As the debate for diversification of the economy from a mono-export economy continues, stakeholders have identified the suspended Export Expansion Grant (EEG) as capable of boosting forex earnings and employment creation.
Beyond the argument that it will breathe life into the country’s non-oil export and augment the forex earnings, proponents of the call added that it will help with employment creation and generation among other pluses.
The Federal Government had introduced the EEG in 1999 to encourage non-oil exports and cushion the effect of cost disadvantages faced by Nigerian exporters due to infrastructural deficiencies. The grant was planned to be disbursed to qualified exporters in the form of the Negotiable Duty Credit Certificate (NDCC) and utilised by beneficiaries for the payment of customs and excise duty on their export shipments.
The EEG scheme was conceived as a very vital incentive required for the stimulation of export-oriented activities that will lead to significant growth of the non-oil export sector.
The impact assessment of the scheme on the Nigerian economy was to be carried out annually by external consultants, as may be determined by the Minister of Finance. The implementation committee consists of Nigerian Export Promotion Council (NEPC), Federal Ministry of Finance (FMF), Nigeria Customs Service (NCS),and Central Bank of Nigeria (CBN).
Even with all its promises, at full implementation, the scheme still failed to record seamless implementation among the government agencies tasked with making a success of it.
The scheme was, however, suspended in January 2014 for it to be reviewed. THISDAY findings revealed that between 2005 and 2014, the EEG scheme had witnessed suspension for as much as eight times on account of various investigative panels, ministerial audits, presidential committee as well as House of Representatives’ probe reports alleging malpractices in the administration of the EEG.
THISDAY investigations further revealed allegations of irregularities, especially claims that some of the beneficiaries of the scheme were unqualified for it were among reasons for its suspension. But President of Manufacturers Association of Nigeria (MAN), Dr. Frank Jacobs, disagreed.
Reacting to question bordering on the allegation, he explained that the allegations were unsubstantiated insisting that if it was found to be true, the culprits should be brought to book adding the continued suspension was impacting negatively on the country’s fortunes.
“We heard so too but have not been shown any proof of irregularity. If there were irregularities, they should be pointed out and the culprits should be sanctioned. We cannot because of perceived irregularities, which have not been proven, discontinue an important scheme such as the EEG. This has serious implications for the country as a whole as it entails loss of confidence in Nigerian exporters who, on account of the changes in policy, failed to meet their obligations to their overseas customers,” Jacobs stressed.
It has remained so till date even as different groups, including the Organised Private Sector Exporters’ Association (OPEXA) decried the continued suspension and maintained that the only way out for Nigeria to extricate itself from the restraints of mono-economy was for the government to diversify the country’s export sector. It will be recalled that the scheme recorded $2billion growth between 2006 and 2013 before it was suspended.
In a widely reported press statement, Executive Secretary of the body, Mr. Jaiyeola Olanrewaju, had lamented that the extant policy on the EEG and the utilisation of the Negotiable Duty Credit Certificates had been put on hold, a development, which he said had impacted negatively on the activities of non-oil exporters in Nigeria.
Though the scheme has remained suspended since 2014, government officials have always maintained that it is under review and will be re-introduced, its re-introduction remained a pipe dream throughout the last administration and has continued to be so till date.
In response to THISDAY enquiries, Jacobs noted that , “the EEG scheme was introduced to provide incentives and rebates needed to reduce the high cost of production in Nigeria, boost production, stimulate and diversify non-oil exports. EEG will reduce the burdens of the high operating costs.” Adding that, “MAN has written to the government and has met with relevant arms of government, explaining the need to conclude the review and lift the suspension. Besides, a lot of exporters’ money, by way of unsettled NDCC, is tied down. MAN has made various recommendations on how to resolve the problem,” Jacobs explained.
A former President of the Institute of Chartered Accountants of Nigerian (ICAN), Chidi Ajaegbu, while lauding the scheme noted that rescuing the economy from its current state requires an integrated approach including revisiting the suspended EEG. According to Ajaegbu, who is also the chief executive officer of Heritage Capitals Limited, the EEG will boost local industry and compliment government’s earnings from the oil sector.
“I agree EEG should be revisited. In an economy like this it is very critical that we do everything humanly possible to diversify our source of foreign exchange earnings and secondly encourage local manufacturers that are still producing profitably to continue to do so across all sectors of the economy.
“If it is revisited, the EEG will help to grow the manufacturing base of the economy and then help with employment generation because as we speak, companies are closing down, people are being fired everyday so whatever policy that will help to generate employment and grow the economy is welcome by me,” Ajaegbu added.
Also, in an interview with THISDAY, Director General, Lagos Chamber of Commerce and Industry (LCCI), Muda Yusuf , noted that, “Export Expansion Grant is the only incentive left for the real sector. The other time when we raised the issue with government, the response that we got was that they were reviewing it so that all irregularities will be taken away and it will go to those that actually deserve and need it. In the light of that, we can only call on government to expedite action on the review of the export expansion grant.”