Nigeria reviews pioneer status list for industries, products

Nigeria’s government on Wednesday amended the list of pioneer industries and products in the country and approved tax holidays ranging from 3-5years to those captured.
For already matured industries, a three-year window will be allowed before finally taking them off the pioneer status list. The incentive scheme is meant to woo investors and in return raise the country’s tax base, officials said.
Twenty seven industries have been given the pioneer status while the Mineral, Oil prospecting governed by the Petroleum Profit Tax as well the cement industry which is deemed to have matured have been taken out of the list.
Council also approved a new policy guideline for the Federal Executive Council, Ministries, Departments and Agencies on the planning and execution of projects, programmes and contracts that have science, engineering and technology components.
The new policy targets to domesticate firms with science, engineering and technology components in 10 years although the science sector will continue to rely on foreign experts to train home based Nigerians to take over.
Minister of Trade and Investment, Okechukwu Enelamah who disclosed this while briefing newsmen after the weekly Federal Executive Council (FEC) chaired by Acting President Yemi Osinbajo, at the State House, Abuja, said the amendment of the list had become imperative seeing that it was last reviewed in 2006.
He noted that the scheme is an incentive to make people enter Nigeria’s market, enter new industries, invest more for companies already existing in the country.
“FEC approved a memorandum that was presented to amend the list of pioneer industries and products that will enjoy pioneer status going forward. Many of you know the pioneer incentive scheme is governed by the Industrial Development Income Tax Relief Act and the whole purpose is to give tax holidays to industries we consider pioneer.
“Pioneer doesn’t mean that they are new it only means that they are not yet mature, we want those industries to grow. We want to attract investment in them and you will find that this covers a wide range of industries and those tax holidays ranges from 3-5 years” Enelemah explained.
The minister who briefed alongside the ministers of Power, Works and Housing, Babatunde Fashola, Science and Technology, Ogbonanya Onu and Information, Lai Mohammed noted that in carrying out the review special attention was paid to the Economic Recovery and Growth Plan (ERGP) to capture the current realities that will help to implement the plan to make sure we attract the kind of investment, industries and players that will help to implement and realize our objectives in the ERGP.
Multi stakeholder engagement, both private and public sector were consulted in arriving at the industries that will be included in the pioneer incentive scheme.
According to the minister council approved some recommendations to “remove all ambiguities in the definition of industries by reclassifying industries according to the international standard in industrial classification, which is the global standard which is also the standard that is used by the Nigeria Bureau of Statistics.
“The other thing we also did is to agree that the pioneer list will be reviewed regularly every two years, biannually so that just that if things come up, we live in a fast changing world and we are being responsive to our world. In the case of additions to the list they will be effected immediately, for deletion of industries that we consider mature there will be a three year window that will be allowed for those that are already investing in that industry that were enjoying pioneer status to carry on till the end of that three year period.
“Against this backdrop, we then approved 27 industries that were recommended for addition to the pioneer list today. We also recommended and it was accepted by the Council that mineral oil prospecting which is governed by the Petroleum Profit Tax should not be part of the pioneer industries list which is really industries governed by the Companies Income Tax Act.
“It was also accepted that given the success we have achieved in cement, which are now net exporters, maybe that is an industry which we could say that we are now where we want to be in terms of maturity even though there is still a lot of scope for the application and the use of cement and you know that will continue. We already have critical mass in cement.”
“Some of the highlights will involve for example where we have bulk purchases of major items that we are bringing into the country that those who normally would have supplied from outside the country will now come to Nigeria to establish their factories to produce in Nigeria.
“By doing so they will offer job opportunities to our people, tax will be paid to government so wealth will be created but most importantly Nigeria will now acquire the necessary technology that will help us to build capacity.’’
On the new Policy on Science and Technology, Onu said that FEC agreed that henceforth whoever wanted to practice any profession, in Engineering, Science and Technology, Medicine, Accountancy, Quantity Surveyors and others must be certified by appropriate professional bodies in Nigeria.
He said the measure was very important in building the nation’s local capacity adding that there were so many areas that the fiscal policy had covered.
The Minister of Power, Works and Housing, Babatunde Fashola, disclosed that N10.4billion was approved for the reconstruction of Pankshin-Balank-Yalen-Salak-Gindiri road in Plateau state while N10.2billion was also approved for reconstruction of Sharre-Patigi road in Kwara.
Council also approved a memorandum in respect to inherited liabilities from the old power ministry where a judgment of N119billion was signed against the Federal Government as a result of acts of officials of government who varied the presidential approval without seeking further directive from him and then awarded the contract on that basis.
This frees up N39.17billion held under another judgement in court to be used now for the supply of electricity meters to the Discos, the minster said adding that the dispute arose from a contract to supply 3 million meters entered into with a contractor and NEPA which became PHCN in 2003, that’s about 14 years ago.
The contract was never fully performed by both parties, neither by the contractor or government. So, there was a court judgement and money was left in the bank, the purpose couldn’t be achieved then a new contract was created which became the liability of N119billion.
“The happy news is that Council approved the memo to give effect to the negotiations that we were able to put together to compromise that judgment entirely and to convert the old N37billion now to a loan to that contractor so that they can use it to supply meters through the Discos,” he said.