Saving 38 Nigerian non-oil export companies from imminent death  

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One of the reasons the EEG became instant success was that the government of the then President Obasanjo made payment of grant through Negotiable Duty Credit Certificates (NDCCs) to conform with WTO international best practice.

 

 

By Olufemi Boyede

One of the sad realities of Nigeria’s economy today is that it still remains a mono-economy depending on crude oil as its mainstay. That has been the albatross hanging on our neck as a nation from the time oil was discovered in Oloibiri, Bayelsa State, in 1956.

This reality has however made governments over the years to introduce programmes and policy instruments that would help enhance non-oil exports. Such programmes have not been consistent though. But they have somehow helped to keep the non-oil sector in the front burner of discussions.

Export Incentives

One of such support instruments is the Export Incentives and Miscellaneous provisions Act No. 18 of 1986. The scheme came with a technical mix of eighteen different incentives, the most prominent of which were: The Export Expansion Grant, Export Adjustment Scheme Fund and the Export Development Fund.

But of all the three instruments above, the EEG seems to be the most functional. It was amended by Act No. 65 of 1992 under the military regime of General Ibrahim  Badamosi Babangida and has however continued to survive all governments, starting from when it was introduced.

The primary objective of the scheme is to assist exporters to: increase volume/value of non-oil exports, diversify their export markets and enhance their global competitiveness. The EEG seems to be the only scheme that is directly connected to the exporters.

Roles of CAC, NEPC

For any exporter to qualify for the grant, such exporter has to have a registered company with the Corporate Affairs Commission, as a Limited Liability Company. The exporter must be registered with the Nigeria Export Promotion Council. The exporter must have a minimum annual export turnover of N5 million while the products being exported must be of Nigerian origin.

The exporter is also expected to show evidence of confirmed repatriation of export proceeds into a Domiciliary Account in Nigeria and submit baseline data which should include Audited Financial Statements and information on operational capacity to the NEPC, on an annual basis.

With all these measures put in place, it was unthinkable that anybody would want to circumvent the process. Yet, that is exactly what has happened over the years.

DIFFICULTIES

Both government officials and exporters played the hide and seek game with the scheme so much that it became rather difficult for genuine exporters to benefit from the grant.

It took a lot of battle and efforts from some exporters in the country for the scheme to survive. While the hide and seek game was being played, the nation’s economy sank deeper and deeper into the abyss.

Non –oil exporters under Obasanjo’s regime

But when President Olusegun Obasanjo became Nigeria’s president in 1999, there emerged a ray of hope. The diversification song took the front burner. Non-oil exporters became the darling of government while campaigns and awareness were on for the nation to diversify her economy.

The scheme was repackaged. Government reached agreement with exporters that the scheme would primarily compensate three categories of exporters: Those who export manufactured products, those who export semi/non-manufactured products and those who export primary products.

The percentage of grants approved for such exports range from 10 percent of the total investment put into the production of the non-oil exports to 30 percent.

To demonstrate its seriousness and prioritisation of value-added exports, the President signed an instrument, under his personal seal, that exporters of fully manufactured products, especially textiles would receive EEG of 40%! 

The scheme soon came into full operation while exporters began to benefit from it. The revolution in that sector was so cheering that a steady growth was recorded in the non-oil export as the years passed by.

The EEG thus proved to be pivotal to the ability of Nigeria’s exports to compete favourably in the international market.

The value of non-oil exports according to reports increased from US$ 0.1 billion in 2005 to US$ 2.7 billion in 2011 (CBN), representing an increase in non-oil exports total export earnings by 270 per cent. The value of the corresponding Negotiable Deposit Credit Certificate released per annum also increased from N21.92 billion in 2005 to N78.46 billion in 2011.

One of the reasons the EEG became instant success was that the government of the then President Obasanjo made payment of grant through Negotiable Duty Credit Certificates (NDCCs) to conform with WTO international best practice. This was unlike the pre-1999 era where such grants were paid to companies in cash.

Nigerian Factors

But then, despite the apparent success of the scheme, a spanner was thrown in its wheel. Soon, government bureaucracy began to creep in. By 2007, the Nigerian factor began to play in the granting of incentives to exporters to the point that several exporters were being owed the grant despite evidence that they had carried out exportation of goods from Nigeria.

Petitions about possible fraud and unfair processes in its administration subjected the scheme to several suspensions, investigations and audits within a short spate of time.  The result was that between 2007 and 2016 about 269 exporting companies were being owed grants of various amounts. It was in the process of this anomaly that the scheme was suspended in 2013.

Culled from The Nation

Read more: https://thenationonlineng.net/saving-38-nigerian-non-oil-export-companies-from-imminent-death/

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