By Merit Ibe
Nigerian manufacturers and exporters have identified the lack of sustainable budgetary allocation, multiplicity of agencies handling the Export Expansion Grant (EEG), corruption among others as reasons the initiative is not working as desired.
The EEG, set up to mitigate the huge cost of manufacturers and exporters spend to make Nigerian goods compete favourably in the international market, has suffered several suspensions that have impeded its goal.
Manufacturers and exporters in Nigerian say they often face a huge cost disadvantages in international market as a result of infrastructural deficiencies, risk and high cost of doing business.
Applauding the scheme, Export Manager, Aarti Steel, Okhai Ehimigbai, explained that EEG has facilitated the integration of the informal sector exporter into the mainstream economy through proper documentation of their exports and repatriation of their proceeds.
“The informal sector refer to those traders who do illegal exports. In order to benefit from EEG, they now document their exports and repatriate their export proceeds.”
Ehimigbai, who is also a member of the Manufacturers Association of Nigeria export Group(MANEG) added that the inclusion of value addition as a template in EEG has significantly contributed to the processing of agricultural produce like cashew nuts, ginger, leather, sesame seeds etc.
These products he said have now earned distinction in quality conscious markets in Europe and America as many company use their EEG proceeds to procure machinery for value addition instead of exporting raw produce.
“A lot of manufacturing companies have used their proceeds from EEG to procure machines for expansion and increase production capacity.”
Ehimigbai, however lamented that the scheme has suffered about 17 suspensions since inception from several governments, adding that till date no one has been apprehended.
He noted that each time the initiative was suspended, there was accumulation of the EEG, “which is what we are suffering today.”
Lamenting the biggest problem the EEG has to contend with, whih he said was sustainable budgetary allocation.he said; “Lack of a sustainable budgetary allocation remains the major constraint in the effective implementation of the scheme. The EEG guidelines introduced in 2017 were premised on an annual budgetary allocation to be made. However, the actual allocation in the last four to five years has met only a fraction of the requirement and in some cases even lapsed without any utilisation.
To date, EEG claims from 2017-20 onwards have accumulated . Therefore, there is a need to put in place a sustainable mechanism for backing the policy with resources either through a budget line or a promissory note instrument.
“I think that of this year was far back below $2bn, but I can see the volume of export we have made so far.
Omokhai who called for tax rebate and special window for exporters and raw materials for production for export, noted that “Even in larger economies like china , they still give up to 30 percent tax rebate for export growth to companies that are into export. “Turkey too has up to 18 percent tax rebate. In India, they charge zero duty on raw materials meant for production for export. If you have to buy such raw materials locally, it’s bought at a reduced rate of about 25 percent. In south Africa, in case of forex, a separate window for importers of raw materials for manufacturing for export is created.”
All these are not available in Nigeria, then how can we be competitive in the global market, he asked.
He also pleaded with the Federal government to reduce the number of agencies managing the scheme, noting that it was a case of duplicity of work.
“Another challenge of this scheme is that it is being managed by too many agencies and ministries.
The Ministry of Finance, Debt Management Office, Budget Office, Ministry of Trade and Investment, NEPC, Customs. It’s a duplication of work. The plea to the federal government is that the number of agencies managing the scheme should be reduced.”
Ehimigbai advised that government should engage core exporters, like NACCIMA, MAN, MANEG, pre shipment agencies and other stakeholders. By that, govt can have an estimate instead of doing a budgetary allocation that would go sour. With an estimate, government can have a clearer picture of what should be expected from export.
He said In a short while, the country would suffer because crude oil is getting out of it.
“By the time crude does not sell again , where do we go to. We have not really taken advantage of our position in west Africa, that is a problem.
He disclosed that there were some monies hidden somewhere, saying for every export made, “we pay 0.5percent value of the naira, “what has happened to such money for over 10 to 12 years now. What has happened to the money. No one refers to that.”
On his part, Chairman, Apapa branch of the Manufacturers Association of Nigeria (MAN), Frank Onyebu, explained that the EEG is a well thought out program of government, but like other similar programs, it is subject to abuse.
“The aim of the program is to incentivize genuine Nigerian exporters through grants to become more competitive at the world stage.
“The expected benefits derivable from EEG are, however, not fully realized due to our system of unbridled corruption. Fake exporters work through corrupt government officials to exploit the system at the expense of genuine exporters. Exporters, including manufacturers, who are unable / unwilling to play ball are left out dry.
“Government’s efforts to rectify this anomaly led to suspension of the program at different times in the past. However, this effort has not worked due to entrenched corruption. The government needs to deal decisively with corruption in order to make the benefits of EEG accrue to exporters.”
The post EEG: Manufacturers, exporters proffer sustainable budgetary allocation, others for effectiveness appeared first on The Sun Nigeria.
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