1. 1
1.1 Background Of Study
Nigeria is a member of the following international organizations: United Nations
and several of its special and related agencies, Organization of Petroleum
Exporting Countries (OPEC), Economic Community of West African States
(ECOWAS), Organization of African Unity (OAU) - now African Union [AU],
Organization of African Trade Union Unity (OATUU), Commonwealth,
Nonaligned Movement, and several other West African bodies. The Babangida
regime joined the Organisation of the Islamic Conference (OIC, now the
Organisation of Islamic Cooperation), though President Obasanjo has indicated
that he might reconsider Nigeria's membership. Comments are being made for
Nigeria to establish more bilateral relations.
Gowon (1973) reaffirmed the priorities in foreign policy established at
independence. These included active participation in the UN, advocacy of pan-
African solidarity through the Organization of African Unity (OAU), regional
cooperation, support for anti-colonial and liberation movements--particularly
those in southern Africa--and nonalignment in the East-West conflict. The role
of Nigeria in world affairs, outside its African concerns, was insignificant,
however.
Nigeria was admitted to the UN within a week of independence in 1960. It was
represented on the committees of specialized agencies and took its turn as a non-
permanent member of the Security Council. One of Nigeria's earliest and most
significant contributions to the UN was to furnish troops for the peacekeeping
operation in Zaire in the early 1960s. By 1964 Nigerian army units, under
Ironsi's command, formed the backbone of the UN force. The FMG was
committed to eliminating white minority rule in Africa, and it channelled
financial and military aid to liberation movements through the OAU.

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Although there was considerable African criticism of Nigeria during the civil
war, the military government resisted this pressure as interference in the
country's internal affairs. An OAU statement in 1967 backing the federal
position on national unity assuaged Nigerian feelings to some extent, but Lagos
protested subsequent OAU efforts to bring about a cease-fire. When the war
ended, Nigeria's participation in OAU activities returned to normal.
The second biggest African economy and the eigth biggest oil exporter in the
world, Nigeria was strongly hit by the world economic crisis, which led to a
decline in the oil price. In 2010, the GDP growth however reached 7.4%,
stimulated by the economy recovery and the increase in oil price. This trend
should continue on this level in 2011.
Nigeria is endowed with various kinds of resources needed to place her amongst
the top emerging economies of the world. Unfortunately, the nation has not
adequately benefitted from the economic prosperity expected of a nation so
richly blessed. Ironically, global economic indices from reputable international
organisation have consistently categorized Nigeria as an economically backward
state. For instance, in 1995, the UNDP human development Index ranked
Nigeria as 164th and 141st amongst 197 nations with low per capital income and
“low quality of life” respectively (World Bank Development Report, 1997)
Through export promotion for instance, Nigeria can manage her resources to
create enough wealth and improve the quality of the economy vis a-vis standard
of living and also enhance her global economic rating. An appraisal of Nigeria‘s
export promotion policy indicates that there is the need to review aspects
relating to non-oil exports so as to harness the vast potential hither to largely
underutilised in that critical sector. The discovery of oil and the realisation that
foreign exchange could comparatively be easily derived there from relegated
attention to the non oil sector to the background. As at 1996, crude oil

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constituted about 97.4% of total export earnings while non oil exports accounted
for only 2.6% (Yesufu, 1996). It could be said that consideration was not given
to the volatility of the oil market, its diminishing nature, the security implication
of a monolithic economy and the instability in the oil producing region, the over
reliance on oil as the major revenue earner for the economy. Recent trends in the
international markets and the restive activities in the oil producing areas
encouraged this study with a view to highlighting the weak links in Nigeria’s
nonoil export policy.
The growth of Nigeria’s non-oil exports has been sluggish in the post
independence period. It averaged about 2.3% during 1960 to 1990 but in relative
terms, declined systematically as the proportion of total exports fell from about
40% in 1970 to about 2% in 2006. In addition, the spread of the non-oil export
items experienced considerable decline in the period under study. Although
many factors may have combined to explain the general adverse development,
the trade policy of the country has frequently been identified as a major
contributor. Nigeria adopted import substitution trade strategy immediately after
independence and export promotion strategy was later ushered in as part of the
structural adjustment programme. Over the years, Nigeria has applied several
measures of trade protections as a means of consolidating her trading position.
These trade policies have to some extent impacted on the performance of the
Nigeria non-oil export.
Nigeria is a country open to the foreign trade, which represented around 60% in
2009. The country has been improving access of non-agricultural products to its
market, but at a rather slow pace. The trade policy aims to promote and diversify
exports by strengthening national competitiveness and liberalizing by reducing
subsidies.

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Customs duties are not very high. Despite attempts at liberalization, Nigeria's
trade regime continues to be protectionist in certain sectors like agriculture.
However, raw materials and intermediate goods enjoy tariff concessions. Import
restrictions and tariff protection have effected trade development and resulted in
the increase of consumer prices. Limited financial means, a crumbling economy
and the weak official exchange rates have limited trade growth.
The trade balance is positive. After a clear decrease of the surplus in 2009, due
to the drop in income from oil, the surplus again grew and should remain
comfortable in the coming years. Nigeria's main trade partners are the United
States, the European Union and China.
Nigeria also nationalized the British Petroleum (BP) for supplying oil to South
Africa. In 1982, the Alhaji Shehu Shagari government urged the visiting Pontiff
Pope John Paul II to grant audience to the leaders of Southern Africa guerrilla
organisations Oliver Tambo of the ANC and Sam Nujoma of SWAPO. In
December 1983, the new Major General Muhammadu Buhari regime announced
that Nigeria could no longer afford an activist anti-colonial role in Africa.
1.2 Statement Of The Problem
Although various factors have been adduced to Nigeria’s poor economic
performance, the major problem has been the economy’s continued excessive
reliance on the fortunes of the oil market and the failed attempts to achieve any
meaningful trade policy (Osuntogun et al., 1997), reflecting the effect of the so
called “Dutch disease”. The need to correct the existing structural distortions
and put the economy on the path of sustainable growth is therefore compelling.
This raises the question of what else need to be done in order to diversify the
economy and develop the non-oil sector in order to realize the potentials of the

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sector through trade policy in the country. This calls for new thoughts and
initiatives, which is the essence of this project.
The main thrust of this research is to take an objective view regarding
the controversy of the role of international trade, in the progress of a country in
terms of economic growth of Nigeria. It has been eluded by the dissenting
voices in the 21st century that trade could be negative in terms of acting as a
catalyst of economic growth and development, being a retrogressive force, in the
journey to economic independence. But ironically, past experience has proven
the potency of trade as a catalyst of economic progress, with regards to growth
and development.
Since 1970 there has been a positive correlation between non oil export and real
GDP, until 1982- 1986 when Nigeria recorded a less non oil export and also in
1995 -1998 there was a decrease but the real GDP continued to increase. In 1998
the non-oil exports 34070.20million naira and decreases to 24822.90million
naira in year 2000. The fluctuation in the non oil export can be attributed to the
different trade policy the government put in place during this selected years.
From 1979 till date Nigeria never recorded any double digit for non-oil export as
a % of total export. In 1979 the non oil export was just 6.2 out of the total export
of the country and it has been decreasing over period of time. The growth of
Nigeria’s non-oil exports has been sluggish in the post independence period. It
averaged about 2.3% during 1960 to 1990 but in relative terms, declined
systematically as the proportion of total exports fell from about 40% in 1970 to
about 2% in 2006. In addition, the spread of the non-oil export items
experienced considerable decline in the period under study.

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1.3 Aim and Objectives Of The Study
The aim of this study therefore, is to critically examine the effect of trade
policies on non-oil exports in Nigeria over the period 1970 to 2010. While the
specified objectives are to:
 Examine the importance of foreign trade policy on non-oil export in Nigeria
 Examine other important determinants of the performance of non-oil exports
 Identify the problem facing export of non oil product in Nigeria
1.4 Research Questions
The study intends to provide answers to questions such as;
 How does government trade policy affect non-oil exports?
 What are other important determinants of the non-oil export performance?
1.5 Research Hypothesis
The research hypothesis is to show the relationship between foreign trade
policy and non-oil export sector in Nigeria.
HO: That foreign trade policies has no impact on non-oil export sector
H1: That foreign trade policies has impact on non-oil export sector
H0: Foreign trade policy does not have any significant impact on
economic growth in Nigeria.
H1: Foreign trade policy has significant impact on economic growth in
Nigeria.

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1.6 Research Methodology
1.6.1 Data collections
The data for this study would be obtained mainly from secondary sources,
particularly from Central Bank of Nigeria (CBN) publications such as the CBN
Statistical Bulletin, CBN Economic and Financial Review Bullion, CBN
monthly reports, CBN Annual Reports and Statements of Accounts of various
years.
1.6.2 Data analysis
The data set for this study is mainly secondary data. The secondary data
comprises annual time series spanning 1970 through 2010. The variables of
interest are: oil and non-oil exports, a measure of foreign demand for Nigerian
export, effective exchange rate, US real gross domestic product, domestic
consumer price index, foreign wholesale price index (US wholesale price index),
trade policy represented by trade openness (ratio of sum of export and import to
GDP). The Ordinary Least Square (OLS) technique will be employed in
obtaining the numerical estimates of the coefficients in different equations using
Statistical Package for Social Sciences (SPSS) or econometrics view (E-view).
The OLS method is chosen because it possesses some optimal properties; its
computational procedure is fairly simple and it is also an essential component of
most other estimation techniques. Here, Gross Domestic Product (GDP) shall be
used as the proxies for the level of economic activities. The estimation period
will cover 1986 to 2010.

