1.1 Background of the Study
Export is a potent strategy for mutual inter-dependence among nations of the world. It is an engine of growth and an instrument for technological and industrial advancement.
Practically, all human beings realize that they are not Islands unto themselves, and that they benefit from living with, and trading with other people. The same is true of nations. They too must interact with one another. No nation can be an Island unto itself.
The dynamics of the world economy and trading environment is continually being shaped by fierce competition among trading nations under the impetus of revolutionary changes in information and communication technology resulting in significant changes in the structure of exports of leading countries in international trade.
The development and promotion of non-oil export on a sustainable basis in Nigeria becomes critical taking into cognizance the huge natural resources in the country and export potentials outside the oil sector that can provide vast employment opportunities and sustain the non-oil economy.
Historically, trade has contributed to optimal allocation of resources within countries and the transmission of growth from one part of the world to the other (Iyoha 1995). The growth records of countries like Singapore, China, Malaysia and Thailand are commonly cited as examples of countries that achieved economic growth through trade. (Giles and Williams 2000). Although one cannot conclude that the growth of an economy is caused only by the expansion of exports or increased openness as there are numerous growth determining variables such as investment, saving and technical progress among others.
Over the years, successive administrations have pursued the objectives of economic diversification and self reliance. However, the economy is yet to be fully diversified. Crude oil exports account for over 90 percent of foreign exchange earnings. Also more than 50 percent of industrial raw material and significant amount of consumer goods are imported (CBN 2009).
Economic diversification implies a conscious effort by the government to improve and restructure the economy thereby creating different avenues of generating revenue which in turn will reduce our dependence on crude oil.
In Nigeria the exports earning is expanding on the average but the composition of the exports is the area of concern. As earlier mentioned, over 90% of Nigeria’s export earning is accrued from the oil exports while the non-oil exports account for less than 10%. (CBN Statistical Bulletin 2009) the disparity is risky to the country’s economy.
It is against this background that the government decided to revive the non-oil exports by the liberalization of trade with some incentives to stimulate growth of non-oil exports for a sustainable economic growth of Nigeria.
Some of these measures include the federal government’s institutional support through the establishment of the Nigerian Export Promotion Council (NEPC) in 1976 with the mandate to promote non-oil exports thereby diversifying the economy. However, the gap between oil exports and non-oil exports in the country is on the increase.
1.2 Statement of the Problem
Generally, exportation is required by any economy to enhance revenue and usher in economic growth and development. It is therefore crucial for economic progress and this has informed the idea of export-led growth. Export is a catalyst necessary for the overall development of an economy. In other words, foreign trade creates an avenue for foreign capital to flow into a country (Aboustrait 2005). This will increase the earning of the country thereby creating an opportunity for growth by raising the national income of the country.
However, Nigeria is yet to attain the ranks of a developed economy due to lack of structural change, among other factors. One factor crucial to this lack of economic progress is the lack of economic diversity which has caused the economy to rely heavily on crude oil for revenues and as the major export commodity in the economy (Osuntogun 1997). Prior to the 1970s, Nigeria’s exports were predominantly non- oil commodities with agricultural commodities accounting for the lion’s share.
However, in the 1970s when the price of crude oil in the international
Market sky rocketed, the share of non-oil exports began to fall and has remained low ever since. This is mainly due to the money spinning nature of oil exports which makes it more profitable to export oil and less profitable to export non-oil commodities. This has caused a rather heavy dependence on the oil sector and the proceeds from the exportation of crude oil. This heavy reliance subjects the country to difficulties when the price of crude oil is low in the international market. In the light of this, the government adopted various strategies to boost non-oil exports and stabilize the economy. One of such strategies is the establishment of the Nigerian Export Promotion Council (NEPC) in 1976. In spite of these efforts, the performance and contribution of the non-oil export sector has remained very low. The sector has continued to perform below its full potentials. The research therefore is carried out to examine export promotion strategies of NEPC and the factors affecting them.
1.3 Objectives of the Study
The objectives of this study are to:
i. Examine the promotion strategies of the Nigerian Export Promotion Council (NEPC).
ii. Determine the factors affecting the achievement of NEPC’s programmes.
iii. Give recommendation on how NEPC can be more effective and efficient.
1.4 Significance of the Study
The need to diversify the country’s export base and strengthen its non-oil sector as a way of achieving poverty eradication cannot be over-emphasized.
Most developing countries make export promotion a priority in order to achieve economic development goals. Government, therefore, expects that sustained export-promotion and development effort will help earn additional foreign exchange needed to cover the cost of imports, solve balance of payment problems, help reduce the burden of increased foreign indebtedness and create additional employment for the people.
Much have been documented on the Nigerian economy especially in the area of agriculture, inflation, privatization etc however, this research is different because it is concerned with export development in Nigeria. The need for an organization to spearhead and ensure the attainment of the objectives of boosting non-oil exports cannot be over-emphasized. The Nigerian Export Promotion Council (NEPC) is the agency of government saddled with the responsibility of encouraging and promoting export activities in the country there is therefore the need to understand the role of the organization as well as its constraints.
Finally, it will contribute to knowledge and serve as a reference material to other students who may wish to make further research in this field of study.
1.5 Statement of Hypotheses
For the purpose of this study, the following hypotheses will be tested:
i. That there is a significant relationship between NEPC’s programmes and export promotion.
ii. That there is a significant relationship between government incentives on export and export growth.
1.6 Scope and Limitation
This research is on export promotion in Nigeria. However, the scope is restricted to the activities of the Nigerian Export Promotion Council (NEPC), while the period is from 2000 to 2010. The reason for choosing this period is because this was when the Obasanjo’s government tried to improve export production by restructuring agencies like NEPC in order to make them more effective and efficient.
The main limitation is the difficulty in gaining access to certain information needed. It was also not easy to gain access to some of the staff of NEPC.
1.7 Definition of Terms Relevant to the Study
i. Export: As used in the research, this refers to the business or action of selling and transporting goods to a foreign country.
ii. Export promotion: These are the various strategies that are put in place in order to encourage or facilitate export activities in the country.
iii. Export growth: This means sustainable increase in export trade.
iv. Oil exports- This refers to the sale of crude oil to other countries.
v. Non-oil exports: These are products which are produced within the country in the agricultural, mining and industrial sectors that are sent outside the country in order to generate revenue for the growth of the economy excluding oil products.
vi. Import: Is the act of bringing goods or services from a foreign country into ones own country.
vii. Diversification: This means to have different sources of income from abroad apart from the sale of petroleum products. As used in the research, it also means given more attention to non oil exports.
viii. Economy: This has to do with the relationship between production, trade and the supply of money in the country.
ix. Liberalize: This is the removal of any restriction to trade in order to facilitate foreign business.
x. Incentives: This refers to the various policies or measures made to boost export trade. Incentives could be financial or non financial.
xi. Commodities: This has to do with goods bought or sold.
1.8 Structure of the Work
The entire research work is subdivided into five chapters.
Chapter one consists of the general introduction of the work which shall include background of the study, statement of the problem, objectives of the study, hypotheses, scope and limitation, definition of terms relevant to the study as well as structure of the work.
Literature Review and theoretical framework shall constitute chapter two, where conceptual issues, theoretical and empirical literature are discussed.
Chapter three is Research Methodology, which will include population of the study, sample size and sampling technique, method of data collection, method of data analysis as well as justification of the method used.
Data presentation and analysis, testing of hypotheses, as well as major findings will constitute chapter four.
Chapter five will take care of summary, conclusion and recommendation.