Presentation is loading. Please wait.

Presentation is loading. Please wait.

- 1 - Olam Impact of incentives on Nigerias agribiz Non-oil export business in Nigeria Impact of Incentives on Agribiz Presented by Creating Value is our.

Similar presentations


Presentation on theme: "- 1 - Olam Impact of incentives on Nigerias agribiz Non-oil export business in Nigeria Impact of Incentives on Agribiz Presented by Creating Value is our."— Presentation transcript:

1 - 1 - Olam Impact of incentives on Nigerias agribiz Non-oil export business in Nigeria Impact of Incentives on Agribiz Presented by Creating Value is our business Olam Nigeria Ltd. November 2012

2 - 2 - Olam Impact of incentives on Nigerias agribiz Contents 1Introduction 2Prospects 3 Impact of EEG 4 Need for incentives 5 Challenges faced by Nigerian exporters 6 Way forward

3 - 3 - Olam Impact of incentives on Nigerias agribiz Introduction 1

4 - 4 - Olam Impact of incentives on Nigerias agribiz Introduction This presentation highlights the potential of developing the non-oil export sector in Nigeria and challenges faced by the non-oil sector The focus areas of this presentation are: Review of recent surveys by international development agencies Need for diversification of the economy Significance of the agro-allied sector Growth of non-oil exports in last 10 years Policy somersaults faced by the private sector Realisation of the Transformation Agenda hinges on economic diversification

5 - 5 - Olam Impact of incentives on Nigerias agribiz Prospects 2

6 - 6 - Olam Impact of incentives on Nigerias agribiz Nigerias long-term economic potential Agribusiness has tremendous growth potential given right policy framework According to a widely read study by Mckinsey,only 1/3 rd of Africas arable land is cultivated. Africa needs to create jobs at a faster pace to absorb its growing labour force The same study identifies 3 key sectors with highest employment potential a)Agriculture b)Manufacturing c)Retail & hospitality Agriculture accounts for 40 % of Nigerias GDP and 2/3 rd of employment Existing low agri productivity provides huge headroom to grow Federal government Agriculture Transformation Agenda provides an impetus to realization of Nigerian growth potential in food and cash crops

7 - 7 - Olam Impact of incentives on Nigerias agribiz Nigerias long-term economic potential Agribusiness has tremendous growth potential given right policy framework Nigeria – richly endowed with fertile land Long history of cash crops cultivation – cocoa, cotton, cashew Agricultural production more difficult to migrate than manufacturing Agricultural products – demand is relatively stable and resilient even in recessions and financial crisis Supply chain and infrastructure deficiency – can be mitigated with policy intervention Huge job/livelihood creation and wealth creation potential

8 - 8 - Olam Impact of incentives on Nigerias agribiz Nigerias long-term economic potential There are several transformation opportunities in agric sector Oil-Palm – large domestic market, good soil and climate challenge of security, long gestation Cotton : provide jute bags to farmers better quality and higher farm realisations Bio-fuel: Potential to replace imports and be an export base. Policy framework required Rice : import substitution as well export into regional ECOWAS markets over the long term clearly articulated long term policy on tariff and investment incentives Sugar: development of industrial scale sugarcane farming to address local consumption Sugar masterplan – a way forward ! Farm Yield and Quality: Nigeria lags behind other West African countries. WA countries lag behind Asian/Latin American region. Bridging this gap can create transformational growth in the sector.

9 - 9 - Olam Impact of incentives on Nigerias agribiz Impact of EEG 3

10 Olam Impact of incentives on Nigerias agribiz EEG Impact - Agric sector Growth in crop size( 10%- 25% per year) – Sesame, Cocoa, Cashew Growth in Farmer Incomes- across almost all products Farm-gate prices as % age of FOB values are highest in West Africa for agricultural-crops like cocoa, sesame, cashew etc. Multiplier Effect of 2.36 as per USDA on agricultural exports –> 70% of non-oil exports is agric high knock-on +ve impact in GDP and employment Farming is turning from subsistence to commercial in export led sectors (cocoa/cashew/sesame etc,)