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1.7 Significance Of The Study
The research is significant in so many ways it will aid policy maker to identify
the performance, relevance and impact of trade policy on non oil export in the
country.
Considerably, Scholars will be educated and enlighten on the key role of non oil
export in Nigeria and trade policies suitable for promoting non oil export in the
country and also exposed some past trade policies in Nigeria.
To the general public the research work will create a better awareness of how
government can use policy to regulate non oil export in Nigeria.
Finally, this study will help government and all policy makers in the government
parastatal on all issues on non oil and trade policy in the country. This research
work will allow the country to secure economic growth and development if
judiciously considered.
1.8 Scope Of The Study
The scope of the study is limited to the financial years between 1970 and 2010.
It is concerned mainly with the trade policies and the determinants of non-export
and various factors affecting import in Nigeria within those periods. Following
the introduction part is the literature review and theoretical framework. It also
discusses the methodology and other relevant issues while results presentation
and analysis as well as concluding remarks are addressed in the concluding part
respectively.
1.9 Limitation Of The Study
The researcher, in carrying out this work, faces several problems which serves
as hindrances to effective reach the idea goal in terms of adequate data,
resources and methodology limitation. This study use presumed data which

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remain the best currently available in proxing the dependent and independent
variables.
1.10 Plan Of The Study
The research is organised into five parts. Following the introduction part is the
literature review – chapter two and theoretical framework. It also discusses the
methodology-chapter three and other relevant issues while chapter four - results
presentation and analyses as well as concluding remarks are addressed in the
concluding part respectively in chapter five.
1.11 Operational Definition Of Term
Trade policy: it can involve various complex types of actions, such as the
elimination of quantitative restrictions or the reduction of tariffs.
Bewildered: to perplex or confuse especially by a complexity, variety, or
multitude of objects or considerations.
Dutch disease: this is the apparent relationship between the increase in
exploration of natural resources and a decline in the manufacturer sector.
Hegemonic: the process by which dominant culture maintains its dominance
position.
Reaffirmed: to repeat, restate, or to claim
Rife: to find something widely or frequently

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Chapter two
Literature review
2.1 Conceptual Framework
Over the years, nations have articulated various policies on important matters of
state such as defence, health, economy and education for the advancement of
their countries. Recent developments around the world have also proved that a
country’s standing in the committee of nations largely depends on the country’s
level of economic development. It is in realization of this fact, amongst other
factors that Nigeria has over the years formulated a number of policies to
enhance the nation’s development. One of such policies is trade policy which
was exposed in a number of studies (Oyejide, 2002; Kruger, 1992; Oyinlola,
2005).
Dornbusch (1980) in his study of a small open economy showed that trade
policy directly affects the domestic price of each tradable good in relation to
others through general equilibrium interactions and the domestic prices of
importable and exportable in relation to home goods. In particular, it can be
shown analytically, that protecting any one sector through trade policy penalizes
other sectors and that the degree of damage imposed on these other sectors
depends on the substitution relationships in production and consumption. Thus,
an attempt to protect an import-competing sector through import tariffs and
other import restrictions may generate significant and unintended negative
incentive effects on the unprotected sectors (Oyejide, 2007).
Tokarick (2006) and Oyejide (2007) argued that import restrictions act as tax on
exports through at least two key channels. First, import restrictions create a
disincentive to exporting activities by directly raising the domestic price of

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imports relative to that of exports. Second, import restrictions discourage
exports by raising the price of imported inputs and domestic intermediate inputs
that are used in the productions of export products.
2.1.1 THE STRUCTURE OF NIGERIA’S NON-OIL EXPORTS
Agricultural products constitute the bulk of Nigeria’s non-oil exports. The
shares of these products bothprocessed and unprocessed in total value of non-oil
exports is as high as 70 per cent. Other components of the non-oil exports
include manufactured products and solid minerals. The agricultural products
include cocoa, groundnut, palm produce, rubber (natural), cotton and yarn, fish
and shrimps, while the manufactured products and solid minerals include
processed agricultural products, textiles, tin metal, beer, cocoa butter, plastic
products, processed timber, tyres, natural spring water, soap, detergent and
fabricated iron rods. The non-oil commodities market experienced an export
boom between 1960 and 1970. Their fortunes declined in the early 1980s when
the international primary commodity markets collapsed with the associated
deterioration in the terms of trade. Resulting mainly from the policies adopted
during the structural adjustment programme, non-oil exports increased owing
mainly to increase in the Naira price of the export commodities. This was,
however, short-lived as international demand for Nigeria’s non-oil exports
remained weak (Okoh, 2004). The value of non-oil exports has been on the
decline ever since. For instance, the share of agricultural products in total
exports declined from 84 per cent in 1960 to 1.80 per cent in 1995 (CBN, 2000,
Ogunkola and Oyejide 2001). Thus, contrary to the expectation of increase in
non-oil exports, there was an overall decline in the export of these commodities.
Manufactures decreased from 13.10 % in 1960 (CBN, 2000) to 0.66% in 1995
and remained the same in 2002 (WTO, 2003). The values of exports in as well

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as the percentage shares of the major export commodity groups in total
merchandise exports are shown in Table 1.
Table 1: Value of Exports and Percentage Shares in Total Merchandise Exports
Value of export (US$ million) Percentage share in total
merchandise export
Year Agriculture Oil and
mining
Manufactures Agriculture Oil and
mining
manufactures
1960 391.72 11.26 60.76 84.48 2.43 13.10
1965 481.50 238.90 16.90 59.01 32.40 2.29
1970 447.60 765.60 14.70 36.45 62.35 1.20
1975 459.20 7485.70 38.50 5.75 93.77 0.48
1980 622.30 24744.80 71.40 2.45 97.77 0.28
1985 328.20 15004.80 296.97 2.10 96.00 1.90
1990 302.02 13265.00 103.30 2.21 97.03 0.76
1995 211.73 11448.70 79.95 1.80 97.64 0.66
2000 279.51 20111.81 166.41 2.20 96.1 1.70
2005 251.50 22554.30 181.61 1.91 128.6 1.08
2010 223.50 24996.79 199.06 1.83 139.3 1.01
Source: CBN, Annual Reports and Statement of Account (1960-2010), and
Ogunkola and Oyejide (2001).
An examination of the contribution of each non-oil merchandise to total exports
shown in Table 1, shows that there has been a general decline in their individual
contributions to total export. The export of processed agricultural products has
however increased over the years.

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2.1.2 THE NON OIL EXPORTS
The export sector serves as an outlet for commodities manufactured
domestically from constituent sectors of the country’s economy. In Nigeria the
domestic sectors are categorized as: a. oil and b. non-oil sectors. The non-oil
sector of the Nigerian economy is the whole of the economy less oil and gas
sub-sector. It covers agriculture, industry, solid minerals and the services sub-
sector, including transport, communication, distributive trade, financial services,
insurance, government, etc in a very broad terminology (Adejugbe, 1997).
Exports are the goods and services produced in one country and sold to earn
foreign exchange, which can be used to purchase goods and services from
another country (Daisi, 2011). Non-oil exports and exports merchandise are
agricultural/farm produce, semi-manufactured and manufactured goods, and
mineral exports and services exports.
The Nigeria’s non exports sector is structured into four broad constituents which
are the agricultural exports, manufactured exports, and solid mineral exports and
services exports. Each constituent will be adequately profiled.
2.1.3 AGRICULTURE EXPORT
Nigeria’s non-oil exports are mostly agricultural/farm produce which are
normally referred to as her traditional export commodities. These are cocoa,
rubber, oil-palm, coffee, cotton, wood products, cassava, ginger, fish and
shrimps etc. However, it is important to mention that cocoa exports had pre-
eminence as Nigeria’s most exportable non-oil agricultural commodity (CBN
and NEXIM, 1999). In the 1960s to the 1970s, even the years preceding
independence, agricultural produce exports played a dominant role in attracting
foreign exchange, aside the solid mineral exports of cocoa, groundnut, rubber,
palm kernels and palm oil accounted for 69.4 percent of total export earnings,
out of the total 97.3 percent for which all non-oil exports accounted for. But

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overtime the Nigerian economy became mono-cultural, having been transformed
from one dependent on fairly diversified portfolio of agricultural exports. It is,
therefore, a consequence of several causative factors, which included:
As the World Bank Report (1984, p4) (cited in Ukpong 1997, p48), which
notes that there has been a consistent bias in prices, tax and exchange rate
policies against agriculture. b. Ukpong (1997, p.48) cites then excising
structures of incentives given to farmers in most African countries as one the
reasons for the reasons for the continent’s poor performance in agricultural
output. And since farmers are price responsive as by Behman (1968); Oni
(1969);Olayemi et al (1975)(cited in Ukpong 1997, pp.47-48), low producers
prices and relative prices of competing crops constrained output. c. The 1971-
1973 drought, which caused significant fall in crop harvest as Nigerian
agriculture is primarily rain-fed. D. The rosset virus epidemic and pest of 1975
e. little or no application of fertilizers to soils farmed continuously;
f. Shortages and high costs of farm labour (relative rural/urban wages); interest
rates on loans
g. Dependence on wild and low yielding plant species, and outdated technology;
and
h. Civil disturbance that dislocate farmers and the population
These factors caused the share of agricultural export produce to fall from 63.0
percent in the in 1960s to 28.92 percent and 20.15 percent in 1973/74 and 1979
respectively. It not only decline in relative terms in 1973/74 and 1981, but in
absolute terms. Its earning from export also fell. Aside the above factors, greater
quantities of agricultural output were processed or consumed locally than
hitherto. Another major structural change was the disappearance of a number of
export products from the export list. Notable exports like groundnuts, groundnut
oil, raw cotton and palm oil decline in their contributions to export earnings but

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also in real terms while others like timber, plywood, palm kernel, and groundnut
cake, became mere shadow of their past importance (CBN and NEXIM, 1999,
p31) All these were what characterized the agricultural industry in the pre-
Structural Adjustment Programme (SAP).
However, the fortunes of agricultural goods improved stemming from the
policies of the structural adjustment programme (SAP). The trend in years from
1986 to 1996 showed favorable growth for agricultural products. The
deregulation of the commodity marketing boards as well as the devaluation of
the naira, coupled with the incentive of 100 percent foreign currency retention
scheme for repatriated export earnings significantly aided export expansion. The
pre-eminence of export of agricultural products notwithstanding, its share in
non-oil exports fluctuated significantly. Cocoa accounted for most of the export
volume of non-oil exports products. Its export volume rose dramatically in 1986
and 1988, from then on it continued to fluctuate till in crashed in 1994 and 1995.
The same is true of other commodities such as rubber and palm produce.
This due to economic conditions in the importing countries and continuous
exportation of these commodities largely unprocessed or in semi processed form
contributed substantially to the observed fluctuations their volume and value
(CBN and NEXIM, 1999, p46).
The year succeeding the SAP years, which is termed post-SAP was
characterized by increased openness of the economy and further depreciation of
the naira. It should be noted that agricultural products export had increased. This
post-SAP reform feature mixed trade policy stance-export promotion continued
and control measures were exercised on imports, which were in force until 2003,
when it was changed.

