Stakeholders want government to investigate EEG disbursement in past 10 years

Amidst the confusion that characterised the implementation of the Export Expansion Grant (EEG) incentive, which led to its current suspension, some stakeholders in the leather sector of the economy have called on the Federal Government to probe the scheme.

The stakeholders are demanding that government probe the actual disbursement made to beneficiating companies under the scheme as against the total figures of leather exported from the country.

The call was contained in a communiqué issued by stakeholders drawn from the Meat and Leather Industries, and donor funded bodies, such as, ENABLE2, MADE, GEM4, GEM3, as well as Trade Organizations and relevant business membership groups, made available to BusinessDay weekend in Kano.

Although, the stakeholders acknowledged that the EEG scheme was well –intended for the industry to grow, however, its regulation, application and administration appeared to favour a few large industry players.

They are also of the view that the way and manner the incentive is being implemented is causing distortionary effect on the industry and an adverse operating environment for the larger small and medium enterprises engaged in the sector.

“There was also a common consensus that the historical figures of declared leather exports and documented EEG payments indicate significant abuse of the scheme and its continued application as it is now, will only perpetuate corrupt practices which appear to favour a few industries.

“Publicly, available data indicates that a total of $2,240 million has been appropriated in EEG payments since 2006, with an average of $385 million annually over the last 5 years.

“A more staggering fact is that the EEG payment on Leather exports in year 2010 was an astounding $911 million from total leather exports of $3,036.8 million” they said.

According to the stakeholders recommended that the EEG should be formal review and clarify the current status of the scheme as well as clarify the role of government agencies, such as, NEPC, Ministry of Finance, Ministry of Agriculture and Ministry of Industry, Trade and Investment.

The stakeholders added that it intends to collaborate with donor programmes to develop the capacity of domestic trade organizations and business membership groups to continue to advocate, and lobby for a review of the scheme.

In the same vein, they advocated that concerted efforts be made to build the capacity of government official in different Ministries, Departments and Agencies (MDAs) involved in the regulation and monitoring of the leather industry-need for technical competency regarding the leather sector

However, the stakeholders in the communiqué noted that it recognized the effort of the Federal Government to ensure the growth of the Leather sector, especially by providing EEG for exporters, including the sector in both Agricultural Transformation Agenda and National Industrial Action Programme.

“The current method of application of the EEG in the Leather sector has led to a deliberate focus of participating industries on production for export-with no apparent protection for the local leather industry.

“These firms have found it more profitable to export leather (regardless of quality standards) seeing that as soon as they declare their export quantities they get a 30% payment. Local industries that engage in finished leather goods production are being starved and having to source their leather inputs from international markets at a higher cost.

“The intended gain from application of the EEG on leather export is not apparent within the sector,” they noted.