Entrepreneurs canvass EEG revival as non-oil exports slump to $1.6 billion

The Organised Private Sector Exporters Association (OPEXA), made up of entrepreneurs and corporations, has called for the reinstatement of Export Expansion Grant (EEG) in the wake of declining non-oil export proceeds, which have seen a 47 percent pratfall in the last two years.

Nigeria’s non-oil export proceeds fell from $3 billion in 2013 to $1.6 billion this year, as the Federal Government dithers on reinstating the suspended EEG, which is the only incentive available for non-oil exporters.

Exporters say earnings from the sector can easily surpass $5 billion and provide sufficient foreign exchange for Nigeria that is facing currency crisis, if the suspended incentive is revived and other challenges addressed.

Jaiyeola Olarewaju, executive secretary, OPEXA, said exporters have, in the last two years, been sitting on a backlog of over N100 billion worth of unutilised export certificates issued under the seal of the Ministry of Finance, urging government to honour its financial commitments.
“It is paradoxical that one sector that has the potential to cushion the commodity shock has been paralysed due to lack of inter-ministerial coordination,”  said Olarewaju.

“In 2015, exports of cocoa, Nigeria’s largest commodity, declined by 35 per cent whereas leather exports, which are the main stay of industrial economy in the North plunged by 60 per cent.
“If the EEG policy had been sustained, our non-oil exports today would have easily crossed $5 billion by 2016 and brought some relief to tackle the foreign exchange crisis prevailing in the economy,” he said.

He pointed out that officials of the Federal Government have been evading the issue by alluding to perceived abuses of the grant which led to its suspension.

“It is classic case of throwing the baby away with the bath water. The exporters relied on the extant policy and repatriated forex through the banks duly verified by the CBN,” he stated, adding that while diversification of revenue is being advocated as the need of the hour to generate employment by boosting production in the non-oil sector, government should clear the backlog of unutilised NDCCs and exports made in 2014 and 2015 under the extant policy to sustain about 11 million Nigerians employed directly and indirectly in the non-oil export sector.
OPEXA helmsman noted that addressing unutilised export certificates could be done by converting them into government bonds with a medium to long term maturity to avoid undue pressure on current government revenue.
“The Ministries of Industry, Trade and Investment as well as Finance should harmonise their position and come up with a sustainable and effective EEG policy to put non-oil exports back on track. Nigeria’s non-oil export sector is still in its infancy and came into mainstream in the last 10 years due to the policies that were put in place that encouraged the sector to invest in agricultural supply chains, export processing factories and overseas marketing,” he further said.

“The root cause of the decline in non-oil exports was a legacy of the past administration inherited by the present government. There is an opportunity to reverse the trend by restoring the policy framework that led to the rapid development of the sector.
“Non-oil exports were boosted by the EEG policy meant to cushion the cost disadvantages faced by our exporters due to infrastructural deficiencies. It improves the price competitiveness of Nigerian products in the international market. Since 1999, EEG has been given in form of negotiable duty credit certificates (NDCCs). However, the former Minister of Finance arbitrarily suspended the utilisation of the certificates pending a review of the scheme which for the past three years has been languishing due to lack of inter-ministerial coordination”, he added.

Latest monthly economic report released by the CBN provisionally puts non-oil exports at $244 million in the month of November, noting that the month-to-month decline was precipitated by fall in receipts from the food products and minerals sectors. Industrial products, which earned $79 million, accounted for the largest proceeds.