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2.1.4 MANUFACTURED EXPORT
The manufactured exports to the international export market comprises of agro-
allied and manufactured exports. The agro-allied export products are cocoa
butter, cocoa powder, cocoa cake, cocoa paste, groundnut cake and wood
products including furniture and fixtures etc. while main manufactures are
textiles, chemical products, beer and beverages, urea-ammonia, insecticides,
soap and detergents, plastics and non-metallic mineral products and processed
skin etc. In the period succeeding independence and pre-structural adjustment
programme, the non-oil exports was characterized by the predominance of the
agricultural exports, which is reflected in its share of contribution to total export
and non-oil export, which are 4.0 percent and 67.0 percent respectively.
However, the manufactured exports were about 1.0 percent and 13.0 percent
respectively in the same period (Adewuyi, 2005). However, with the adoption of
the Structural Adjustment Programme (SAP), the degree of openness of the
economy increased while the naira depreciated. Although there were fluctuation
in the value of exports of processed or manufactured products between 1986 and
1991, the export value increased continuously from US$ 11.0 million in 1992 to
US$ 24.0 million in 1996. All this was as a result of the measures put in place
since 1986 to diversity the nation’s non-oil exports. But in terms of volumes, it
was an opposite trend entirely; the quantum fell continuously from 38.6
thousand tons in 1993 through to 2.4 thousand tones in 1996. The structure in
the post SAP showed that the share of semi-manufactured increased immensely
from an annual average of 4.6 percent for the period of 1986 to 1990, to 23.0
percent in 1991 and 1995 (CBN and NEXIM, 1999, pp46-47).
However, this performance as highlighted in a World Bank study (1989) cited in
the CBN and NEXIM study (1999) which showed that manufactured export
accounted for 30 percent of exports from developing countries.

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2.1.5 SOLID MINERALS EXPORT
Solid minerals exports from Nigeria are cassiterite, coal, columbite, charcoal,
asbestos, processed iron ore and marble. Exports of solid minerals to the
international market have from the time of independence had minimal in terms
of their volume and share of the exports earnings. Prior to independence, the
solid minerals export were to satisfy the demand from industrial base of the
British imperialism. But after independence, the Nigerian government avoided
direct participation in the mining of solid minerals due large capital outlay
involved, reoccurring flooding of mines, high risks intricate technology and
huge financial outlay involved, instead mining was left to private firms.
However, government still provided support as highlighted in the CBN and
NEXIM (199, p28). However, in the 1970s engaged in direct participation,
which was volte face to its earlier stance.
In the period of 1985 to 1996 accounted for an average 0.8 percent of total non-
oil exports and about 0.1 percent of total exports. And in value terms, the export
of solid minerals during the period was not substantial (CBN and NEXIM,
1999, p48). This clearly shows the infinitesimal contribution sold minerals made
so far within the period. So far, in recent times government has instituted
reforms to exploit the optimal potentials inherent and derivable from the solid
minerals, and as ways of diversifying the economy from its oil exports addition.
2.1.6 SERVICES EXPORT
Exporting does not only involve the delivery of physical goods to another
country. Exporting can also include the export of services such as education,
consultancies, nursing and tourism. These are known as service export. There
are unique benefits to service exports that do not apply to goods, as no or low
freight costs. But service exports also carry risks and challenges, such as limited

18. 18
options for secure payment and the protection of your intellectual property rights
(Business Victoria, 2007).
This is an export area in which there has been no significant activity or event
occurring. It remains still a veritable means of generating foreign exchange for
the country and facilitating economic development, which is largely untapped.
Services such as transportation, tourism, communication, construction,
insurance, financial professional, and technical activities are what countries in
the developing countries, like Nigeria except for a few such as Egypt have not
been able to export to the international market. However, Nigeria has been
making progress in a n area like tourism in current times. Places like Obudu
Cattle Ranch, Tinapa Business Resort, and other arrears of tourist attraction are
spring up to offer leisure services.
Also in terms of financial and professional services, Nigeria has no services to
provide here, although Nigerian experts work in other countries and remit
money, in foreign currency back home, it is more of brain drain phenomenon.
And some Nigerians serve in overseas countries under the Technical Aids
Corps ((TAC), it is a foreign aid and cooperation to other developing countries.
This does in no way bring foreign exchange to the country, Nigeria.
In the CBN and NEXIM study (1999, p33), the sector contributed an average
of 30 percent to GDP between 1973 and 1981, 57 percent of it been made by the
wholesale and retail trade sector. But its contribution to balance of payments
was negative. The reason for this is because of Nigeria’s low level participation
in the provision of international services.
2.2 TRENDS IN NIGERIA’S NON-OIL EXPORT POLICIES:
PRE-INDEPENDENCE ERA TO 2013
In the pre-independence years, the marketing board system was adopted by the
colonial administration to ensure regular supplies of raw materials to factories in

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metropolitan Britain in particular and Western Europe in general. The system
was adequate as machinery for the effective and efficient marketing of Nigerian
farm produce to the outside world (Itegbe, 1989). It indeed helped to boost farm
incomes, improved the livelihood of the peasant farmers and above all, assured
and enhanced government revenues especially needed for acquiring the
country’s essential import needs. The marketing board grew into a formidable
platform for the negotiation of profitable deals on a comparable term with the
more experienced and more efficient foreign firms and multi-nationals with
whom the Boards had to invariably conclude substantial export sales contract
and also ensure prompt repatriation of proceeds.
However, inspite of the positive contributions of the export trading system,
Itegbe (1989) noted that the system was bedevilled by numerous export
constraints such as export licensing. Fagbenro (1996) is, however, of the view
that the marketing board policy was meant to serve the British interest
exclusively in that its articles provided for the supply of raw materials to British
factories and check diversion of such produce to other European countries. With
the attainment of independence, such a policy was bound to collapse, he stated.
The shortcomings of the marketing board system gave rise to the establishment
of the commodity boards in 1977 (Itegbe, 1989). The commodity board was to
foster uniformity and stability in prices for all export commodities throughout
the country. The measure however did not stop the downward trend in the
volume of Nigeria’s export of agricultural commodities. According to Igbani
(1981), this downward trend in agricultural export was because the root
problem, being diminishing returns from agricultural productions, remained
untackled.
However, Itegbe (1989) was of the view that the monopoly enjoyed by the
Commodity Boards constituted some degree of disincentive to export-oriented

20. 20
investments. He further stated that the system did not allow for the rapid
expansion of the processing industry to allow for the exportation of value added
products and therefore higher export earnings. Consequently, by the end of the
seventies, export of non-oil commodities declined to an insignificant figure of
about 4.4% of Nigeria’s total export value. Between 1976 and 1983 two policies
on agriculture were launched to encourage massive participation in agriculture
for self sufficiency and exports, Abimboye (2009).These were the operation feed
the nation (OFN), initiated in 1976 to1979 and the green revolution programme
that operated between 1979 and 1983. He observed that except in name, there
was no difference in the aims or contents of these two agricultural policies. The
twin objectives were to boost local crop and fibre production through
introduction of high yield varieties of grains and improved management
techniques. The improved outputs envisaged were to cater for domestic needs
and provide enough for exports. The impacts of these programmes on Nigerian
non-oil exports were however never felt. Abimboye posited that politicians
cornered the bank loans given for agricultural development purposes for their
fake companies and nonexistent firms. By the time the schemes were suspended,
over N200 billion had been expended.
In furtherance of Nigeria’s quest for a sustainable diverse exports base, the
Nigeria export promotion council (NEPC) was enacted through the
promulgation of the NEPC act No. 26 of 1976 which according to Ezike (2009)
gave legal backing to adhoc incentives already in place. The decree created the
Nigeria’s export promotion council and charged it with the promotion of
Nigeria’s non-oil exports and the diversification of the export base. The primary
objectives of the NEPC were to promote the development and diversification of
Nigeria’s export trade and assist in promoting the development of export related
industries in Nigeria. It is also to spearhead the creation of appropriate export
incentive and articulate the implementation of export policies and programmes

21. 21
of the Federal government, Isiekwenu (1985). Isiekwenu (1985), however,
stated that since its creation, the agency has adopted various strategies to
enhance Nigeria’s non-oil export base. These include the exports expansion
grant (EEG) designed to induce non-oil exporters whose minimum annual
export turnover was N5, 000,000.
This scheme is aimed at assisting exporters, diversify export markets and to
make them more competitive in the international markets. The NEPC has also
made some progress in product development. It has made inroads in the
development of solid minerals export, even though this is being constrained by
the absence of mechanized mining. The council is also into capacity building
and entrepreneurship in export trade through training of existing and potential
exporters. The NEPC has established a human capital development centre in
Ikoyi and the common facility centre in collaboration with United Nations
industrial development organisation (NIDO) in Aba. The human capital
development centre would train exporters in the production of garments and
apparels while the common facility centre carters for over 11,000 small and
medium scale enterprises involved in the production of leather products such as
shoes, belts and bags. Notwithstanding these seeming achievements by the
NEPC, the desired result for a sustainable non-oil export base is yet to be
achieved. Touted lack of strong political will to diversify our nonoil export base
by the policy-makers as one of the major problems of NEPC. According to
Isiekwenu (1985), even though the NEPC act was promulgated in 1976, the
powers, authority and functions of the council were not more than advisory and
besides, it has little or no autonomy in practical terms. He argued that despite the
Act, Nigeria continued her over-reliance on crude oil export until some
unexpected and undesirable phenomenal development occurred between 1977
and 1979 in the world oil market. This was marked by the sharp decline in oil
price in 1978 which sent a ripple of shocks through the economy. It soon

