Urge FG to explore other ways to boost export competitiveness
PDF Bridge calls for more budgetary allocation to EEG
By Gabriel Ewepu – Abuja
As Federal Government pushes for diversification of the economy towards a sustainable economy and increased generation of foreign exchange, the non-oil exporters have decried the poor funding of Export Expansion Grants, EGG, to support exporters.
Making their challenges known at a recent webinar conference organized by PDF Bridge and Non-Oil Export Nigeria, the Chairman, Non-oil Export Group, NEG, Ede Dafinone, while lamenting that government for the past seven has unable to fund the EEG.
Dafinone said: “Government has been unable to fund the EEG in the past six, seven years now. the figures from customs highlight the size of the problem where we have amount significantly and amount approved much less and yet amounts released are being nothing to write home about, and still, there is a significant amount of EEG that remains unpaid even with the amounts released and amounts budgeted.
“It is a far cry from the amounts required to sustain the EEG going forward and to give exporting economy any confidence that government is committed to encouraging non-oil exports even with the rhetoric we keep hearing that there is a need for government to support.
“I have to say behind all of these even where funding is not available for Export Expansion Grant and with other problems, you keep hearing government initiating new schemes in order to encourage non-oil exports but the scheme that is showing to be successful historically in increasing non-oil exports has not being funded.
“This gives exporters a great deal of concern. The common thinking on government is that the EEG is being used by exporting companies that are beneficiaries is not correct at all. But we have been saying to the government over 15 years fish out those companies, make example of them to stop this rumour. The government has stopped the scheme nine times or 10 times in 15 years and yet no companies have been prosecuted for any fraudulent claims.
“My call to government and PDF is that we need to show the government in very clear terms is that encouraging the non-oil exports is critical to our long term economic survival. Chairman of Non-oil Export Group
“And any investment we are making in any scheme like he EEG is important for the export sector and for the expected growth we need for a viable economy; long term past the days of oil.”
He also queried the exclusion of 28 companies and said there was no basis for that based on the fact that some of the companies excluded are the best, largest, and most profitable multi-nationals.
“On the issue of the promissory note scheme, N350 billion was made available for exporters to pay claims on the Export Expansion Grant having the period of 2007-2016, 30 or 28 companies have been left behind, there is absolutely no basis for excluding the 28 companies.
“The companies excluded are some of the best, largest, and most profitable multi-nationals within the Nigerian space.
“I want to re-emphasize the point again that the fact that a beneficiary of the EEG is a multi-national does not mean that that money is going abroad.
“Again, a multi-national company that receives a super profit as a result of EEG will be encouraged to invest in the Nigerian market in order to earn future super-profits, and this is what we need to do to expand growth in non-oil exports”, he stated.
Also speaking was Bamidele, who said they’re in a need for government to grow export if it can focus on other programmes that encourage export.
“I am of the opinion that the interest to grow export, can we focus on other programmes that encourage export because the goal of EEG is to make us more competitive by giving incentives.
“Can we look for other ways for helping us to be able to grow and expand the export or just thinking some people are just milking the government as we have also heard under the oil subsidy scam?
“Now, number one, can we do export credit insurance, pre-export incentive. We need to support export. Also, the Central Bank of Nigeria has come up with a single digit loan, can we reduce the requirement for those exports so at the end of the day the single digit can be assessed.
“I did an article on a typical product, how the price has gone up, the effort has become non-competitive and loss for some transactions because I am forced to sell at N350 rather than sell at a rate that is not profitable.
“And I must say this, a lot of Nigerians are beginning to look at exporting outside the country; they will buy the product in the north and ship it out from the north to other neighbouring countries and ship it out of other neigbouring countries because they won’t do NSP there, they will bring in their money and they won’t have to be shipping at a loss.”
On the issue of government thinking some companies are taking advantage of the EEG, he also queried, “The question we should first ask ourselves is, are we interested in growing exports? And if we are interested in growing exports and we feel some people have taken advantage of EEG which I think is true because I heard one of the reports saying that about 1, 000 companies claiming transaction I think there is an issue with it.
“I am just working with data with different companies legitimately exporting every year, how come 1000 companies claiming EEG I have an issue with that but I might be wrong, but I am working with data from NBS, inspection agents that do these exports.
“If you look at these data and if you look at people that legitimately export is not up to a thousand every year.
“I think the concern of government I think is legitimate to an extent. Some people are bad does not mean everybody is bad. I think we should find a balance. I think we should find a balance”, he stated.
The Deputy Director, Nigerian Export Promotion Council, NEPC, Incentive Division, Lawal Dalhat, explained how the Council was able to secure approval of N350 billion by the Federal Government
He said, “On the issue of backlog we were able to intervene where Federal Government also has been able to approve N350 billion for settlement of backlogs from 2007 to 2016 where the DMO brought in promissory notes for the settlement.
According to him, N50 billion has been made available for simulation plans to assist the exporters, manufacturers, and companies to enable them to tackle some other challenges in their business.
“Culminated out of the recommendation of some of the things that government is trying to implement, the government has made available some funds to simulate plans to assist the exporters and other manufacturers and companies in order to overcome some of these problems.
“The provision of about N50 billion has been made for this but not directly in the hand of NEPC but through the ministry and some agencies under the federal ministry of industry, trade, and investment.
“Once the implementation commences, exporters will be able to benefit through this fund. Looking at the issues especially regarding some of the figures that have been going down, all hands must be on deck in order to actually encourage the exporters to be able to export without much hindrance.”
However, the highlighted some challenges facing non-oil exporters including unfettered access to forex, “One major issue I believe is a major problem is one when you look at the issue of our exports, structure issue which supposed to be tacked in a very short time because a lot of our exporters face a lot of problems trying to access the ports. It takes three to four days from the north to Lagos but it takes three to four weeks to get the goods from Lagos to the port.
“Another issue which is a major problem which supposed to be looked into NEPC is working towards is also the forex itself. This is the unfettered access to export proceeds by the exporter. When an exporter cannot access his exporter proceeds when he repatriates a legitimate business and now he is forced to discount his proceeds to the bank at the official rate which is not considered when he is making cases for export.
“It discourages exporters from carrying out legitimate export business because the gap between the official and black market is so huge that exporters are losing a lot.”
The CBN Deputy Director, Trade and Exchange, Chika Nwagwu, while speaking on the issues acknowledged that protocols have been a major challenge to non-oil exporters.
“It seems that the budgetary allocation is never enough. Unfortunately, due to the protocols on how it is organized, the people that are doing the budget are the Federal Ministry of Industry, Trade, and Investment.
“Meanwhile, the people managing the budget is the Nigerian Export Promotion Council and this has caused a lot of problems because there is no synergy between them as what the budget is usually below what the exporters actually need,” she said.
Earlier, in an opening remark, the Programme Manager, PDF Bridge, Titilola Akindehinde-Ojo, pointed that it has become imperative for the Federal Government to urgently settle the outstanding EEG owed exporters in order to boost the export capacity of companies.
According to Akindehinde-Ojo, Government should subject the scheme to a thorough review for comprehensive reform with clear implementation strategy and guidelines in order to permanently address the issues that have led to the truncation of implementation since inception.
Also, increase commitment in terms of investment to the non-oil sector is fundamental to increasing non-oil export in the mix of Nigeria’s export basket.
“The government must increase budgetary allocation to EEG and similar incentives designed to grow the non-oil sector in Nigeria”, she said.