NIGERIA’S non-oil export earnings fell by 18 percent in December 2014, as the suspension of the Export Expansion Grant, EEG and other economic headwinds weakened export receipts.
Non-oil exports dropped to $2.43 billion in 2014, from $2.97 billion recorded by the end of 2013, report by the Nigerian Export Promotion Council, NEPC has shown.
Some of the commodities exported within the year included cocoa, raw hides, skin and leather, oil seeds, grains, plants, tobacco, aluminium, edible fruits and nuts, among others.
National Chairman of Federation of Agricultural Commodity Association of Nigeria, FACAN, and Victor Iyama said “the EEG Policy Review which has been in the works for a long time which is yet to be completed. We believe that non-oil exports are a critical issue at this juncture for this country. We urge government to kindly ensure that appropriate details are shared with the transition committee so that the incoming administration would be assisted to complete this process at the soonest.
“Our prayer is for the Federal Government to treat EEG claims with same seriousness as other subsidy payments like fuel, fertilizer etc , as non-oil exporters should not be subjected to an inferior treatment; approve and release the EEG claim files pending for Finance Ministry approval for over a year; announce a set schedule for redemption of NDCCs, perhaps 5 percent of total outstanding NDCCs each month so that exporters can plan and organize their cash flow and business operations; advise the NEPC to continue with processing of EEG claims submitted to them which are pending for processing”.
For the incoming government to start on a good footing, soundness and transparency of the financial sector must remain the main domestic policy challenge, and every effort must be channelled towards addressing credit quality, liquidity and capital adequacy concerns that would keep financial risks elevated.
“Though the profit is still marginal because of the exchange rate and other factors, like government’s inadequate protectionist policy through the Export Expansion Grant, EEG scheme, we are optimistic that the trade condition will improve, more so if the Nigerian government recognizes the benefits of building local industry using the instrument of friendly taxation.”
“The EEG has been largely successful years back, as exports have grown significantly. But the Negotiable Duty Credit Certificates, NDCC, have not been honoured at the ports for over a year. So I would expect such decline in 2014,” Iyama said.
The Export Expansion Grant Scheme was introduced in 2005 to push Nigeria’s non-oil exports, as the country seeks economic diversification routes away from the oil sector. The EEG scheme operated by the use of the Negotiable Duty Credit Certificates, NDCCs, which served as cheques for non-oil exporters who wished to benefit from the grant.
The essence of the grant was to reduce production, distribution and logistics costs for non-oil exporters, so as to enable them compete effectively in the international market.
The understanding of the initiators of the scheme was that allowing non-oil exporters to bear the brunt of the costs would make their products uncompetitive in the international market, as goods from other countries, where governments provide different grants, would sell cheaper than those exported from Nigeria.
But between 2005 and 2013, the scheme, which was managed by the Nigeria Customs Service, NCS, was suspended eight times, before being indefinitely suspended in August 2013. Ngozi Okonjo-Iweala, coordinating minister for the economy, has said that the scheme is under review.
But outstanding debts to exporters have risen to about N70 billion under the scheme.
“Export business requires planning and certainty. So it is also important that government tells exporters when next to pay the outstanding,” Tunde Oyelola, chairman, Manufacturers Association of Nigeria Export Group, MANEG, said.
Apart from EEG, a headwind such as high cost of funds was a problem for exporters within the year, as banks charged between 20 and 35 percent interest rates.
The revival of the scheme, according to Moses Itie, secretary, Farm Suppliers Association of Nigeria, FUISAN, was scripted to promote value-addition industry especially in the agricultural sector.
The suspension of the EEG scheme by government for almost two years has generated several criticisms from agro-processors and players in the value-addition sector, describing it as a disincentive and elixir to raw commodities’ exportation.
The Export Expansion Grant, EEG, until now remains the only functional incentive of all instruments introduced by government to encourage exporters of non-oil products immensely essential.
The scheme was introduced as a form of buffer for those who export non-oil products from Nigeria so that they could be encouraged to expand their production base, add more value and foray into new markets. With the Grant, exporters are entitled to certain percentage of their turnover so that they could continue in business.
The incentive was also introduced bearing in mind that Nigeria’s infrastructure and business climates are not particularly healthy for business.
Indeed, manufacturers in Nigeria are more of local governments in their own rights because they have to get their own water, their own light, construct their own road and then face numerous government agencies after they might have finished production.
With various commodities markets opening up for export, the ability of Nigerian exporters to exploit these markets hinges on their ability to compete effectively and profitably.
Moses had stressed that Nigeria’s first step towards actualising a significant global market share was to produce more cocoa.
“We need to increase our production of cocoa and from there, make improvements in the value chain by increasing value addition. More factories should be established to produce made in Nigeria chocolate, while we drastically cut down on the export of raw cocoa,” he said.
“We support the Nigerian Industrial Revolution Plan, NIRP, and with the proposed Cocoa Corporation Board which we are all in support of, that will make it easier for stakeholders to come together and share information on cocoa. While the Board will be funded by the government, the private sector will be allowed to drive its activities,” he said.

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