22. 22
became clear to the government that the foreign exchange being generated
mainly by crude oil could not be adequate for the development needs of the
country.
Fagbenro (1999) noted that by 1984, Nigeria faced a situation of economic
recession and austerity characterised by serious balance of payments deficits,
escalating external debts and an unbearable debt servicing burden. He affirmed
that the structural adjustment programme was introduced in 1986 as a last ditch
attempt to resolve this economic crisis and assure the nation’s economic
survival.
Nigeria made N428bn from non-oil export in the last one year, the Minister of
Trade and Investment, Mr. Olusegun Aganga, said on Thursday (18th April
2013). This feat, he said, was achieved through proactive trade policies and
incentives for non-oil exports introduced by the Ministry of Trade and
Investment, adding that Nigeria had achieved a relatively high level of
international penetration currently. He spoke at the ministerial platform
organised by the Ministry of Information to mark the President Goodluck
Jonathan administration’s one year in office. Aganga said,
In 2011, Nigeria exported non-oil products to 103 countries and territories out of
220. This shows significant improvement over the previous years. There has
been an increase in non-oil export to $2.765bn (N428bn at N155/$),
representing an increase of 19 per cent.
“The Export Expansion Grant is critical to the growth of the Nigerian export
market. We have had wide consultations across all industry groups within the
value chain of each commodity. New guidelines on EEG is expected shortly.”
The minister also disclosed that actual investments in Nigeria’s Free Trade
Zones currently stood at $11.1bn , adding that 35,120 new jobs had been created

23. 23
in the zones. Giving the breakdown of the investment inflows into the FTZs, the
minister stated that the Onne Oil and Gas Free Trade Zone, in Rivers State, had
attracted investment worth $6billion, noting that investment commitments in the
FTZ were worth $6.7bn in the last one year. He added that other Free Trade
Zones across the country under the Nigeria Export Processing Zones Authority
also generated $4.4bn investment in the last one year, noting, however, that the
Ministry of Trade and Investment was currently reviewing the operations of the
Free Trade Zones to make them more functional.
Overall, Aganga said that Nigeria had secured over N6.6trillion investment
commitment over the last one year. “The breakdown of the total investment
commitment showed that expected FDI into the country stood at N3.9 billion,
while investment commitment from local investors stood at N2.7trillion,” he
stated. Aganga also said that the ministry had held over 70 meetings in over 12
countries, resulting in the renewed investment interest in Nigeria. He said “As a
result of the on-going reforms and aggressive investment drive by the Ministry
of Trade and Investment, investment commitments of over N6.6trillion over the
next three years have been generated. To attract investment in these key sectors,
the ministry has made trade and investment missions to key partner countries to
develop interest in the Nigerian market, accompanied by Nigerian business
leaders. “As part of efforts to boost the country’s investment drive, we
established the Australia Nigeria Trade and Investment Council in October
2011, while the Qatar Nigeria Trade and Investment Council will be inaugurated
by next month. Similarly, discussions have reached advanced stages with China,
Brazil and Austria for the establishment of such important councils.”
A very important achievement, according to the minister, is that in the last one
year, the Standards Organisation of Nigeria had been able to reduce the volume
of sub-standard products from 85 to 74 per cent, with a target of 30 per cent

24. 24
reduction by the end of this year. He said notable improvement were recorded
with life-endangering products, saying that the volume of substandard electric
bulbs had been reduced from 80 per cent to 50 per cent; reinforced steel bar (45
per cent to 30 per cent); while the volume of substandard tyres reduced from 60
per cent to 50 per cent. He also noted that, as part of efforts to improve the
country’s business environment and make it the preferred investment hub, the
ministry had strengthened its One Stop Investment Centre and streamlined
investment procedures to remove bottlenecks in business registration,
incorporation and granting of permits and licences, among other things.
He said, “We have commenced the Nigeria Investment Climate Reform
Programme, partnering with the World Bank and DFID. Also, we have
inaugurated the Investor Care Committee and Doing Business and
Competitiveness Committee as part of our investment climate reform
programme.
We are closer to the 24-hour target for registering new businesses. Our target is
to achieve significant improvement in Nigeria’s Ease of Doing Business ranking
by a minimum 103 points by 2015 and improve on Nigeria’s Global
Competitiveness ranking by 75 points by 2015.
2.2.1 Nigeria's Current Trade Policy
Thus, as observed above, the Nigerian government like many other developing
countries considers trade as the main engine of its development strategies,
because of the implicit belief that trade can create jobs, expand markets, raise
incomes, facilitate competition and disseminate knowledge. (WTO 2005: 15).
The main thrust of trade policy is therefore the enhancement of competitiveness

25. 25
of domestic industries, with a view to, inter alia, stimulating local value-added
and promoting a diversified export base.
Trade policy also seeks (through gradual liberalization of the trade regime) to
create an environment that is conducive to increased capital inflows, and to
transfers and adoption of appropriate technologies. The government pursues the
liberalization of its trade regime in a very measured manner, which would
ensure that the resultant domestic costs of adjustment do not outweigh the
benefits. The reforms which accompany this policy direction are also aimed at
re-orientating attitudes and practices towards modern ways of doing business.
However, the instruments of trade policy such as the tariff regime are designed
in a manner which allows a certain level of protection of domestic industry and
enterprise. While this is the main trade policy framework to guide economic
growth, the trade expansion, employment generation and poverty alleviation
dimensions are now subsumed in a new overarching economic development
policy blueprint adopted in 2003, the National Economic Empowerment and
Development Strategy (NEEDS).
2.3. Theoretical Analysis of Nigeria Export Policies and
Programmes
The export assistance policies and programmes of Nigeria are largely based on
the government assistance programmes/incentives and fiscal policies. Since
1979, Nigeria government took reasonable steps to deal with the things
identified as constraints in export marketing expansion and diversification in the
country by approving what NEPC referred to as package of incentives. The
incentives according to NEPC (1997) are aimed at encouraging Nigerian
exporters to stimulate the foreign exchange earning capacity of the export sector
and diversifying the productive base of the economy. Other objectives of the
incentives are to address the problem of supply, demand, and price

26. 26
competitiveness of Nigerian exporters, the provision of foreign exchange
requirements of the exporters to direct cash grant on export performance, tax
relief inducements and some other export assistance are to improve production,
marketing, packaging quality and price competitiveness of Nigeria export
products. The export assistance policies and programmes of Nigeria government
are largely based on the government assistance programmes/incentives and
fiscal policies.
Since 1979, the government took what can be regarded as reasonable steps to
deal with some of the things identified as constraints in export marketing
involvement and diversification in the country by approving what NEPC (1997)
described as package of incentives. The incentives are aimed at encouraging
Nigerian exporters to stimulate the foreign exchange earning capacity of the
export sector and diversifying the productive base of the economy. Other
objectives of the incentives are to address the problem of supply, demand, and
price competitiveness of Nigerian exporters, the provision of foreign exchange
requirements of the exporters to direct cash grant on export performance, tax
relief inducements and some other export assistance are to improve production,
marketing, packaging, quality and price competitiveness of Nigerian export
products.
Structural Adjustment Program (SAP) And Non-Oil Exports In Nigeria
According to Itegbe (1989), between 1984 or thereabout to September 1986,
successive military administrations started giving serious consideration to the
need to urgently find or develop other methods or avenues of sourcing foreign
exchange, in addition to measures adopted to conserve what was already earned.
This situation arose as a result of mounting obligation on the country to settle
trade arrears and for debts servicing as well as to meet current trade bills. He
further stated that by 1984, Nigeria had found herself in huge foreign debts in

27. 27
addition to being in serious arrears in settlement of foreign trade bills mainly on
irrevocable letters of credit.
Thus, it became clear to policy makers in Nigeria that additional effort had to be
made by the nation to earn foreign exchange. It was for this reason that the
government in 1986 adopted export-oriented development strategy as a major
cornerstone of the structural adjustment programme (SAP). SAP involved the
formulation and adoption of a comprehensive export incentive legislation known
as the Ezike and Ogege 195 export incentives and miscellaneous provision
decree No.18 of 1986. The provisions of this decree were subsequently
strengthened by the provision of the second tier foreign exchange market
(SFEM) decree No. 26 of September, 1986.The introduction of the export decree
and SFEM decree could be described as “Watershed” in the history of non oil
export policy development in Nigeria, according to Itegbe (1989), pointing out
that for the first time, in the history of the country, export expansion and
diversification strategy became a national policy objective. The removal of all
bureaucracies and additional incentives through SAP did not however make any
significant impact on the volume of non-oil exports. Experts and academicians
in the area of export promotion have tried to figure out why after over 20 years
of this export policy regime there has yet been little significant positive results.
In their view, Faruqee and Husain (1994) said the SAP policy virtually had
everything sorted out but only on paper including plans for diversification,
foreign exchange earnings and retention through domiciliary accounting,
incentives, institutional frameworks, laws, decrees etc. However, a fresh
dimension into export policy expectation which might not have been provided
for is the increased protectionism in most developed countries especially those
of developed markets that the country trade ties with. They further stated that the
inability of SAP to secure against this protectionism, is indicative of the fact that

28. 28
the global trade competition is more formidable and less friendly than reflected
by our acceptances (as in the law of contract) and by the competitions
themselves. This assertion goes to show that there may have been some
fundamental defects in policies regarding non-oil exports in Nigeria in the
period under study.
Government Motivational Export Policies and Strategies
The nation export promotion programmes are contained in the Nigerian Export
Incentives and Miscellaneous Provision Decree 18 of 1986, as amended by
Decree 65 of 1992, and the 1996/1997 national budget policies on export. Some
of the assistance policy programmes include: Currency Retention Scheme
This is also referred to as “Domiciliary Account Export Proceeds”; the scheme
allows exporters to retain one hundred percent of their foreign exchange
earnings in their domiciliary accounts in any authorized bank of their choice.
The objective of the currency retention scheme is to enable exporters have
foreign exchange at their disposal, and this can be utilized for non-oil export
related activities.
Export Development Fund (EDF)
This is a special fund provided by the Nigeria government to give financial
assistance to exporting companies so as to cover part of their initial expenses in
respect of the following export promotion activities:
a. To participate in training courses, symposia and workshops in all aspects of
export promotion,
b. To enable exporters advertise in foreign markets,
c. To carryout market research studies,
d. To encourage firms to engage in productdesign and consultancy programmes,

