- Nigeria’s domestic market remains the primary source of revenue for most businesses, with over 97% of the revenue mix coming from local sales and less than 3% from exports.
- Despite government policies to encourage exports, businesses struggle to generate significant export revenue, relying heavily on the domestic market.
- Nigeria’s export revenue has increased but is still relatively low, standing at $4.8 billion in 2022, indicating the challenges faced in boosting export potential.
Nigeria’s domestic market continues to dominate the source of revenues for most businesses operating in the country for the financial year ending December 2022.
A cursory analysis of the financial statement of over two dozen manufacturing companies quoted on the Nigerian Exchange reveals their revenue mix includes over 98% local (or domestic) sales while just 2% was from exports.
The Buhari administration has for years introduced policies to encourage exports in line with its forex revenue drive. However, businesses continue to struggle to generate significant export revenue as they rely on the domestic market for much of their revenue. sources.
The Central Bank has also introduced several policies such as the RT 200 to encourage local exports of goods in exchange for forex. This appears not to have worked especially for quoted companies
However, these policies seem to have had little impact on boosting Nigeria’s export revenue, which stood at $4.8 billion in 2022, according to the Nigerian Export Promotion Council (NEPC). This represents a 39% increase from 2021 but is still far below the peak of $10.5 billion recorded in 2014.
Some of the factors that hinder Nigeria’s export potential include poor infrastructure, high cost of production, low-quality standards, trade barriers, and insecurity.
What the data is saying
For example, the likes of Dangote Cement, Unilever, Nestle, and Nigeria Breweries, reported domestic sales to make up over 95% of the revenues generated for their Nigerian operations. Our analysis does not take into account the revenue earned from their foreign operations.
BUA Foods, Dangote Cement, and Flour Mills lead exports
Dangote Cement, one of the largest homegrown businesses only reported a revenue of N32.5 billion or 2% of the revenue earned from its Nigeria operations. Its Nigerian operations earned N1.2 trillion.
Thus, most of its locally manufactured products are for domestic consumption.
Flour Mills, Nestle, Cadbury, BUA Cement, Unilever, PZ, and Guinness all reported less than 5% of revenues from their export business. Most of their products were produced and sold to Nigerians.
Despite the challenges, BUA Foods and Beta Glass posted significant numbers from their export business as both companies reported 14% and 11.6% of their revenues came from export. BUA Food reported a revenue of N359.7 billion while N58.5 billion was earned from export. Beta Glass reported a combined revenue of N48 billion with N6.3 billion from export sales.
Flour Mills earned N27.5 billion in exports compared to N1.1 trillion from its domestic sales business.
What this means
The implication of the information provided is that Nigeria’s export potential and its ability to earn significant export proceeds are currently limited.
- Despite the government’s efforts to promote exports and diversify the economy, businesses in Nigeria are struggling to generate substantial revenue from exports.
- The heavy reliance on the domestic market indicates that most companies are primarily focused on meeting the demands of local consumers rather than exploring international markets.
- The low percentage of export revenues reported by manufacturing companies suggests that there are barriers or challenges hindering their ability to tap into foreign markets effectively.
- These challenges could include factors such as limited access to international distribution networks, inadequate infrastructure for transportation and logistics, trade barriers and restrictions, and insufficient competitiveness in global markets.