Time overdue for FG, CBN to create incentives to boost GDP

By Enyeribe Ejiogu

 Nigeria’s desire for higher inflow of earnings from non-oil exports would receive a strong boost if a coordinated framework is established to grow the export of services, denominated and paid for in the major global currencies. And for that to happen, Dr Obiora Madu, chief executive of Multimix Academy, who for over 20 years has been engaged in Logistics and Supply Chain Management training at the tertiary level, strongly argues that the Bola Tinubu led-Federal Government must necessarily, as part of the Renewed Hope Agenda, create clear incentives to encourage Nigerians to export services and thereby boost the country’s GDP, and rapidly create employment for the teeming mass of unemployed but employable youths in the services sub-sector of the economy like Rwanda and some other African are doing.

Looking at the export of services, where does Nigeria stand today?

If you look at the statistics for the second quarter of the year, services contributed about 59 percent to GDP. What that means is that services is an area we should pay more attention. Considering the desire to create employment for youths who constitute 60 percent of the Nigerian population, it is only in services that you are likely to create those jobs. However, for you to gain full benefit from it, you need to expand your market. That is where global export of services comes in. Creation of the Africa Continental Free Trade Area (AfCFTA) will actually increase the chances. The fact is that revenue from services is growing because investment in services is greater than investment in product exports, So, the services sector is about to take off. The thing is that without services, nothing can happen, whether in manufacturing, agriculture and other areas. So, if you need to create employment for young people, you must look in the direction of the services industry. Nigeria is currently very sound when it comes to financial services export, through the foreign branches of several banks like Zenith, Access, UBA and First Bank, among others. In the area of information technology, we can do a whole lot better because we have a huge opportunity to export IT services in software, data services and cybersecurity, among others.

However, the unfortunate thing is that we don’t have proper and accessible records of the pockets of the things happening with respect to export of services. There are different types of business services, including education which we do in Multimix, We have students from across Africa. In other words, we areactually exporting services. A company becomes a services exporter when the person who is paying your fee is not resident in your country. So, if your brother who lives in the United States wants you to buy shares for him in Nigeria, and he sends you money to buy the shares. If you earn a commission out of it, you have exported service. If you had to build a house in Nigeria for someone abroad and he pays in dollars, you have actually exported services. The same goes for logistics services. That is another area where we are strong. Consider the West African subregion. Nigeria took it by storm in terms of movement of people. That is why you have the likes of Chisco Motors, ABC Transport and the other companies engaged in mass transit on the West African coast. Some logistics companies in Nigeria are already positioned in about nine countries in Africa. Still talking about logistics services, you have freight forwarders and clearing agents, who work for foreign companies, and get paid in the currency used in the particular foreign country.

Of course, you can also export cultural entertainment and other products of the creative industry. If indeed we have records, and we are coordinated, we will be shocked at the level of what is happening in the Nigerian services industry. We have statistics for local services only. One of the international agencies reported that about 10 percent of services are being exported. Unfortunately, it does not appear like that in our national reports.

 What can you say about the World Trade Organisation with regard to services, which is now a major item in international trade relations and balance of trade issues?

The World Trade Organisation saw the importance of this and that was why the member nations negotiated on services and reached agreement. Trade in services is one area the WTO is very keen to see growth. That’s why they developed four different modes, to enable people to put services exported under categories. Let me explain that. The Commonwealth headquarters recruited my services to develop a training package for Nigerian services exporters. And they paid me in hard currency. That was an export of services, which fell under Mode 1, whereby the service travelled. When I developed it, I sent it to them by email. We did some back and forth, and when we agreed, they paid me. So under Mode 1, the service travels. The sender of the service doesn’t have to travel. The buyer of the service doesn’t have to travel. But in Mode 2, it is tourism. If you have heard so much about Dubai, and you want to enjoy Dubai, you can’t do so while in Nigeria. You have to go there. That’s mode 2. Mode 3 is like Zenith Bank opening a branch or a subsidiary in Britain. The company that wants to export that service comes into the country and sets up physically. Mode 4 is where, for instance, the Commonwealth calls me up and says, ‘Go to Kenya and conduct a seminar’ based on the training modules my firm developed, and I go Kenya and conduct training for one month. I have to travel, deliver the service within one month and come back. That’s mode 4, whereby the person offering the service is the one that travels. So these are the four modes.

 You talked about our not having records of what is happening in the services sector. How can we build a framework for putting the records together?

Well, that is a big challenge and it is actually the lack of understanding of the importance of what we are saying. Go and pick up a Central Bank of Nigeria report on import of services, you see a huge figure. But regarding export of services, you see practically nothing. So, why is it like that? You have from M, for goods. You have from A, for services. You have another form for export of goods, but there is no form for export of services. I told you about the Commonwealth assignment. That’s not the only one I have done. The money came in and I collected my money. Nobody knows what the money is meant for. If there was an existing framework for reporting it, I would have filled a form in the process of the listing and that would be it. We have spoken about it for over 15 years. And the CBN hasn’t done anything.

Check for part ( 2) 

Time overdue for FG, CBN to create incentives to boost GDP from export of services –Dr Obiora Madu, Multimix CEO (2)

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