29. 29
e. To participate in trade missions buyers-oriented activities, overseas trade fairs
exhibitions and store promotions
f. To assist in the area of cost of collecting trade information,
g. To encourage the development of export oriented industries.
It is important to note that the fund would only cover part of the cost involved in
any export related activity, while exporters bear major part of such costs.
Export Expansion Grant Fund (EEGF) The fund is to provide an inducement for
exporters to enable them (exporters) increase the volume of export, diversify
export products and market coverage. The Export Expansion Grant Fund is
made available only to exporters who have repatriated their proceeds from
previous export transactions as certified by Central Bank of Nigeria (CBN).
Duty Draw-Back Scheme (DDS)
This scheme is aimed at providing for the refund of import duties and surcharges
on raw materials, including packaging and packaging materials used for the
manufacturing of products destined for export.
Duty Suspension Scheme (DSS)
This is a mechanism through which imported inputs for export production can
be imported with a waiver of import duties and surcharges, such as raw
materials and intermediate inputs packaging materials, labels, etc used directly
to manufacture export products that can be imported free of customs, excise and
other duties under the scheme.
Manufacturing-in-Bond Scheme
The manufacturing-in-bond scheme provides for importation of raw materials
into a bounded warehouse of the company for export production. That is, the
scheme is designed to enable manufacturers to export products that have a
minimum value added of 20 percent to import duty free on their raw materials

30. 30
for exportable products. Only products produced in Nigeria qualify to benefit
from this incentive.
Pioneer Status Scheme (PSS)
This is an incentive that grants tax holidays on corporate income to
manufacturing exporters that export at least fifty percent of their turnover. The
objective of this scheme as provided in the income tax Act of 1971 is to
encourage the establishment of export-oriented industries in Nigeria.
Export Price Adjustment Fund (EPAF) This fund serves as a supplement or
additional fund to compensate exporters on the following:
(a) High cost of production arising mainly from infrastructural deficiencies.
(b) Purchasing commodities at prices higher than the prevailing world market
prices-this is usually fixed by government.
(c) Other factors beyond the control of the exporters are unfavourable currency
exchange rate, political instability, etc.
The fund is principally designed to provide leverage after other incentives might
have been exhausted.
Tax Relief on Interest Income
The relief is aimed at tax exemption on interest accruing from loans granted by
banks in aid of export activities. This is in accordance to Company’s Income
Tax Act of 1979, which states the percentages of tax exemption on interest for
foreign investors.
Capital Asset Depreciation Allowance (CADA)
The Company’s Income Tax Act of 1979, as amended by the
Finance/Miscellaneous Provisions Decree of 1985, and amended further by the
Export Incentives Decree No. 18 of 1986, provides for an annual depreciation
allowances of five percent on plants and machinery to all manufacturing

31. 31
exporters who export at least fifty percent of their annual turnover with at least
thirty-five percent value added. Incentives for Manufacturing Enterprises
Manufacturers profit and dividends are exempted from taxation under this
scheme. The tax exemption
Includes:
(a) Removal of taxes on interest income loans and advances granted by banks
for export manufacturing.
(b) Tax exempt for dividend derived from manufacturing companies in the
petrochemical and liquefied natural gas sub-sectors.
(c) Low rate of tax (20%) for small manufacturing companies for the first five
years of commencement of business.
(d) Small companies’ dividends are free from tax.
(e) Restrictions for capital allowances are removed for manufacturing
companies
(f) Profit for any Nigerian company in respect of goods exported from Nigeria
are exempted from tax, and
(g) Profits of companies whose supplies serve as inputs to manufacturing of
products for exports are excluded from tax.
Incentives on Export of Solid Minerals
New companies venturing into the mining of solid minerals from 1996 are to
enjoy tax free holiday for the first three years of their operation.
Special Trade Agreements Liberalization Certain bilateral and multi-lateral trade
agreements are entered with a view to waiving or reducing some duties or tariffs
on goods from countries that signed the agreement. This is aimed at encouraging
foreign trade and investment. The Lome conventions, generalized system of
preferences (GSP), and ECOWAS treaty are some of the examples of the special
trade agreements to which Nigeria has been associated with.

32. 32
Export Promotion Zone (EPZ) Nigerian export promotion zone was established
by Decree No 34 of 1991; the decree provides for the establishment of a
geographical enclave within the country, to which normal customer’s tariffs or
duties do not apply. In other words, EPZ is an incentive provision for exporters
within a nation’s customs territory, which provides an attractive environment for
doing business especially in an otherwise not too attractive environment. The
objective of EPZ is to motivate local and foreign investors, stimulate industrial
production for export, diversify economic activities, generate foreign exchange,
create backward linkages and provide bases for technology transfer. The first
export promotion zone in Nigeria is located in Calabar, and the foundation was
laid on November 7th, 1991, by the then President of the Federal Republic of
Nigeria-General Ibrahim B. Babangida.
Other policies and incentives aimed at not only creating export awareness, but
also to promote other export activities include incentives for the manufacture of
locally made spare-parts and equipment, re-discounting and refinancing facility
for export, industrial export simulation facility, export credit guarantee facility,
export credit insurance facility and insurance of market risks.
Perception of Nigeria Export Policies and Programmes to have an insight to the
perception and performance of the Nigerian export promotion programs, we will
consider the number of participants and the total sum paid to beneficiaries with
respect to duty drawback scheme and export expansion grant fund from 1988 to
1996.
According to NEPC (1997), a total of ninety-three companies benefited under
the duty drawback scheme, out of one hundred and forty-three companies that
applied within the period; while about one hundred and ninety-one million naira
was paid to the companies for the same period of nine years (1988 to 1996). It is
worthy to remark that the number of companies that applied is small, and the
number of benefiting firms is also not encouraging.

33. 33
Hence the desired objectives could not be achieved. Okeke (1990), also stated,
that the drawback schemes’ elaborate administrative procedures gave rise to
what the author called “undesirable situations”. Another example of Nigerian
export performance can be seen from the total export expansion grant disbursed
to companies from 1989 to 1996. The grant ranged between 1.7 million Naira to
79 million Naira. Considering the capital-intensive nature of expanding
manufacturing companies, it will not be out of place to state that the above sum
disbursed is insignificant to make meaningful impact in the export expansion
scheme of most companies within the given period. In analyzing the scope and
the objectives of Nigerian export assistance programmes as discussed above, we
can describe them as laudable. But some of the export assistance programmes
are not yet being implemented or are poorly implemented. Hence, Iyanda (1998)
similarly remarked that Nigeria government’s approval of export credit
guarantee scheme was more on paper. In the same manner, the commercial
banks failed persistently to comply with CBN’s guidelines on credit to the
export sector, while some people have also argued that successive governments
were simply paying “Lip service” to the promotion of non-oil export. The usual
complaints of NEPC since its establishment in 1976, has been that of inadequate
funding. The underfunding if NEPC may have also been responsible for the
ineffectiveness and inefficiencies. NEPC (1989), noted that, “…owing to the
ineffectiveness of existing package of export incentives as well as constrains, the
orders received in some of its missions overseas could not be executed”.
This is coupled with some administrative “bottle-necks” placed on the part of
exporters which resulted in the inability of Nigerian exporters to respond
urgently and successfully to the over fifty million Naira tentative orders received
during the trade missions embarked in the past. It was to solve some of the
above-mentioned problems that the Association of Nigerian Exporters (ANE)
was formed in 1984 (Ogunnusi, 1986). ANE is a private sector, non-profit

34. 34
organization that liaises with relevant government agencies over export matters.
It may also be necessary at this point to ask whether we-those involve in export
policy formulation, promotion and implementation in Nigeria-are supporting the
best programme (Czinkota 1981).
Some other problems were also identified as being responsible for not achieving
the nation’s desired economic development through export marketing. One of
the problems has to do with exporting raw agricultural commodities by Nigerian
exporters, and these commodities are sold as processed goods to Nigerian
consumers at a higher price. This is why Nwakama (1986), stated that the
absence of forward integration in the Nigerian agricultural sector is largely
responsible for the failure of the Nigerian agricultural sector to expand, and
make meaningful progress. Similarly, lack of backward integration is also
accused of been responsible for the industrial sector’s low growth and
expansion. From the preceding discussions, it can be appreciated that marketing
in general, and export marketing in particular can be described as the necessary
foundation and facilitator for any meaningful economic development to be made
in any given country of the world, and government effective export incentives
and conducive environment will not only motivate firms’ export marketing, but
will also facilitate the achievement of the desired export objectives of the
Nigeria nation.
2.3 Empirical Analysis
Tariffs on imports result in negative rates of protection for exports since the
nominal rate of protection for their output is typically zero while the protection
applicable to imported intermediate inputs is usually positive.
Thus, for a given domestic export price, tariffs on imported intermediate inputs
increase the cost of producing export goods and, therefore, will reduce their
profitability and tend to decrease the output of exportable. Rajapatirana (1995)

