Nigeria Moves to Tackle Supply Chain Constraints

In December 2020, the Nigerian Export Promotion Council (NEPC) announced the establishment of a domestic export warehouse (DEW). This initiative intends to tackle supply chain constraints and enhance competitiveness in the exportation of non-oil products. 

The DEW is designed to reduce the cost of doing business for micro, small, and medium-sized exporting companies. It is proposed as a one-stop facility/terminal for the storage of products, packaging and labeling, pre-shipment inspection, and fumigation of non-oil export. This will ensure that designated goods are well prepared to meet the high-quality standards of their export destinations.

Ezra Yakusak, the executive director and CEO of NEPC, addressed stakeholders at the engagement session to form DEW on December 10th, 2020. The stakeholders in attendance were the Central Bank of Nigeria (CBN), Nigeria Export Processing Zones Authority (NEPZA), Nigeria Export-Import Bank (NEXIM), Federal Ministry of Industry, Trade, and Investment, Nigerian Shippers Council, Nigeria Customs Service (NCS), and others. 

How Does the Domestic Export Warehouse Work?

As of July 2022, the federal government has issued licenses to thirteen DEW operators across the country's geopolitical zones to kick-start the initiative's implementation.

Yakusak stated at the presentation of letters to four approved operators and one aggregation center that nine authorized DEW members had already been presented with letters. He explained further that the aggregation center will serve as a collection point. This would be where farmers, suppliers, and merchants collectively deliver their agricultural produce for the exporter to aggregate, sort, grade, and standardize to required grades or sizes that meet the required export order quantity before proceeding to the DEW.

The ED also said that the Federal Road Safety Commission (FRSC) has approved special plate numbers that will be used by all DEW vehicles. In his speech, he revealed that a N375 billion (approximately $700 million) export expansion grant has been earmarked to facilitate the export of non-oil products, though it has yet to be disbursed as it awaits approval from the president and the national assembly. Regardless, if properly implemented, this is a good initiative that will encourage and facilitate business for exporters.

Due to supply chain constraints, Nigeria has not been able to convert its enormous comparative advantage in agricultural products to a competitive advantage in the global market. When DEW becomes fully operational, it will help to attract investors to the non-oil sectors, especially those without access to the supply chain. Also, the partnership with FRSC to grant special plates to DEW vehicles shows the readiness of this initiative to collapse transportation and logistics impediments. It will also facilitate an increase in the global market share of Nigerian agricultural products.

This initiative will provide a platform that connects export-related agencies and export practitioners in Nigeria because the institutional gap between these stakeholders needs to be reduced to the barest minimum. More so, collapsing the supply chain constraints will serve Nigeria more when the African Continental Free Trade Area (AfCFTA) framework becomes fully operational.

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