Cash-strapped exporters unhappy over FG’s proposed N300bn loan
The N300 billion special intervention fund recently unveiled by the Central Bank of Nigeria (CBN) has attracted criticism from non-oil exporters who say it is improper for the federal government to propose loans for them when it still owes them in excess of $109 billion.
The CBN had, in a communiqué on January 19, announced N300 billion export stimulation fund, which would be available for non-oil exporters at not more than nine percent interest rate.
The announcement was contained in a communiqué issued at the end of a non-oil export conference held by the CBN and the Nigerian Export-Import Bank.
Non -oil exporters say they are grateful that the federal government has identified them as a critical growth area for the economy, but add that the government already has a policy instrument directed at growing Nigeria’s non -oil revenues.
“We are happy that the government recognises the importance of the non-oil exports sector to the Nigerian economy, at this time of a general worldwide recession and a collapse in the oil prices to ten year lows of prices below $30 per barrel,” said Chief Ede Dafinone, chief executive officer of Sapele Integrated Industries Limited.
“But there is already a Federal Government policy instrument called the Export Expansion Grant (EEG). We have the Negotiable Duty Credit Certificates (NDCCs), which are government instruments used to pay the export grant and can be redeemed only by the payment of customs duties. The federal government today owes us an estimated $109 billion in NDCC’s issued and not yet redeemed, as well as a further estimated $123.5 billion in EEG claims for 2014 and 2015,” Dafinone disclosed.
“The question on the lips of all exporters, therefore, is: If the federal government is owing us $109 billion with a further potential debt of $123.5 billion, why is this available fund not directed firstly at settling the outstanding government liabilities?,” he asked.
According to exporters, where the Ministry of Finance and the CBN are unable to work together to grow the non -oil sector, then the CBN should accept NDCCs as security for the loans given under the special intervention fund, stressing that this would give them some relief as other collaterals would be freed up and further expansion guaranteed.
The EEG scheme was introduced in 1986 and is targeted at non-oil exporters. The scheme has successfully increased non -oil exports from $700 million in 2005 to $2.9 billion in 2013, according to data by the Manufacturers Association of Nigeria Export Group (MANEG).
The CBN said Nigeria’s non-oil export revenue receipts nosedived from $10.53bn in 2014 to $4.39bn in 2015. Exporters say the sharp drop in the non -oil revenue is directly correlated to the suspension of the EEG in 2013 and the refusal of the Nigerian Customs to accept the NDCC’s). NDCCs.
The scheme has been suspended seven times since its inception and the federal government has set up various committees such as Presidential Committee on Trade Malpractices (2005),Inter-Ministerial Committee on Waivers and Concessions (2007), and Investigation by Presidential Committee on Trade Malpractices, among others, to look into issues of abuse.
But all these committees, including the Forensic Audit by the Federal Government set up in 2012, did not indict any non-oil exporter. Analysts say suspending the EEG due to the alleged abuse by exporters, who may be in the minority, is like throwing away the baby with the bath water.
The suspension and the present government’s calculated silence on EEG have brought several export companies to their knees. RMM Global, an exporter of processed foods and hibiscus flower, has closed shop with over 700 workers losing their jobs. Unutilised NDCCs have also closed down Multi Trex Integrated Foods Limited, exporter of processed cocoa, located along Lagos-Ibadan.
Non-oil sector analysts say the federal government’s inability to redeem the NDCCs issued to date and additionally give out a clear policy statement on the EEG have damaged its credibility on export policy in particular and would further reduce Foreign Direct Investment (FDI) targeted at the non -oil export sector.
They stress that any new policy to grow non -oil export revenue, which does not take cognisance of existing policy, will not impact on export revenues as much as planned.
“Export business requires certainty because an exporter is going into a different market. We believe that the government will think seriously about the damage done by the suspension of the EEG and reinstate the scheme,” said Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group (MANEG).
ODINAKA ANUDU