35. 35
found empirically that the negative impact of import restrictions on
manufactured exports was much more significant through the second channel. In
particular, import restrictions negatively affected the availability of imports that
were often critical to the production of manufactured export products. Hence; in
general, it was found that import restrictions had a significant negative effect on
manufactured exports while their liberalisation had a positive effect. The
assertion of a strong influence of trade policy reform on export performance in
developing countries has remained largely unresolved in the literature. The
argument is based on whether trade liberalization has led to positive or negative
export performance. While some studies have found a positive association
between trade liberalization and export performance, some other studies have
also found little empirical evidence to support a link between trade liberalization
and export performance.
Most developing countries marketing system like that of Nigeria, particularly
export marketing, unlike that of developed countries – U S A, Britain, France,
Germany, China etc., or that of few developing countries like Taiwan, Singapore
and South Korean – is characterized of questionable government
incentives/programmes, political uncertainty, acute shortages of competent
marketing managers, inconsistent policies, and red-tape bureaucracy, among
others. However, government of Nigeria in appreciation to the import and role
export now plays in nations’ development motivate firms to be involve in
export. This is done through various agencies and policies- such as Nigeria
Export Promotion Council (NEPC) and Structural Adjustment Programme
(SAP) - were said to have been designed to address these problems and
encourage export sector with a view of diversifying the productive base and its
export earnings. The export promotional programmes and policies, though well
intentioned and designed, are yet to achieve the desired objectives because of
the not un-usual poor implementation of government policies and programmes

36. 36
in Nigeria. This study therefore examined government policies and strategies,
export awareness of Nigeria government incentives and policies, perception of
the policies and programmes, and whether the current incentives encourage
Nigeria firms’ export marketing involvement.
Fagbenro (1999) identified some major defects in the policy environment.
These include constraints in infrastructural development e.g. electricity, water,
communication, transport and inefficient implementation of incentives. He
further cited difficulties in managing the transition from import substitution to
export oriented industrialization strategy and various policy inconsistencies
among other factors.
The vital role of optimizing economic growth process can therefore, be credited
to export marketing and or marketing. This is because marketing was
instrumental in laying the groundwork necessary for rapid development of most
developed nations. Drucker (1958) asserted that marketing is the process
through which the economy is integrated into society to serve human needs. In
the same manner, “effective marketing” was described as not only improving the
life-style and well being of a people in a specific economy, but also upgrades
world markets. In other words, marketing raises the living standard of not only
of its domestic economy, but also that of others through export marketing.
Walter Elkan (quoting Myint. 1971), observed that export expansion of peasant
products, particularly in South East Asia, Uganda and West Africa, placed not
so much emphases on the reallocation of given and fully employed resources
from domestic to the export sector, by bringing hitherto under-utilized surplus of
land and labour in the subsistence economy into export production. The
significance of export to a nation’s economic development was further
highlighted by Haberker (1961), as he observed that exports (or import
substitution), now constitute important national goals. It has been argued that the

37. 37
economic development of any nation has some strong relationship with the
export performance of the country. Ayal (1982) similarly noted that the
economic problems faced by most countries, at a given period, were associated
with export marketing of the nations.
Kilpatrick and Miller (1978), relevantly remarked that determinants of export
success from Israel, had to do with wages per employee which are strongly
associated (positively) with capital per employee, and the study concluded that
higher wages per employee, higher value added per production workers, and
higher economies of scale, are the main characteristics discriminating between
net exporting and net importing industries in the United States.
Export marketing can be described as a nation’s economic facilitator, as it
facilitates transactions between a country’s productive sector and its
international consumer need/demand. It is the critical link in effectively utilizing
the production resources of one country to the economic wellbeing and growth
of both the importing and exporting countries. It has also been argued that
export marketing and by extension marketing, might by itself go far toward
changing the entire economic tone of the existing system, without any change in
methods of production, distribution of population, or of income. What is needed
in most developing countries’ (like Nigeria) growth to make economic
development realistic and meaningful is to engage in effective marketing and
export marketing. It is the belief of most people that man can improve his
economic lot through systematic, purposeful, and directed marketing effort,
individual as well as for the entire society. This is because man has so been
equipped or blessed with necessary tools of divine aptitude, learning, developed
technology among others.
In their view, Faruqee and Husain (1994) said the SAP policy virtually had
everything sorted out but only on paper including plans for diversification,

38. 38
foreign exchange earnings and retention through domiciliary accounting,
incentives, institutional frameworks, laws, decrees etc. However, a fresh
dimension into export policy expectation which might not have been provided
for is the increased protectionism in most developed countries especially those
of developed markets that the country trade ties with. They further stated that the
inability of SAP to secure against this protectionism, is indicative of the fact that
the global trade competition is more formidable and less friendly than reflected
by our acceptances (as in the law of contract) and by the competitions
themselves. This assertion goes to show that there may have been some
fundamental defects in policies regarding non-oil exports in Nigeria in the
period under study.
However, government of Nigeria in appreciation to the import and role export
now play in nations’ development motivates firms to be involve in export. This
is done through various agencies and policies- such as Nigeria Export Promotion
Council (NEPC) and Structural Adjustment Programme (SAP) - were said to
have been designed to address these problems and encourage export sector with
a view of diversifying the productive base and its export earnings. The export
promotional programmes and policies, though well intentioned and designed,
are yet to achieve the desired objectives because of the not un-usual poor
implementation of government policies and programmes in Nigeria. According
to NEPC (1997), a total of ninety-three companies benefited under the duty
drawback scheme, out of one hundred and forty-three companies that applied
within the period; while about one hundred and ninety-one million naira was
paid to the companies for the same period of nine years (1988 to 1996). It is
worthy to remark that the number of companies that applied is small, and the
number of benefiting firms is also not encouraging. Hence the desired objectives
could not be achieved.

39. 39
Okeke (1990), also stated, that the drawback schemes’ elaborate administrative
procedures gave rise to what the author called “undesirable situations”. Another
example of Nigerian export performance can be seen from the total export
expansion grant disbursed to companies from 1989 to 1996. The grant ranged
between 1.7 million Naira to 79million Naira. Considering the capital-intensive
nature of expanding manufacturing companies, it will not be out of place to state
that the above sum disbursed is insignificant to make meaningful impact in the
export expansion scheme of most companies within the given period. In
analyzing the scope and the objectives of Nigerian export assistance
programmes as discussed above, we can describe them as laudable. But some of
the export assistance programmes are not yet being implemented or are poorly
implemented.
Hence, Iyanda (1998) similarly remarked that Nigeria government’s approval of
export credit guarantee scheme was more on paper. In the same manner, the
commercial banks failed persistently to comply with CBN’s guidelines on credit
to the export sector, while some people have also argued that successive
governments were simply paying “Lip service” to the promotion of non-oil
export. The usual complaints of NEPC since its establishment in 1976, has been
that of inadequate funding. The under-funding of NEPC may have also been
responsible for the ineffectiveness and inefficiencies.
NEPC (1989), noted that, “…owing to the ineffectiveness of existing package of
export incentives as well as constrains, the orders received in some of its
missions overseas could not be executed”. This is coupled with some
administrative “bottle-necks” placed on the part of exporters which resulted in
the inability of Nigerian exporters to respond urgently and successfully to the
over fifty million Naira tentative orders received during the trade missions
embarked in the past. It was to solve some of the above-mentioned problems

40. 40
that the Association of Nigerian Exporters (ANE) was formed in 1984
(Ogunnusi, 1986). ANE is a private sector, non-profit organization that liaises
with relevant government agencies over export matters. It may also be necessary
at this point to ask whether we-those involve in export policy formulation,
promotion and implementation in Nigeria-are supporting the best programme
(Czinkota 1981). Some other problems were also identified as being responsible
for not achieving the nation’s desired economic development through export
marketing. One of the problems has to do with exporting raw agricultural
commodities by Nigerian exporters, and these commodities are sold as
processed goods to Nigerian consumers at a higher price.
This is why Nwakama (1986), stated that the absence of forward integration in
the Nigerian agricultural sector is largely responsible for the failure of the
Nigerian agricultural sector to expand, and make meaningful progress.
Similarly, lack of backward integration is also accused of been responsible for
the industrial sector’s low growth and expansion.
Dynamics Of Trade Policy Since 1960
An assessment of Nigeria's trade policy since the 1960s reflects a trend which
has been known to characterize uncertain and unpredictable trade regimes the
world over. Trade policy since the 1960s has witnessed extreme policy swings
from high protectionism in the first few decades after independence to its current
more liberal stance (Adenikinju 2005:113).
Tariffs have at various times been used to raise fiscal revenue, limit imports to
safeguard foreign exchange or even protect the domestic industries from
competition. In addition, various forms of non-tariff barriers such as quotas,
prohibitions and licensing schemes have on various occasions been extensively
used to limit imports of particular items.

41. 41
The overall pattern portrays the long-held belief that trade policy can be used to
influence the trade regime in directions that can promote economic growth.
Attempts were made to use trade policy to promote manufactured exports and
enhance the linkages in the domestic economy, to increase and stabilize export
revenue, and scale down the country's reliance on the oil sector (Olaniyi
2005:7). Trade policies were accordingly directed at discouraging dumping;
supporting import substitution; stemming adverse movements in the balance of
payments; conserving foreign exchange; and generating government revenue
(Bankole and Bankole: 2004).
TRADE POLICY TRENDS BETWEEN 1960 – 1970s
During the first decade of independence, Nigeria pursued an import substitution
industrialization strategy. This involved the use of trade policy to provide
effective protection to local manufacturing industries, through such measures as
quantitative restrictions and high import duties. Many items were accordingly
placed on import prohibition. During this period, all imports from Japan were
placed under import license. Machinery and spare parts imports were restricted
and exchange controls on the repatriation of dividends and profits were
enforced. Restrictions were also applied on capital goods, spare parts and non-
essential imports. Although the import substitution industrialization strategy
continued even after the Nigerian civil war in 1970, trade policy between 1970
and 1976 assumed a less restrictive stance, ostensibly because of demands
necessitated by the post-war reconstruction.
Thus, only items that were regarded as non-essential consumer goods were
restricted, while tariff rates on raw materials were reduced and quantitative
restrictions on spare parts, agricultural equipment and machinery were relaxed.
Similarly, the reconstruction surcharge on imports was reduced from 7.5 percent

