Olam, Cadbury, Flour Mills, Guinness to benefit from N70bn EEG fund

Major exporters including Olam International, Flour Mills of Nigeria, Cadbury and Guinness stand to benefit from the federal government’s N70 billion budget for the Export Expansion Grant (EEG) in 2018 a latest move to spur the non-oil sector.
Apart from them, Dangote Group, Royal Mills and Foods Limited, Aarti Steel, African Industries Group, Louis Dreyfus Commodities Nigeria Limited, Deekay & Sons (Nig) Limited, Dag Motorcycle Industries Nig. Limited, and Givanas Industry Nigeria Limited will equally benefit when the settlement begins next year.
“Incidentally, the N70 billion will take care of 2017 EEG payments,” Ede Dafinone, chairman of the Manufacturers Association of Nigeria Export Group (MANEG), told BusinessDay in a telephone interview.
The EEG is a scheme introduced to assist Nigerian exporters become competitive in the global market by reducing their production costs.
The scheme was suspended in the last quarter of 2013 with billions of naira held in exporters’ Negotiable Duty Credit Certificate (NDCCs), which then served as cheques used for export transactions.
Exporters say that most of them borrowed money from banks before 2013 to carry out transactions with the hope of getting the EEG, with the suspension putting their businesses at risk in the last four years.
The federal government responded to their demands by stating that the backlog of debts would be cleared using tax credit certificates, but it appears that the government now has a different strategy.
“The government wants to use promissory notes for the settlement of the backlog. They have decided to put non-oil exporters in the same group as oil marketers,” Dafinone said.
The federal government earlier budgeted N20 billion for the scheme in 2017, but this was not used by exporters due to bureaucracy involved in the documentation and the submission of baseline data
The baseline data provides basic information about a company’s participation in export business and determines how much it gets.
The Nigerian Export Promotion Council (NEPC) recently requested qualifying exporters to submit baseline data for the determination of export ratings for the 2017 fiscal year.
Existing companies were asked to submit baseline data on their 2014, 2015 and 2016 transactions, while new companies would hand in their current management account and projected 2018 financial statements. Submission commenced on Monday, 20 November 2017 and will end on Friday, 29 December 2017.
NEPC has also requested all beneficiaries under the old EEG scheme, who are in possession of unutilised negotiable duty credit certificates (NDCCs), to return the NDCCs for verification.
Obiora Madu, former chairman of the Export Group of the Lagos Chamber of Commerce and Industry (LCCI), in an earlier interview, said it was important for government to settle the debts of companies owed huge sums of money in the previous regime before restarting the scheme.
“The reason is that many exporters that participated in the previous scheme are struggling,” Madu said.
The EEG recorded huge success in the past, with the volume of non-oil exports rising from US$700 million in 2005 to US$ 2.9 billion in 2013. Since the EEG was suspended, the non-oil sector has witnessed a sharp decline from US$2.9billion in 2013 to US$1.1billion in 2015, which is about 59 percent decrease. Since then, non-oil export value has remained below $2 billion annually.
Nigeria desperately needs to diversify into the broad non-oil sector to earn dollars and protect itself against external shocks.
According to the data from the International Trade Centre (ITC), export of major crops from Nigeria dropped in 2016, meaning that the sector may need some support.
Nigeria exported oil seeds, oleaginous fruits, grains, seeds and fruit worth $280.62 million in 2016 as against $363.11 million value obtained in 2015, representing 22.7 percent decline.
“The problem is that the cost of exporting products out of Nigeria is very high,” Jon Kachikwu, CEO of Jon Tudy Interbix, an exporter to the US, who is also the chairman of Lagos Chamber of Commerce SME Group, said.

ODINAKA ANUDU