Naira Devaluation Exaggerates Nigeria’s Non-Oil Export Growth Despite Struggling Sector

Nigeria’s non-oil export sector showed growth in 2024, with the Nigerian Export Promotion Council (NEPC) reporting a rise to N9.65 trillion, up from N3.14 trillion in 2023. However, when translated into dollar terms, the increase is much less impressive, with earnings rising by only 20.79% from $4.517 billion to $5.45 billion. This apparent success is largely due to the devaluation of the naira, which inflated the numbers, masking the underlying stagnation in the sector.

The share of non-oil exports as a percentage of total exports has been steadily declining over the years. In 2024, it accounted for just 10.88% of total exports, a slight improvement from previous years but still far below the 30.8% share in 2012. Countries like Indonesia and Vietnam have seen more substantial growth in non-oil exports, highlighting Nigeria’s struggle to diversify its economy and become more competitive in the global market.

Despite a weaker naira, Nigeria’s dollar earnings from non-oil exports have been declining. In 2019, the country earned $8.23 billion, but this dropped to $5.45 billion in 2024, reflecting broader structural issues within the sector. While agricultural exports like cocoa and cashews contribute to non-oil exports, the dominance of crude oil, which accounted for 65.44% of total exports in 2024, shows how far Nigeria still has to go in shifting its export focus.

Challenges such as high production costs, poor infrastructure, insecurity, and rising logistics expenses continue to hamper Nigeria’s non-oil export potential. The Manufacturers Association of Nigeria (MANEG) has pointed out that these structural issues limit the sector’s growth. The NEPC has set a 30% growth target for non-oil exports, but without addressing these fundamental challenges, it remains uncertain whether Nigeria can achieve significant progress in diversifying its export base.

SOURCE: BUSINESS DAY