42. 42
to 5 percent and later completely eliminated, while exchange controls and profit
repatriation were also relaxed. The 1960s and early 1970s also saw the
application of export duties ranging from 5 to 60 percent on agricultural exports
such as cocoa, rubber, cotton, palm oil, palm kernel and ground nuts. In 1973
however, these duties were eventually abolished, as a result of the oil boom and
the need to promote agricultural exports as part of the export diversification
strategy. However this spurt of liberalization ended in 1977, when a wide range
of imported finished goods requiring licenses came to be placed on very high
duties or were banned outright. This renewed restrictive trade policy culminated
in the banning of 82 items in 1979; while a further 25 items were placed on
import license.
TRADE POLICY TRENDS BETWEEN 1980 -1990s
From 1981, there was a policy shift towards exports promotion and a move to
intensify the use of local raw materials in industrial production. However, the
increase in the value of imports led to a worsening of the balance of payments
(with, in addition, the backdrop of the collapse in world oil prices), which forced
the government to promulgate the Economic Stabilization (Temporary
Provisions) Act in April 1982. Under this Act, tariffs on 49 items were raised,
while a prohibition was imposed on gaming machines and frozen poultry.
Further, 29 commodities were removed from the general import license regime
and placed under specific license, while the use of pre-shipment inspection
became widespread.
During 1983 - 1985, 152 items were brought under specific import license, and
foreign exchange regulations became more stringent. The central objective of
trade policy was to provide protection for domestic industries and reduce the
perceived dependence on imports; a corollary to that objective was a desire to

43. 43
reduce the level of unemployment and generate more revenues from the non-oil
sector. Accordingly, tariffs on raw materials and intermediate capital goods were
scaled down.
THE STRUCTURAL ADJUSTMENT ERA
From 1986, there was a significant shift in trade policy direction towards greater
liberalization. This shift in policy is directly attributable to the adoption of the
structural adjustment programmes. The Customs, Excise, Tariff etc
(Consolidation) Decree, enacted in 1988, was based on a new Customs goods
classification, the Harmonized System of Customs Goods Classification Code
(HS). It provided for a seven-year (1988 -1994) tariff regime, with the objective
of achieving transparency and predictability of tariff rates. Imports under the
regime thus attracted ad valorem rates applied on the Most Favoured Nation
(MFN) basis. A new seven-year (1995 - 2001) tariff regime, established by
Decree No. 4 of 1995 succeeded the previous (1988 – 1994) regime. The tariff
structure over the period 1988 – 2001 increased import duties on raw materials,
and on intermediate and capital goods, while tariffs on consumer goods were
slightly reduced. This was aimed at reducing distortions in resource allocation
and combating smuggling. Both the 1988 and 1995 tariff schedules had
provisions for reviews and amendments. However, they maintained the familiar
mixed trends in tariff regimes. Three types of changes were subsequently
common, namely, reduction in rates; increase in rates and/or removal from or
addition to the import prohibition list.
TRADE POLICY UNDER THE NEEDS ERA (1999 - 2006) As pointed out
above, Nigeria's trade policy regime as currently contained in the NEEDS and
trade policy documents, has been geared to enhancing competitiveness of
domestic industries, with a view to, inter alia, encouraging local value-added

44. 44
and promoting as well as diversifying exports. The mechanism adapted to this
end is gradual liberalization of the trade regime. Thus, the government intends to
liberalize the trade regime in a manner, which will ensure that the resultant
domestic costs of adjustment do not outweigh the benefits. This is the
fundamental basis on which to gauge the direction and implementation of
policy. The clarion call is "gradual liberalization". This addresses the question as
to what is the kind of trade strategy the government has adopted in furtherance
of its development agenda. Current reform packages are therefore designed to
allow a certain level of protection of domestic industries and enterprise.
Concretely, this has translated into tariff escalation, with high effective rates in
several sectors and lower import duties on raw materials and intermediate goods
unavailable locally. This policy perspective has also led to the application of
relatively high import duties on finished goods which compete with local
production.
Measures affecting imports The tariff structure, indicates that Nigeria’s bound
tariffs taken together, are in the range of only 19.2 per cent. In the period since
1998, the average applied MFN tariffs have increased from about 24 per cent to
29 per cent, with applied MFN tariff rates on agriculture and non-agricultural
products averaging 50 per cent and 25 per cent, respectively. A general
assessment of the tariff structure reveals that tariff rates are widely dispersed,
ranging from 2.5 per cent to a maximum of 150 per cent, with a total of only 19
bands applied. Thus the overall picture reveals mixed escalation, and this is
attributable to the high tariffs on agricultural commodities. This seems to
indicate a policy bias in favour of agricultural protection. A number of industries
are also protected through positive tariff mechanisms, while several industries
benefit from tariff exemptions and concessions on imports of inputs of raw
materials.

45. 45
Duty exemption and concessions Duty exemptions and concessions also remain
some of the quantitative policy instruments for affecting trade policy in favour
of domestic producers and to achieve the aim of diversification. Exemptions on
import duties have been put in place for a number of goods. There are tariff
concessions which have been put in place to attract investment and boost
production. These concessions apply to certain raw materials used by
manufacturers. Tariff concessions are also applied to fertilisers, in order to
support agriculture, while tax concessions have been extended to exporters
under the Export Expansion Grant (EEG).
Import prohibitions Import prohibition continues to be a major non- tariff tool
for pursuance of trade policy. Comparison between 1998 and 2005 has seen the
addition and withdrawal of items on the prohibition list. Since 1991, several
items had been removed from the list. These include vegetable oils; processed
wood; textile fabrics, furniture; fluorescent tubes and lamp bulbs. Imports of
motor vehicles over eight years from date of manufacture, were also banned, but
again re-authorized in January 1998. In 1993, imports of all types of meat were
banned. In 1998, products under 23 HS four-digit codes were subject to import
restriction. However, in line with the government's desire to scale down
prohibitions, a number of prohibitions were replaced with high tariffs between
1999 and 2001. Since 2002 however, there has been a sharp reversal of policy.
Thus, as at November 2004, agricultural and non-agricultural goods under some
218 HS four-digit codes have been subjected to import restrictions, mainly for
purposes of protecting domestic industries. Under the Export Prohibitions Act,
certain agricultural products have also been placed under prohibition to enhance
domestic food security and support local processing.

46. 46
These include raw hides and skin; timber (rough and sawn); unprocessed rubber
latex and rubber lumps; rice; yam; maize and beans. Although opinions differ as
to the impact of the measures taken on local production, there are indications
that the aggregate index of agricultural production registered an increase of 6.1
per cent in 2003, over the preceding year, with all sub-sectors contributing to
growth. This upward trend has shown some measure of consistency between
2003 and 2005. It is noteworthy that in addition to various other measures
initiated by the federal government, the Central Bank of Nigeria (CBN) has
attributed the success partly to the imposition of bans in the sector. Similarly,
the CBN report cited sub-sectoral growth of livestock by 5 per cent in 2003, up
from 4.2 per cent in 2002. There seems not to be a clear certainty that tariff
protection measures, including import bans, have led to very salutary results in
the manufacturing sector. A 2005 trade policy review document indicates that
import bans and lower tariffs on inputs for growth of businesses appear to have
declined since 1999, in spite of the increased use of prohibition measures. The
conclusion is that the manufacturing sector appears to have fundamental
problems, which cannot be addressed by merely increasing effective rates of
protection.
Other macroeconomic trends under needs era
In assessing the performance of trade policy, the view has often been expressed
that trade policy in itself may not be able to accomplish the desired policy
objectives, in the absence of appropriate complementarities. Studies of trade
liberalization since the 1980s have shown that trade liberalization has failed in
many instances due to lack of appropriate accompanying measures, and not so
much as a result of faulty design of the trade policies themselves. Such
associated policies are macroeconomic policies, pro-growth regulatory and

47. 47
competition policy, investments in infrastructure, human resource development,
governance and the rule of law.
Under the NEEDS regime, fiscal policy has continued to be influenced by
developments in the oil sector. Petroleum-related taxes account for over 70
percent of public revenue. Increases in crude oil prices in recent times have led
to improvements in the fiscal balance. Between 2003 and 2005, federal revenue
increased by 48.7 percent on account of increased production and higher world
market prices; another contributory factor was the removal of subsidies on
domestic crude oil sales to the Nigerian National Petroleum Corporation
(NNPC). Public revenue from company income tax, customs and excise duties
and value-added tax (VAT) also increased over the same period while aggregate
public expenditure rose by 20 per cent on capital items. Concomitantly, the
public deficit diminished from 5.0 per cent in 2002 to 1.3 per cent in 2003.
While the aim of monetary policy continues to be fiscal and macroeconomic
stability, inflation rates have in recent times remained above the single-digit
mark, due mainly to excessive money supply, with adverse effects on the
competitiveness of the economy. The growth in money supply was attributed
largely to an increase in net foreign assets, and to a lesser extent, on overall
banking sector credits. The inadequacy of stabilization policies has meant
sustained high inflation levels, partly also accentuated by a reduction in the
minimum discount rate between 2003 and 2005. Overall, the nominal exchange
rate appears to be adjusting to the misalignment of the local currency, the naira,
vis-à-vis the currencies of the major trading partners, largely due to persistent
depreciation and devaluation. Unfortunately however, high inflation rates
appeared to have dampened the impact of depreciation on the competitiveness of
non-oil export products in particular. At the same time, restrictions in the
exchange-rate market have widened the gap between the official and non-
official exchange rate, which thus constitutes an indirect tax on non-oil exports,

48. 48
and hence a disincentive to export-oriented activities. The trade account balance,
largely affected by world market prices and domestic production of oil, remains
mixed, with improvements during years of favourable oil prices as occurs
presently. Fiscal policy has also shown a similar trend due to a high import
content of expenditure. Management of the external debt burden still represents
a heavy drain on government resources.
2.4 METHODOLOGICAL FRAMEWORK
There is huge number of studies that investigate the impact of exchange rate on
export. But according to our research objective we try mainly to focus on studies
that investigate this relationship in case of oil dependent economies like
Azerbaijan.
Bernardina (2004) investigates impacts of the real exchange rate, real non-oil
GDP, and the world income on Russian non-oil export by using an Error
Correction Model over the period 1994-2001. Author finds that there is a robust
and negative long run co-integration relationship between the real exchange rate
and Russian non-oil exports. Furthermore, the world income has positive effect
on Russian non-oil export while real non-oil GDP causes a decline in non-oil
export.
By using Static OLS and Fix Effect based onTwo StageLS Masoud and Rastegari
(2008) estimate effects of certain factors as well as real exchange rate on non-oil
export over the period 1995-2005. Study concludes that Iran’s non-oil exports
positively related to increase in population, per capita income and consumer price
index while negatively depends on appreciation of real exchange rate.
Another study related to Iranian non-oil export comes from Sabuhi and Piri
(2008). They explore the effects of exchange rate, export volume, domestic
saffron production on price of saffron, Iran’s major non-oil export good in the

