representing about 30 percent of Ghana's total export earnings.

Ghana is presently the world’s second largest producer of cocoa beans, after the Ivory Coast.

According to the Bank of Ghana, cocoa bean and products export receipts for the first quarter of

2011 is $859.4 million, accounting for about 61 percent of total export earnings as compared with

$682.5 million at 48.8percent in 2010.

Source: Annual Cocoa Report 2012.

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Manufacturing will remain the strongest differential when countries are rated on their

competitiveness.

Trend In Global Manufacturing.

“Manufacturing competitiveness, increasingly propelled by advanced

technologies, is converging the digital and physical worlds, within and beyond

the factory to both customers and suppliers, creating a highly responsive,

innovative, and competitive global manufacturing landscape,”

--Craig Giffi, Deloitte US Consumer & Industrial Products Industry group

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The Manufacturing sector contributes over 17% of the world’s US$ 70 tr

economy, & accounts for over 70% of global trade.

Poor countries start off by employing the bulk of their population in agric.

To transition into middle income/developed markets, there is need to

create a robust industrial & services sectors, which are the drivers of

mass employment, improved skills, & better wages, providing the

foundations for long run sustainable economic growth & advancement

Increasingly the manufacturing sector drives the creation of service sector

jobs. In advanced markets, 30% to 55% of service jobs are related to the

manufacturing sector. 6/15/2016

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The 2016 Global Manufacturing Competitiveness Index forecasts that the top eleven countries

will remain consistent between now and 2020, with some exchange of rankings.

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Summing Up:

Strategically, Export Manufacturing has more sustainable

Potential to Grow the Nations Economy.

Grow and Sustain the nations GDP

Create sustainable Employments

Create relative Currency Strength(Value).

Foster Developed Infrastructure.

Stop Rural –Urban Migration and create even development

Foster Human Capital Development to match needs

Promote acquisition and expansion of Skills and Technology

Fo

cu

sin

g o

n E

xp

ort

Ma

nu

fac

turi

ng

wil

l C

rea

te In

du

str

ies

……

!

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Summing Up:

Strategically, Export Manufacturing has more sustainable

Potential to Grow the Nations Economy.

Industry Multiplies Nations

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What..When..Why..?#WWW??

“If you’re not confused, you’re not paying attention.”

-Tom Peters

END:

Thank You.

Engr Dele Abioye MNSE

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Data and References Acknowledgements.

NEXIM- Nigerian Import and Export Bank

BOI- Bank Of Industry

SON- Standard Organizations of Nigeria.

MAN- Manufacturing Associations of Nigeria.

NAFDAC-National Food and Drug Admin. Control

NEPC-Nigerian Export Promotion Council

NBS- Nigerian Bureau of Statistics.

NIRP- Nigerian Industrial Revolution Plan

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export manufacturing- a strategic imperative for nigeria.pptx

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