Following the official confirmation of Nigeria’s economy in recession, non-oil exporters are asking the Federal Government to resuscitate the Export Expansion Grant (EEG) to pull the economy out of this crisis.
Nigeria’s GDP contracted for two consecutive quarters, which confirmed Nigeria as a country in recession. GDP growth in the second quarter of 2016 fell by 2.06 percent, while employment took some heat as a result of job losses that happened across sectors in Q2 2016.
The biggest factor remains the foreign exchange scarcity, caused by oil price lows and Nigeria inability to diversify its revenue base over the years.
“The Federal Government needs to resuscitate the EEG suspended in 2013. When you do so in this situation of crisis, you encourage exporters to export more and bring in foreign exchange,” Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG) told BusinessDay on the phone.
“You also push more people into export. Continued delay of resuscitation of EEG is one key reason Nigerian exporters are not competitive. This is also responsible for our woes today,” said Oyelola.
The EEG started in 1986, but became effective in 2005. It is a post-shipment incentive designed to assist exporters to increase the volume and value of exports, diversify their export markets and enhance their global competitiveness, despite high cost of production due to infrastructure deficiencies. The essence of this scheme is to subsidise export products from Nigeria and make them price competitive in the global market. Transactions in this scheme are done through the Negotiable Duty Credit Certificates (NDCCs).
This scheme has been suspended seven times. The last suspension happened in August 2013 when the Federal Government claimed the scheme was undergoing a review.
Kemi Adeosun, minister of finance, recently said non-oil exporters abused the scheme, as some exported stones and took EEG, despite that the grant was meant for those in the business of value-addition.
“But in MAN, nobody produces stones,” Frank Udemba Jacobs, president, MAN, said at a recent press briefing.
“We are manufacturers and any member of MAN is involved in production. So nobody in MAN could have been involved in that,” Jacobs said in response to a question.
ODINAKA ANUDU
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