49. 49
short- and long-run. Employing Autoregressive Distributed Lag (ARDL) model
shows that appreciating exchange rate has statistically significant negative
impact on export price of saffron while there is no significant relationship
between export price and domestic production of Saffron in the long-run.
Sorsa (1999) analyzes Algerian non-oil export promotion issues in presence of
oil sector dominancy over the period 1981-1997 and reveals that appreciation of
real exchange rate is the major factor that impedes non-oil export growth and its
diversification.
The effects of real exchange rate, its movements and volatility on the growth of
non-oil export in Nigeria are studied by Ogun (1998) over the period 1960-1990.
The results show that real exchange rate and also both its misalignment and
volatility affect non-oil export growth adversely.
Oyejide (1986) examines effects of trade and exchange rate policies on
Nigeria’s agricultural export using Ordinary Least Squares (OLS) over the
period 1960-1982 and concludes that appreciation of real exchange rate
adversely influences to non-oil export especially during the oil boom.
Another study that investigates relationship between exchange rate and non-oil
export goods in Nigeria comes from Yusuf and Edom (2007). By applying
Johansen co-integration approach over the period 1970-2003 they reveal that
depreciation of official exchange rate promotes export of round wood and sawn
wood in Nigeria.
Adubi and Okunmadewa (1999) investigate impact of exchange rate and price
indexes and also their volatilities on the agricultural export of Nigeria in the
period 1986 to 1993. Results of ARIMA and OLS estimations indicate that
appreciation of exchange rate and its volatility have negative impacts on
agricultural export earnings.

50. 50
By applying OLS on the time series of relevant variables including exchange
rate over the annual period of 1970-2005 Abolagba et al. (2010) find that
appreciation of real exchange rate has statistically significant and negative
impact on export of cocoa and rubber in Nigeria.
Ros (1993) analyzes Mexico's non-oil trade and industrialization experience
during 1960-1990 and concludes that appreciation of real exchange rate due to
oil revenues is harmful for non-oil export performance.
There are many variables that can be used to measure economic activities in a
country. These include; gross domestic product, net national product, amount of
import and export, index of industrial production. Following Oyejide (2002),
this study uses US real gross domestic product as a measure of foreign demand
for Nigeria‘s export. Also following Oyejide, (2002), relative price is captured
by dividing US wholesale or producer index with Nigerian consumer price
index. Also oil export is introduced to test the ‘Dutch disease hypothesis’. This
is due to the fact that increases in demand for Nigeria’s oil have contributed to
the neglect of the non-oil export. By introducing oil export in the export
function, we are able to verify the ‘Dutch disease’ function.
Trade policy encompasses all measures taken to guide exports and imports.
Accordingly, trade policy can be considered as liberal or restrictive. Trade
policy is liberal when an economy is open to international trade and export
promotion. Whereas, trade policy is restrictive when an economy is closed to
international trade or when international trade is prohibited or restricted. The
effect of trade policy can be examined through the level of trade openness. This
is captured by ratio of sum of export and import to GDP. According to Olaniyi
(2005) the trade openness implemented in the post to1986 structural adjustment

51. 51
period contributed to Nigeria’s export performance. Thus, it is expected that
openness relates positively with economic growth in Nigeria.
There are many variables that can be used to measure economic activities in a
country. These include; gross domestic product, net national product, amount of
import and export, index of industrial production. Following Oyejide (2002),
this study uses US real gross domestic product as a measure of foreign demand
for Nigeria‘s export. Also following Oyejide, (2002), relative price is captured
by dividing US wholesale or producer index with Nigerian consumer price
index. Also oil export is introduced to test the ‘Dutch disease hypothesis’. This
is due to the fact that increases in demand for Nigeria’s oil have contributed to
the neglect of the non-oil export. By introducing oil export in the export
function, we are able to verify the ‘Dutch disease’ function.
Chapter Three
Structure of Foreign Trade And Non Oil Exports In Nigeria
3.1 Introduction
The immense benefits derivable from engaging in export marketing and the
emerging business opportunities worldwide are associated with the current
international trends in global trade liberalization in most nations (including
Nigeria). Buzzel (1968) noted that as trade barriers in Western Europe and
elsewhere diminish; more companies have found attractive opportunities for
expansion in countries other than their traditional home markets.
To engage in foreign trade bring about: earning foreign exchange, increase in
sales, increase in profit, lower production cost, employment creation, earning
international recognition, enhancing reputation, improving living standard of
both the exporting and importing firms/nations. Panagariya (1995), in a study of

52. 52
China’s exporting strategy, remarked that, export is a key to high GDP growth
rates. The critical economic difficulty faced by Nigeria as a result of oil glut in
the world market stimulated several search for alternative to oil as a sustainers
of economic development in 1980s, hence the need for export marketing as a
viable alternative to oil (crude petroleum).
3.1.1 THE STRUCTURE OF NIGERIA’S NON-OIL EXPORTS
Agricultural products constitute the bulk of Nigeria’s non-oil exports. The
shares of these products bothprocessed and unprocessed in total value of non-oil
exports is as high as 70 per cent. Other components of the non-oil exports
include manufactured products and solid minerals. The agricultural products
include cocoa, groundnut, palm produce, rubber (natural), cotton and yarn, fish
and shrimps, while the manufactured products and solid minerals include
processed agricultural products, textiles, tin metal, beer, cocoa butter, plastic
products, processed timber, tyres, natural spring water, soap, detergent and
fabricated iron rods. The non-oil commodities market experienced an export
boom between 1960 and 1970. Their fortunes declined in the early 1980s when
the international primary commodity markets collapsed with the associated
deterioration in the terms of trade. Resulting mainly from the policies adopted
during the structural adjustment programme, non-oil exports increased owing
mainly to increase in the Naira price of the export commodities. This was,
however, short-lived as international demand for Nigeria’s non-oil exports
remained weak (Okoh, 2004). The value of non-oil exports has been on the
decline ever since. For instance, the share of agricultural products in total
exports declined from 84% in 1960 to 1.80% in 1995 (CBN, 2000, Ogunkola
and Oyejide 2001). Thus, contrary to the expectation of increase in non-oil
exports, there was an overall decline in the export of these commodities.
Manufactures decreased from 13.10 % in 1960 (CBN, 2000) to 0.66% in 1995

53. 53
and remained the same in 2002 (WTO, 2003). The values of exports in as well
as the percentage shares of the major export commodity groups in total
merchandise exports.
3.2 TRENDS IN NIGERIA’S NON-OIL EXPORT POLICIES:
PRE-INDEPENDENCE ERA TO 1992
In the pre-independence years, the marketing board system was adopted by the
colonial administration to ensure regular supplies of raw materials to factories in
metropolitan Britain in particular and Western Europe in general. The system
was adequate, as machinery for the effective and efficient marketing of Nigerian
farm produceto the outside world, (Itegbe, 1989). It indeed helped to boost farm
incomes, improved the livelihood of the peasant farmers and above all, assured
and enhanced government revenues especially needed for acquiring the
country’s essential import needs. The marketing board grew into a formidable
platform for the negotiation of profitable deals on a comparable term with the
more experienced and more efficient foreign firms and multi-nationals with
whom the Boards had to invariably conclude substantial export sales contract
and also ensure prompt repatriation of proceeds.
However, inspite of the positive contributions of the export trading system,
Itegbe (1989) noted that the system was bedevilled by numerous export
constraints such as export licensing. Fagbenro (1996) are however of the view
that the marketing board policy was meant to serve the British interest
exclusively in that its articles provided for the supply of raw materials to British
factories and check diversion of such produce to other European countries. With
the attainment of independence, such a policy was bound to collapse, he stated.
The shortcomings of the marketing board system gave rise to the establishment
of the commodity boards in 1977, Itegbe (1989). The commodity board was to
foster uniformity and stability in prices for all export commodities throughout

54. 54
the country. The measure however did not stop the downward trend in the
volume of Nigeria’s export of agricultural commodities. According to Igbani
(1981), this downward trend in agricultural export was because the root
problem, being diminishing returns from agricultural productions, remained
untackled.
However, Itegbe (1989) was of the view that the monopoly enjoyed by the
Commodity Boards constituted some degree of disincentive to export-oriented
investments. He further stated that the system did not allow for the rapid
expansion of the processing industry to allow for the exportation of value added
products and therefore higher export earnings. Consequently, by the end of the
seventies, export of non-oil commodities declined to an insignificant figure of
about 4.4% of Nigeria’s total export value. Between 1976 and 1983 two policies
on agriculture were launched to encourage massive participation in agriculture
for self sufficiency and exports, Abimboye (2009).These are the operation feed
the nation (OFN), initiated in 1976 to1979 and the green revolution programme
that operated between 1979 and 1983. He observed that except in name, there
was no difference in the aims or contents of these two agricultural policies. The
twin objectives were to boost local crop and fibre production through
introduction of high yield varieties of grains and improved management
techniques. The improved outputs envisaged were to cater for domestic needs
and provide enough for exports. The impacts of these programmes on Nigerian
non-oil exports were however never felt. Abimboye posited that politicians
cornered the bank loans given for agricultural development purposes for their
fake companies and nonexistent firms. By the time the schemes were suspended,
over N200 billion had been expended.
In furtherance of Nigeria’s quest for a sustainable diverse exports base, the
Nigeria export promotion council (NEPC) was enacted through the