The government has gone beyond the revival of the Export Expansion Grant incentive scheme to introduce a new basket of incentives for existing and new exporters.
According to the Acting Executive Director/Chief Executive Officer, Nigerian Export Promotion Council, Abdullahi Sidi-Aliyu, the new basket of incentives is designed to boost the growth of the Small and Medium Enterprises sector.
Speaking during a stakeholders’ forum on the validation of the guidelines of the new incentives in Lagos on Friday, Abdullahi Sidi-Aliyu, who was represented by the Director, Export Development and Incentives at the NEPC, George Enyiekpon, revealed that the government had already made funds available for the implementation of the new incentives.
He added that unlike the EEG, which was a post-shipment incentive where exporters were required to export before accessing, the new basket of incentives was pre-shipment and exporters would be given the grant before carrying out the export.
Sidi-Aliyu said that the NEPC had constituted a technical committee on the new basket of incentives, which reviewed export incentive schemes in the country and came up with suggestions.
“The draft report of the committee proposed the reactivation of moribund schemes such as Export Development Fund, Export Adjustment Scheme Fund, Manufacture-In-Bond Scheme and the introduction of new ones such as Export Support/Litigation Fund, which is being presented for stakeholders’ validation,” he stated.
He noted that the Export Incentives and Miscellaneous Provisions Act had made provision for various forms of incentives out of which only the EEG was operational, adding that it was obvious that the EEG alone was not enough to cater for all the challenges facing the non-oil sector.
With the return of the EEG, some stakeholders including XPT Logistics International Limited expect more people to go into the export business.
The Managing Director and Chief Executive Officer, XPT Logistics International Limited – a consultancy, training and trade facilitation firm, Mr. Kolawole Awe, specifically said the export volume would rise by about 150 per cent.
The President, Federation of Agricultural Commodities Association of Nigeria, Dr. Victor Iyama, told our correspondent that the new scheme would push up the non-oil export sector by about 300 per cent.
The Chairman, Manufacturers Association of Nigeria, Export Promotion Group, Chief Ede Dafinone, stated that with the introduction of the new incentives, there would be a remarkable growth in the non-oil export volume by the end of the first quarter of 2019.
Speaking to our correspondent on the sideline of the stakeholders’ forum in Lagos, Dafinone also expressed confidence that Nigeria was about to witness a reversal of the high unemployment rate.
“The scheme will encourage new operators to come into the export sector and that way more jobs would be generated,” he said.
Iyama, who has been an operator in the agro-export sector for over 27 years, said, “I believe the growth of the sector will be tripled if there is consistency in the policy.
“This policy is better than the EEG in terms of encouraging upcoming exporters who have no opportunity to access bank loans.”
Awe said that with the widening of the basket, more people would be attracted to the non-oil export sector.
“The export sector will grow more than 150 per cent because the EEG is back; utilisation has been expanded, you can use it to pay tax, buy treasury bills, and so on. More people will go back to export to be able to take advantage of the EEG and all the other incentives.”
“This is what is being practised in more developed economies and we are just taking a cue from that,” he said.
Continuing he said, “The EDF, for instance, is targeted at the SMEs that are hampered by funding capacity to expand their market. With the EDF, they have access to funds to take care of their labelling, branding, advertisement issues and more importantly to be able to access the international market.
“So you can imagine the myriad of opportunities opened to new and existing exporters. I believe it is going to greatly impact on the figures of the non-oil export sector and the SMEs would be able to produce, sell more and employ more people and the economy will grow as a result.”
The suspension of the EEG in 2014 led to a decline in non-oil exports by over 50 per cent. By April 2017, the non-oil exports reportedly suffered a 60 per cent decline.
Reports put the yearly loss in the sector between 2014 and 2016 at $1.39bn compared with the $3.4bn recorded in 2013.
The 2016 recession added to the suspension in the EEG to compound the loss. According to data from the National Bureau of Statistics, export trade on non-oil goods in 2016 was the lowest at about $1.1bn compared to 2011 and 2012 when receipts from agro-based produce were over $3.8bn and $3.9bn, respectively.
Following series of screening of outstanding claims, meetings and negotiations with stakeholders, President Muhammadu Buhari in his 2016 budget speech announced that the EEG would be revived and made provision for it in the 2017 budget.
This, in addition to the country’s exit from recession, led to a rise in the non-oil exports to $1.26bn by the third quarter of 2017.
It was also resolved that the backlog of the unclaimed Negotiable Duty Credit Certificates (instruments presented by exporters to enable them to benefit from payment of the EEG claims) would be settled through promissory notes.
The new basket of incentives would be claimed through the presentation of the Export Credit Certificates, which was used to replace the NDCC.