INTERVIEW (Isaiah Ndukwe, Divisional Head Export & Agriculture, Fidelity Bank Plc)

Export Management Programme: Helping Nigerian Exporters Build Capacities to Become More Competitive in the Export Management Space

The Fidelity SME Forum is a weekly radio programme organized by Fidelity Bank Plc to educate, inform, advise and inspire budding entrepreneurs in Nigeria with knowledge and expertise that will enable them build sustainable and successful businesses. The interactive radio programme features subject matter experts and model entrepreneurs as guests on a weekly basis to share their insight and unique success stories. In this interview, Isaiah Ndukwe, Divisional Head Export & Agriculture, Fidelity Bank Plc gives valuable insights on “Export Management Programme: Helping Nigerian Exporters Build Capacities to Become More Competitive in the Export Management Space”.

 

Q: WHY IS FIDELITY BANK SO INTERESTED AND INVESTED IN THE NON-OIL EXPORT SPACE?

Isaiah: I would start by saying we are super excited to be here as export is one of our favorite topics. To your question, let us review some perspectives. It is so cliché to say that Nigeria’s economy is sensitive to shifts and movements in crude oil prices – it is a broken record. Rather, what we should focus on is how this dependency might have started and how deep and far-reaching the secondary effects of the changes in crude oil prices on Nigeria’s economy are. To properly contextualize, we do not have an import issue, but largely an export issue – more importantly, a value-added non-oil export problem. A classic example to show how shifts in the balance of crude oil affects the business environment and how the changes and dynamics in crude oil prices are the key drivers in the Nigeria economy. In June 2014, a barrel of crude oil was $112, not because of anything we did, but because of the global supply and demand of crude oil. Our balance of trade then was ₦1.8 trillion and we saw how that played out on the exchange rate side of the equation and economy in general. We were growing at about 5%, which slowed down to 3% by the end of the year when crude oil prices plummeted to about $50 a barrel. In June 2016, crude oil prices had crashed to $30 a barrel, which was not as a result of what Nigeria had done, but as a result of global demand and supply for crude oil dynamics. Thence, our balance of trade became negative ₦250 billion and on the exchange rate side of the equation and economy in general, we saw how that played out, the country went in to recession. Let’s quickly talk about how to fix the problem and segue into why we are so invested in non-oil exports. So what does non-oil export play into all I have mentioned earlier? In order to do that, let me decouple the concept of a country’s economic growth. The one simple measure of the size of a country’s economy is the size of its GDP, which, in lay man’s terms, is what everyone in the country spends and invest in, plus what the government spends, plus our balance of trade. Basically, all other variables being constant, a contraction in the balance of trade will result in a contraction in the GDP and vice versa. However, the peculiar thing about the Nigerian economy is our balance of trade is driven by oil exports which account for over 90% of our total exports receipts. So a dip in crude oil prices does not only affect the balance of trade component of the GDP, it affects everything in relation to the Nigerian economy – the macro and the micro elements like exchange rates, government spending and the everyday spending of you and I. The way to fix this problem is to go into non-oil exports, and not just to expand balance of trade, but to also create a buffer for oil price shocks. The way to do this is not by exporting more cocoa beans to Europe or more cashew nuts to India and Vietnam, or more lead & zinc to China. The way to do this is by adding more value to what we export – for example for every dollar spent buying roasted cashew nuts in the United States, only about 30 cents make it back to Nigeria’s economy. So we have not only lost 70 cents, but also employment generation and value-added revenues. We do about $4 billion of non-oil exports, and just adding more value to what we export, we can easily ten-times this number to become $40 billion. We need to begin to prime our economy as if there were no revenue from crude oil and put in more efforts towards growing our non-oil sector. Saudi Arabia, with their great oil reserves, are looking to go in this direction, why not Nigeria? That is why we at Fidelity Bank are very much interested in helping Nigerian exporters build their capacities and be more competitive in the global market place..

Q: WHAT REALLY IS THE EXPORT MANAGEMENT PROGRAMME?

Isaiah: The Export Management Programme (EMP) is a strategic collaborative capacity development initiative between Fidelity Bank, the Lagos Business School (LBS) and the Nigerian Export Promotion Council (NEPC). The objective of the programme is to help Nigerian Exporters enhance their business management capacity to become more competitive in the global market place. The EMP is in its third year going on its eighth stream and has graduated over 400 people who have transitioned from base level entrepreneurs to becoming established exporters and having extensive export market footprints. In Lagos, the programme is run out of the Lagos Business School and directed by one of the key LBS faculty members. However, for the first time, we are taking the EMP on the road to Kano State. The EMP, Kano Edition is scheduled to hold from 15th to 18th July, 2019 at the Grand Central Hotel. We strongly recommend that people who will be in or around Kano during this period to leverage on this opportunity. There are also future plans to take the EMP to other parts of Nigeria where there are critical mass communities for non-oil exports.

