Non-oil export struggles as outstanding EEG payment exceeds N1.2trn

Nigeria’s non-oil export sector has not earned enough foreign exchange that can support the economy as exporters have an outstanding Export Expansion Grant (EEG) totalling over N1.2 trillion.

The EEG is an incentive meant to cushion the effect of high production cost for exporters. It was paid through the Negotiable Duty Credit Certificates (NDCCs) but was suspended in 2013, with the Federal Government promising a review within the shortest possible time. The government of Muhammadu Buhari came in 2015 and promised, in 2016, to pay the grant with promissory notes. But two years after, this is yet to happen.

Speaking at the annual general meeting of the Manufacturers Association of Nigeria Export Promotion Group (MANEG) in Lagos, Olusegun Awolowo, CEO of the Nigerian Export Promotion Council (NEPC), said the current government was committed to paying the outstanding debt.

“The EEG has been what many of the exporters leveraged on to expand their export. In the absence of that very important incentive, you discover there was dwindle in the non-oil export data. We are agitating and canvassing that the EEG should be revitalised and exporters should be given access to it because it will expand non-oil export activities,” Awolowo, who was represented by Abdullahi Sidi-Aliyu, director in charge of policy and strategy ,said.

He said government had done its part but inability of the National Assembly to reconvene was delaying the process.

“Government has done all that is necessary for the take-off of the programme. Right now, we are waiting for the National Assembly to reconvene so that they can grant approval to the use of promissory notes. It is not only the EGG that is affected. There are other debts—domestic debts by the Federal Government—that come under the promissory notes. Hopefully, if the National Assembly can reconvene before the end of the year and grant approval, the government will definitely implement the decision,” Awolowo said.

He said the value of the outstanding notes was at over N1.2 to N1.3 trillion.

Nigeria’s non-oil export value in 2017 posted by the NEPC was below $1.4 billion. This is against $3 billion obtained in 2013.

Ede Dafinone, chairman, MANEG, said government had started the process of bringing the EEG back on stream. Dafinone said inability to pay exporters’ outstanding debts had hit the players hard.

“Essentially, the benefits of the EEG to exporters have been reduced. It is hoped that these reduced benefits will be distributed more promptly to enable exporters have access to the relief the grant is meant to give. The Export Development Fund has taken off. Through the CBN, there is N500bn that can be accessed through NEXIM Bank. All these benefits to exporters are still at their early stages.

“The EEG has taken off, but we are yet to see a real movement that shows that the grant will be paid and the backlog taken care of,” Dafinone said.

He said significant damage to the non-oil export was done in 2015/16 when access to foreign exchange was difficult, adding that the level of export today was a result of that damage.

“We, exporters, are yet to recover from that damage. Although the foreign exchange is now available and the economy has stabilised a little bit, it is not enough for the recovery to start as yet. The grant was not paid when exporters borrowed from banks to support their business.”

He stressed that the competitiveness of the export sector was determined by cost of production locally.

“I would like to see more incentives from the government. We need to improve our competitiveness in terms of infrastructure available for exporters, in terms of power costs, in terms of delays at the ports,” he said.

Dafinone pointed out that where the margin between the official and unofficial exchange rate was significant, there was always an incentive for exporters not to declare their proceeds.

“Previously, the EEG encouraged exporters to make declarations to benefit from the grants. More exporters were doing their export through formal channels. But with the grant not being in operation, FX being scarce, and the gap between official and unofficial rates being huge, more and more exporters may be choosing not to declare,” he added.

ODINAKA ANUDU