Quantitative Analysis of the determinants of Agro-based Manufacturing Firms’ Decision to Export in Nigeria

Abstract

The study analyzed the determining factors of agro-based manufacturing firms to export agricultural products from Nigeria. Using the cross-sectional data from agro-based exporting firms as obtained from the database of the Nigerian Export Promotion Council (2022 – 2023), 127 viable agro-based firms were selected using the Probability Proportional to Size (PPS) technique. Tobit regression was then employed to examine the determinants of agro-based export decision. The results of the analysis showed that the explanatory variables were consistent with a priori expectations and a statistically significant log-likelihood ratio (p<0.001). Further, export sales (β = 6.00e-9, p<0.001), years of education of the firm’s manager (β = 0.027, p<0.002), management characteristics (β = 0.025, p<0.000), export marketing characteristics (β = 0.071, p<0.062), and foreign market characteristics (β = 0.021, p<0.000) were prime determinants that statistically and positively enhance agro-based manufacturing firms’ decision to export. Conversely, the decision to export agro-based products was negatively impacted by export destination (β = -0.012, p<0.000), firm size (β = -0.108, p<0.000), firm characteristics (β = -0.115, p<0.006), and domestic market characteristics (β = -0.047, p<0.000). The findings call for the attention of key players in the export sector to leverage the factors that promote exports and at the same time, strengthening the determinants that do not enhance export decision to maximize the export potentials that the Nigeria’s agricultural sector is endowed with. This calls for the regulatory authorities such as National Agricultural Quarantine Services and NEPC to work out modalities to raise the quality of agro-based products to international standards.