Exploring Nigeria's Export Potential (The Case of Ebonyi State)

The Preamble?

Ebonyi State is in the Southeastern region of Nigeria. It has 13 local government areas including Izzi, Ezza North, Afikpo South, Ohaukwu, Ebonyi, Oniocha, Ishielu, Ezza South, Ikwo and others with Abakaliki as the state’s capital. Ebonyi state, like other states in Nigeria, should consider export for several reasons some of which include avoiding overdependence on federal allocations, fostering creativity and innovation, identifying and developing state competitive advantage, empowering the working population by creating more jobs, reviving the state economy, boosting the Gross Domestic Product (GDP) of the state, making farming and rural life more lucrative, and maximising the potential of indigenes in the diaspora.??

Regardless of the poverty, unemployment, and frustration present in Ebonyi state like other states in Nigeria due to the inefficient management of state-owned resources, it is imperative to look beyond the challenges, seeing the growth potentials and opportunities for significant improvement that can come from efficient and effective utilisation of available resources.??

For Ebonyi state, there are opportunities in farming, mining and in the state’s population. With the level of unseriousness plaguing many states in Nigeria, cutting down on federal allocations might make the state governments become more serious in the development of their states.?

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The Peculiarities?

Ebonyi State is in the South of the Eastern region of Nigeria. It is inhabited and populated primarily by the Igbo people. Its capital and largest city is Abakaliki. Ebonyi State is one of the six states created on October 1st 1996 by Late General Sani Abacha’s government. It was created from parts of both Enugu State and Abia State. The State is nicknamed the “Salt of the Nation” due to its huge salt deposit.?

Ebonyi State covers 5,530 square kilometres. Afikpo is the second largest city while other major towns are Edda, Onueke, Nkalagu, Uburu, Oniocha, Ishlagu, Amasiri and Okposi. Ebonyi was created from the of old Abakaliki division of Enugu State and the old Afikpo division of Abia State. Ebonyi State is bounded to the north by Benue State, to the west by Enugu State, to the south by Imo and Abia States and to the east by Cross River State.?

With a total land area of 5,535Km2, Ebonyi state has 13 Local Government Areas (LGAs) which include Abakaliki, Izzi, Ezza North, Afikpo South, Ohaukwu, Ebonyi, Oniocha, Ishielu, Ezza South, Ikwo, Afikpo North, Ohaozara, and Ivo. It has a total population of 3,046,287 with 1,553,606 males and 1,492,681 females. It has Tropical Savannah vegetation, and the major crops grown are Rice, Yam, Potatoes, Maize, Beans and Cassava. The solid minerals present in Ebonyi State include Lead, Crude Oil, Salt and Natural Gas.?

The competitive advantages of Ebonyi State are in the high salt deposits in the state; the state is the largest producer of rice in the country; the deposits of lead and natural gas in the state; it has the best roads in the Southeastern part of Nigeria; Abakaliki Green Lake and Amanchor cave are tourists' attraction sites. In 2019, the state recorded an Internally Generated Revenue (IGR) of N7.5bn and a budget of N178bn, implying that the state depends greatly on federal allocations and loans for its survival. In the same period, the unemployment rate in the state was about 40.16%, while about 21.98% were underemployed. With the opportunities available in Ebonyi state, the state can generate IGR enough to solve its internal problems as well as that of the federation, if the resources available in the state can be managed efficiently.?

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The Profile?

In 2020, Ebonyi State recorded an IGR of N13.59bn and a Federal Allocation of N47.84bn. Although, the IGR in 2020 was significantly higher than that of previous years while the Federal allocation was lower than that of the previous year, the problem of federal allocation being significantly greater than the internally generated revenue of the state still lingers. This by implication means Ebonyi state cannot survive without an allocation from the federal government which is the reason why the state must work towards tapping into the many resources present in the state. The state in 2020, had a domestic debt of about N44.21bn and foreign debt of about $65.9m and the growth in the state’s debt has been fluctuating over the years. About 72.02% of the state’s revenue went to capital expenditure while the remaining 27.98% went to operating expenses. The IGR per capita of the state was N4,219, capital expenditure per capita was N23,608 and debt per capita was N21,502.?

According to the Budgit report of Nigerian states, Ebonyi State emerged in the 2nd position in the 2021 ranking, up from its 6th position in 2020 and 13th in 2019. Its steady growth is commendable, and key areas of its fiscal strengths need to be consolidated to sustain this improved performance. The improvement in this year’s ranking is driven by the improvement in the state’s IGR and increased prioritization of investment in capital expenditure over operating expenses. Ebonyi is one of 5 states to spend more in capital expenditures than operating expenses. The other four states are Rivers, Anambra, Cross River and Kaduna.?

In 2020, despite fiscal shocks from the COVID-19 pandemic across the country, the state recorded a total internally generated revenue of N13.59bn, up by 82.03% from the N7.46bn IGR recorded in 2019. This performance is better than the 21.33% year-on-year IGR growth the state witnessed from N6.14bn in 2018 to N7.46bn in 2019. Although this feat is laudable, we note that Ebonyi still has one of the smallest IGR sizes among the states, ranking 22nd by size, indicating there is more work to do.?

The biggest growth in its IGR was primarily driven by an N2.92bn Increase in MDA revenue, representing a 256.09% growth from N1.14bn in 2019 to N4.01bn in 2020. Income taxes (PAYE) also saw a 44.74% growth from N4.65bn in 2019 to N6.74bn in 2020 However, an analysis of the structure of Ebony state’s recurrent revenue component of its total revenue indicates it is still dangerously dependent on federally distributed statutory revenue. A trend it still needs to reverse by consolidating on the momentum in its IGR growth.?