Q: HOW HAS THE JOURNEY BEEN SO FAR GOING INTO THE 8TH EDITION OF THE EMP IN THREE YEARS?

Isaiah: I would make mention of some of the gaps we identified before setting up the EMP and the value-added propositions we sought to fill with the EMP. The export space is a brutal arena and exporters or anyone getting into the space has to be on their A-game to hack it. To export anything from Nigeria, first you are competing with people from other countries who are also exporting to the same markets, and secondly, you are competing with Nigerians who are also exporting same products into that same market. So there is dual competition, both external and internal. So an exporter must land their export at a cheaper price or a higher quality than the competition, else you will be totally priced out of the market. There are some drivers in the global market space that enable some exporters do better than others. On the one hand, you have the structural enablers, which are the macro-level structures that enable production. Things like infrastructure availability, ease of doing business, exchange rates, cost of borrowing and tax rates are strictly the responsibility of the government. On the other hand, you have the business processing system enablers or the micro-level factors of production, like supply chain management, quality control, market access, technology and production techniques, financial management. They are some of the observable gaps the EMP seeks to address. With what we have been able to achieve, typically, at the end of each programme, the class members will organize themselves into cooperatives of common interest to undertake export transactions and subsequently most of them have gone on to do several successful export transactions.

Q: WHAT DOES THE PROGRAMME COVER (CURRICULUM)?

Isaiah: The program is extensive but to name a few, we cover overview of the Nigerian export market; assessment of the export gaps, knowledge gaps and intervening steps; positioning for export readiness; regulatory requirements for export business; designing & implementing effective supply chain management systems; and product packaging, branding and marketing. The programme does not only make you a better exporter, but also a more bankable business person.

Q: WHY ARE WE GOING ALL THE WAY TO KANO?

Isaiah: The choice of Kano was borne out of two things: market and needs concentration. Kano is the hub of agro-commodity exports in Nigeria and most of these transactions are done informally. There is a need to mainstream those class of exporters to the formal export space for the incremental benefits and upsides accruable to them. Some of these benefits are access to the revalidated export expansion grants, financing opportunities and enhanced market penetration opportunities. As mentioned earlier there are plans to take the EMP to other parts of Nigeria where there are critical mass market opportunities for non-oil exports. Kano just happens to be the start of that plan.

Q: SO FAR YOU HAVE GRADUATED ABOUT 400 PARTICIPANTS, WHAT VALUE ADDITIONS CAN THE EMP BOAST OF TO THESE PARTICIPANTS?

Isaiah: First of all, these people had zero knowledge of exportation. Even if they were into importation, they probably had dollar paucity issues. These program have been able to add value to make them go ahead to do several successful transactions that have enabled them have enhanced profit margins and increased exchange rate margins to get more naira for their dollar receivables. For those who want to go into importations, these also serves as a steady source of FX to finance import transactions.

Q: AFTER THE EXPORT MANAGEMENT PROGRAMME, WHAT NEXT?

Isaiah: Basically, that was why the Fidelity SME Forum was set up, to provide continuous capacity development information for entrepreneurs. Also, as an institution, we are very much interested in continuous human capital development that we equip our staff with skill to be able to provide quality business advisory services to our clients on a continued basis. It is often said that you cannot give what you do not have and nowhere is it truer than in the world of business where every decision has cost implications. Exports, by its nature, is a very difficult space to navigate, so doing it without adequate and relevant information is business suicide. So, we continue to handhold these participants and provide free advisory services as we progress on this enterprise. Because of the way the Nigerian economy is structured, importation is second-nature to most of us, but the exportation business is a different ball game. That is why most of what we do is to help these new export business ventures raise their game and become more competitive in the global market space. We have other programmes like the lending interventions and exposure to markets. We expose them to markets to ensure products off-take via our off-shore engagement targets. For example, in December last year, we were in Cairo for the Intra-African Trade Fair Conference organized by Afrexim Bank and we took with us 12 of our former EMP participants and most of them secured off-take contracts. For manufacturing exporters, we link them to export credit agencies for equipment financing opportunities. We also provide tailored financing solutions that are adaptable to the peculiar needs of this business. We have extensive on-lending relationships with a network of development finance institutions like the Afrexim Bank, CBN and BOI. This pool of alternative funding access and sources gives us more reach in terms of loan pricing to the benefits of the participants and no debt in terms of the quantum of deals we can do.

Q: WHO SHOULD BE AT THE 8TH EDITION OF EMP AND HOW CAN THEY REGISTER?

Isaiah: Anyone can be at the program. If you are already an exporter looking to scale up your business’ capacity, then you definitely need to be at the program. If you are looking for ways to raise USD currency for the importation aspect of your business, then you should be at the program. If you are a financier looking to understand the business better, then you should be at the program. To register, log on to www.export.fidelitybank.ng/login, register and make your payment of ₦195,000. You can either do this online or go to any Fidelity Bank branch close to you and do a physical registration and payment.