11 Olam Impact of incentives on Nigerias agribiz EEG Impact – Case Study - Sesame Crop volumes have grown almost 3 times in 5 years MT ( ) to 180,000 MT ( ) Farmer incomes have trebled Average Naira / MT (2005) to / MT (2010) Farmer realization ~ 85% of CNF price( higher than Ethiopia and Sudan etc) Export profile shifting from natural seeds to de-hulled sesame seeds – greater export revenue, greater local value addition, more investments, more local jobs, Diversifying markets – Far East, Middle East, Europe & USA

12 Olam Impact of incentives on Nigerias agribiz Nigerias non-oil export growth Nigerias non-oil exports have grown 300% in the last 6 years( ) growing at a CAGR of 25% Source :Cobalt/NEPC shipment statistics Exports ($ Bn)

13 Olam Impact of incentives on Nigerias agribiz Nigerias non-oil export growth Agro-allied products drive Nigerias non-oil exports with Cocoa and leather contributing about 50% of total exports Product wise market share of non-oil exports: 2011 (%) Source: Cobalt/NEPC Cocoa Leather

14 Olam Impact of incentives on Nigerias agribiz Need for incentives 4

15 Olam Impact of incentives on Nigerias agribiz Incentives are needed to offset competitive cost disadvantages faced by Nigerian exporters Nigerian cocoa exporters face a disadvantage even after taking EEG into account(1/2) FactorsUSD/MT Power cost disadvantage in processing 30 Additional port charges10 Additional freight charges10 Additional finance 8% p.a.200 Disadvantage on account of low productivity(yield/ha) 350 Import duty imposed in EU due to non- signing of EPA by Nigeria 180 (A) Total disadvantage780 (B) EEG Benefit at full rate900 (C) Net benefit to exporter (A-B)120 Subsidy available in Ivory Coast188

16 Olam Impact of incentives on Nigerias agribiz Incentives are needed to offset competitive cost disadvantages faced by Nigerian exporters Nigerian cocoa and cashew exporters face a distinct cost disadvantage Cost/MT (US$)Ivory CoastTanzaniaNigeria FOB charges Fuel & Energy3310 Wages Cost disadvantage faced by Nigerian cashew processors

17 Olam Impact of incentives on Nigerias agribiz Challenges faced by Nigerian exporters 5

18 Olam Impact of incentives on Nigerias agribiz Constraints faced by Nigerian exporters The government policy encourages diversification of the economy by boosting non-oil exports. Incentives in the form of export grant are given to cushion the impact of infrastructural disadvantages and high cost of doing business in Nigeria However, there is a need to improve the implementation of the policy to realize the full potential of the non-oil sector Major challenges facing the non-oil export sector are Inconsistency in implementation of export incentive policy – frequent interruptions restrictions by customs to accept NDCCs Lack of appreciation of the contribution of the non-oil export sector to the economy Loss of preferential market access to EU due to non-signing of EPA Present system only allows payment after 1 year of export – causes delays Erosion of the benefit due to climbing discounts of NDCCs Nigeria was ranked 127 among 142 countries in terms of competitiveness (2012)

19 Olam Impact of incentives on Nigerias agribiz Policy instability and discontinuity have weakened the non-oil export sector and is affecting Nigerias image as a reliable international trading partner The value of non-oil exports increased by 37.1% attributed to improvement in production,processing and packaging of Nigerias products Despite this development the non-oil export subsector performed dismally accounting for only 3.6% of the total exports due to poor Infrastructure,policy slippages and volatility of commodity prices. CBN Annual Report 2010 (P 146) Constraints faced by Nigerian exporters

20 Olam Impact of incentives on Nigerias agribiz Way forward 6

21 Olam Impact of incentives on Nigerias agribiz Conclusions Non-oil export promotion by way of incentives (EEG) should be sustained Realization of governments Transformation Agenda depends on diversification of the economy Non-oil exports have increased by 300% during investments, job creation – growth much higher than Nig GDP growth rate EEG is required to cushion the effect of infrastructural and other disadvantages faced by Nigerian exporters Need to have more effective inter-ministerial coordination on implementation of policies by relevant agencies Affirm clear and strong commitment to the incentive policy(no policy can be perfect) for 5-7 years and review every 5 years to refine/improve – to attract long term and big ticket investments

22 Olam Impact of incentives on Nigerias agribiz Thank You


Download ppt "- 1 - Olam Impact of incentives on Nigerias agribiz Non-oil export business in Nigeria Impact of Incentives on Agribiz Presented by Creating Value is our."

Similar presentations


Ads by Google