The commitment of the administration of President Muhammadu Buhari in diversifying the country’s economy has never been in doubt. What is, however, in doubt is the determination of relevant agencies of government to match the President’s commitment. At a meeting with a delegation of French investors on the platform of the Movement of the Enterprises of France, led by its president, Mr. Pierre Gattaz, in Abuja in 2016, the President expressed his administration’s desire to enact new policies aimed at diversifying the nation’s economy, including measures at boosting domestic manufacturing as a way of attracting greater investment to the country, among others. During a two-day working visit to Jigawa State in the same year, Buhari reiterated his administration’s commitment to grow the non-oil export sector. Taking advantage of the new vision in moving the economy out of its mono prodyct syndrome through the policy of Export Expansion Grant (EEG), which was abandoned by the former administration of President Goodluck Jonathan, the present administration reintroduced the EEG policy in order to stimulate export-oriented activities towards developing the non-oil export sector.
The EEG provides for claims payable to exporters, depending on value and volume of products exported as outlined in the EEG Policy Circular of Federal Ministry of Finance, including individual’s rating as per the company baseline data as clearly outlined in the EEG Policy Circular issued by the Federal Ministry of Finance.
In addition, the company’s baseline data from the audited financial results of the exporting companies as filed at the Corporate Affairs Commission (CAC) are verified by the Nigeria Export Promotion Council (NEPC) before processing EEG application for payment. What is eventually paid is based on claims processed and approved by the EEG Implementation Committee meetings whose membership is drawn from the Federal Ministry of Finance, Federal Ministry of Industry, Trade and Investment, Central Bank of Nigeria and the NEPC, among others. The EEG claims are first audited by the Presidential Initiative on Continuous Audit (PICA) and the process of audit includes calling for comprehensive documentary submissions from exporters after field visits to their facilities.
For industry operators, the EEG bill payments have been described as a well-grounded interventionist programme that is capable, if appropriately carried out, of accelerating export volume and diversifying sources of earnings for the country. However, the present situation surrounding the settlement of EEG obligations are confronted by various bottlenecks. It is sad that non-oil exporters in the country are being owed to the tune of several billions of naira despite the reintroduction of the EEG claim policy by the Buhari-led administration.
In the last seven months or so, there have been mounting pressure on the federal government to release the accumulated Export Expansion Grant (EEG), from 2007 – 2016. The Organised Private Sector Exporters Association (OPEXA has been in the forefront of pressuring government to release the sum of N195 billion that was earlier approved by the federal government through the Promissory Notes (PNs) programme in 2017. The National Assembly had approved the payment of N195 billion in January, 2019, but several months after that, the payment has remained stalled. The issuance of PNs by the Debt Management Office (DMO) through a Reverse Auction Process seems to have stalled payment aimed at rescuing exporters from dire financial straits. Traditionally, Reverse Auction occurs when several sellers submit increasingly lower bids to one buyer, instead of the other way round, where several buyers submit increasingly higher bids to one seller. This was not originally on the cards, and the beneficiaries claim that the Reversed Auction would affect their cash flows, and compromise their capacity to service debts incurred in the export transactions.
Taking into cognisance that the EEG claims cover a backlog of 10 years from 2007 to 2016 for 270 companies with the total value of N195 billion, there is need to wade into the matter and save the situation. Since the intention of this scheme is to cushion effects of infrastructure deficits, which tend to increase the overall unit cost of manufacturing in Nigeria, the adoption of non-cash scheme that is operated via promissory note goes a long way in promoting non-oil export ventures. Promissory Notes are acceptable to government agencies, just as they can be used to offset payments, like tax due to government. The PNs are also negotiable because they are transferable to third parties, and beneficiaries can assign the instrument to their creditors who can also use it to offset statutory payments to government agencies.
When used to offset tax, it becomes a fiscal policy. It is truly a win-win situation for both government and beneficiaries, with the prospects of increasing foreign exchange earnings.
According to information obtained from the Pre-Shipment Inspection Agency and Nigerian Bureau of Statistics (NBS), there was a growth of 48.43 per cent in non-oil exports from $1.204 billion in 2016 to $1.787 billion in 2017. This further went up by 27.22 per cent, equivalent to $2.274 billion in 2018. It is predicted that exports for 2019 would leap to about 40 per cent, if promissory note settlements are done early enough.