Ebonyi ranks 33rd most indebted in the southeast Indebted state in Nigeria and the least region with a total debt stock of N69.27bn as of December 2020. Its domestic debt component saw a 5.40% year-on-year decline from N46.74bn in 2019 to N44.21bn in 2020. The state’s total debt per capita stood at N21.502, which was lower than the country average of per citizen for all 36 States.?

Ebonyi state, despite the economic downturn, outdid itself in its investment in capital expenditure, recording a 93.03% year-on-year increase from N39.65bn in 2019 to N76.54bn in 2020. The most significant improvement in capital expenditures was noticeable in the Social Sector (comprising the Ministry of Health, and Education, among others) which received N26.69bn 9bn up from N6.27bn in 2019.?

The Economic Sector which shot up from N23.91bn in 2019 to N37.24bn in 2020. The priorities Ebonyi state has placed on Investing in the citizens is truly commendable and the growth is worth emulating by other states. However, citizens still need to follow the money to ensure that public projects in Ebonyi state deliver value for money.?

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The Potential?

Agriculture is the major occupation of the people of the state. The crops produced are yam, cassava, plantain, banana, maize, and cocoyam. Others are palm produce, cocoa and rubber. It is a leading producer of rice, yams, potatoes, maize, beans and cassava in Nigeria. Rice and Yams are predominantly cultivated in Edda, a region within the state. ?

Ebonyi also has several solid mineral resources including lead, crude oil, and natural gas, but little large-scale commercial mining. The state government has however given several incentives to investors in the agro-allied sector. ?

Ebonyi is called “the salt of the nation” for its huge salt deposits at the Okposi and Uburu Salt Lakes. Mineral resources in the state include salt which is mined locally in the Uburu/ Okposi salt lakes of Ohaozara. There are some industries in the state which engage in the production of plastic and block and food processing.?

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The Purchasers?

Looking at the global market size for the resources produced by Ebonyi state, it should interest the state to consider enlarging its production capacity to export each product or resource. For example, the world import market size of palm oil (which is one of its major cash crops) is about $29.3bn with India, China, Pakistan, the Netherlands, Spain, Italy and the United States as its major purchasers. The import market share in Africa is about $4.28bn with Egypt, Kenya, Nigeria, Tanzania, South Africa, Benin Republic and Ghana as major buyers.??

The state also produces rubber, and the world market share of rubber import is $13.6bn with, China, the United States, Malaysia, Japan, India, South Korea, Germany, Vietnam, Spain, Turkey, and Canada as major purchasers. The African import market share is $162m with South Africa, Egypt, Algeria, Eswatini, Kenya, and Ethiopia as major buyers.??

Ebonyi state also produces bananas and the world import market share for bananas is $14.2bn with the United States, China, Japan, Germany, the Netherlands, Belgium, Russia, the United Kingdom, France, Canada, Italy, and Spain as major buyers. In Africa, the import is $229m with Algeria, South Africa, Senegal, Tunisia, Morocco and Libya as major purchasers. There are other markets like that of rice, and potatoes that Ebonyi state can explore for exports as well.?

The Proposal?

For Ebonyi State to experience tangible improvement in job creation in the state, there is a need to empower Small and Medium-scale Enterprises (SMEs). Given the commodities produced by the state, if SMEs oversee the entire value chain processes from production to harvesting and transportation, primary processing and storage, secondary processing and packaging, marketing and sales, logistics, export and distribution then there would be certain challenges encountered which would be in the form of inefficient value chain operators, low processing capacity and output, few jobs created, low-quality packaging, high production cost due to lack of economies of scale and prevalence of unexportable products. With a synergy between large Corporations and SMEs, these processes would be more efficient and there would be improvement which would take the form of efficient value chain operators, high processing capacity and increased output, low cost of production, good product quality and packaging, increased job creation, etc. The large corporations need to oversee two critical areas, and these are primary processing and storage, and secondary processing and packaging. While the SMEs can focus on handling production, harvesting and transport, marketing and sales, and logistics, export and distribution. Sticking to this arrangement would expand the participation of SMEs and improve the efficiency of their processes.??

To support exporters to enter markets in Africa, Europe and America securely and sustainably, Ebonyi state government should consider the following:??

1. Partnering with a representative at the destination market to market and secure a contract.??

2. Setting up a warehouse (or warehouses) for pickup by both wholesalers and retailers at the destination market??

3. Setting up an entity (agent or distributor) for the SMEs at the destination market??

4. Partnering with an independent agent or distributor at the destination market??

5. Organising and sponsoring manufacturers to exhibit their products in the destination market??

In summary, the state government should provide funds while the other entities provide expertise. After all necessary relationships and structures have been formed, the state government can agree with the SMEs on the export profit-sharing percentage.??

This model's impact on the state government goes beyond the generation of revenue from exports; it has a huge significance on employment and improves economic activities in the state. With this model, economic diversification is achievable in Ebonyi state. The same model can be used by the federal government to diversify the economy, especially regarding solid minerals and agricultural produce exportation.?

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The Profit?

Given the arable land available in Ebonyi state, if the state dedicates a part of this to the cultivation of profitable agricultural produce for export, given all associated costs from the cost of farming, to the cost of processing, cost of exports, and the unit cost for each agricultural produce, multiplying this by the quantity produced and deciding on a fair selling price considering all necessary factors, the state government can realise a lot of revenue from the export of agriproducts. By implication, the state can increase its Internally Generated Revenue (IGR) significantly, fund more projects and incur less debt.?

See here for a hypothetical visual representation and explanation of how Ebonyi state can make N247.5bn from the export of agriproducts (palm oil).?

In conclusion, if we would diversify our economy, create more trade in Africa, grow our GDP, create employment, boost our foreign reserve, create wealth and reduce poverty, Aggressive Drive for Intra-Regional Trade is the Way to Go!?

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