The renewed efforts by the present administration to diversify the economy and grow exports are reportedly being hampered by lack of effective implementation of the Export Expansion Grant (EEG). Undoubtedly, its implementation will boost non-oil exports and foreign exchange earnings.
Being a catalyst for private sector-driven growth, the EEG was created specifically to address the handicaps experienced by Nigerian exporters arising from infrastructure deficit, inadequate power supply and other problems.
However, exporters are complaining that despite government’s promise to disburse the export expansion grants to support their commercial activities, the implementation of the policy by government agencies, including the Debt Management Office (DMO), which deals directly with most of the exporters on this matter, is slow. Also, disheartening is the report that the DMO will make disbursement of the grant on the principle of Reverse Auction Process (RAP). Under RAP, only exporters who agree to accept discount rates will benefit from the intervention fund. More worrisome is the fact that the DMO will not disburse the grant to all qualified exporters. This decision has not gone down well with many stakeholders. They want the government to urgently wade into the matter.
We agree with the stakeholders that this is the time to deliver on Nigeria’s long-awaited Export Expansion Grant. In order to realise this lofty objective and shift from the overdependence on oil sector to other sectors of the economy, any obstacle to the smooth implementation of the EEG should be removed. For instance, the controversial RAP policy does not take cognizance of the accumulation of debts by Nigerian exporters between 2007 and 2016 and the interests.
Currently, over N350billion is reported as the outstanding indebtedness of the government to the beneficiaries for nine years. We recall that prior to 2007, exporters had access to this grant without problems until the process was allegedly corrupted by duplicitous claims over who should or should not benefit from the policy.
There are still some other problems that should be quickly resolved. It is important to ascertain how the N195billion Promissory Notes (PNs) that the Federal Executive Council (FEC) approved to about 270 export firms through the DMO was disbursed. There is the need to also explain why the deductions should be made on approved payments and why some of the beneficiaries should be selected for the promissory notes, while others are subjected to stiffer conditions.
We urge the Federal Government to promptly resolve all the problems associated with the implementation of the EEG policy so that Nigerian exporters, especially exporters of agricultural products, will do so unimpeded. There is need for transparency in the implementation of the EEG. In this regard, the controversial RAP should be reviewed immediately. Therefore, anything that would erode investors’ confidence and dampen the appetite for export sector development should be avoided. Nigeria’s non-oil sector is in dire need of support and its potential is so huge that nothing should be done to hamper the process.
We advise the government and the DMO to issue the promissory notes at the shortest possible term feasible for payment. They should also ensure that all beneficiaries are accommodated. Let government also consider issuing our exporters promissory notes with the shortest tenure, considering the fact that payment of claims by members had been delayed for between three and 12 years.
In all, we believe that only a faithful implementation of the EEG policy will determine the performance of the non-oil exports. There is no doubt that adequate utilisation of the EEG and the CBN’s N500billion Non-oil Export Stimulation Facility (NESF) will substantially stimulate the economy, create new jobs, and encourage rapid industrialisation. Like the EEG, the NESF covers the export of goods wholly or partly processed or manufactured in the country. For government’s Economic Recovery and Growth Plan (ERGP) to succeed, the EEG must be seamlessly and urgently implemented.