The EEG was introduced in 1986 via the Export Incentives and Miscellaneous Act in order to diversify Nigeria’s export base from crude oil to non-oil products, especially in the agricultural and allied sub-sector of the economy. Interestingly, the Nigerian Export Promotion Council (NEPC) has directed DMO to settle EEG debts. With the executive secretary of the NEPC, Mr Segun Awolowo, appealing to the National Assembly to approve the first batch of promissory notes for the export grant in January 2019, respite is expected to come the way of the agitated exporters to have their claims cleared. It is hoped that once these debts are settled, the present debt-ridden status of these exporters would pave way for the revival of the non-oil export sector of the economy, in addition to enabling financial institutions inject funds for further export activities, generate more foreign exchange as well as employment for the nation’s teeming youth.
In order to get the resuscitated EEG bill payments on good footing, according to the exporters, there is need to reconsider the Reverse Auction Process (RAP) for issuance of Promissory Notes (PNs). Secondly, government should restrict issuance of PNs within the shortest term feasible for payment, including equal treatments to all beneficiaries of all categories of PNs. Another requirement is that exporters should be issued PNs with shortest tenure of not more than three years, bearing in mind that payment has been delayed for a period of three to 12 years for exporters.
Apart from facing major challenges, especially on increasing interests on loans that is making pricing decision in their businesses very difficult, there is no doubt that the inability of government to meet up with the promissory notes for non-oil exporters for dues owed them for over nine years is capable of undermining the successes recorded so far by the EEG Policy. The EEG scheme resonates with the Economic Growth and Recovery Plan of the present administration which aims at accelerating non-oil revenue generation for the government and people of Nigeria.
Amidst the growing unemployment ravaging the country, there is no denying the fact that embarking on measures aimed at encouraging non-oil export growth will go a long way in providing employment opportunities and diversifying the economy. Clearing the N195 EEG claims will brighten the prospects for the diversification of the nation’s economy. This is a task the finance minister, Hajiya Zainab Ahmed, should set out to achieve.
Christine Lagarde Resigns As IMF MD
Christine Lagarde, the Managing Director, International Monetary Fund (IMF), has resigned, the IMF says. The Executive Board of the fund...
Court Remands Man In Prison Custody Over Car Theft In Osun
An Osun State Magistrates’ Court sitting in Ile-Ife on Tuesday remanded one Hammed Ajala, 37 in Ile-Ife prison custody over...
Lawmaker Assures Of NASS Support To Make Nigeria Safe
A member of the House of Representatives from Ekiti, Hon. Yemi Adaramodu has assured that the ninth National Assembly will...
Nigerian Students Get $7.5m In Scholarships From US Universities
About 303 Nigerian students have received no less than $7.5 million in full or partial scholarships from 225 American universities...
Court Freezes Firms’ Accounts Over Alleged N125m Fraud
Justice Nicholas Oweibo of the Federal High Court in Lagos on Tuesday placed a no debit order ordered on two...
Ekiti NGOs Hail Mrs. Fayemi On Gender Rights Protection
The coalition of the Non-Governmental Organisations (NGOs), in Ekiti State have lauded the first lady of Ekiti State, Erelu Bisi Fayemi...
Cuba Seeks Nigeria’s Support To End U.S Blockade
The Cuban government has urged Nigeria to throw its weight behind the country in its quest to pressure the United...
OPINION16 hours ago
Kogi 2019: Whither Governor Yahaya Bello (I)
COVER STORIES17 hours ago
Army Redeploys Lt Gen Adeosun, 32 Others In Major Shakeup
FEATURES17 hours ago
Dissecting Akpabio’s Many Battles
COVER STORIES17 hours ago
Mixed Reactions Trail OBJ’s Latest Missive To PMB
FEATURES17 hours ago
When Will Ondo APC Crisis Be Over?
BUSINESS16 hours ago
NERC Moves To Stop Arbitrary Estimated Billing
NEWS24 hours ago
‘Investigative, Digital Story-telling, Proper Response For Current Challenges’
COLUMNS16 hours ago
Edo Assembly Imbroglio, A Necessary Distraction