- The Export Expansion Grant for exporters is too half hearted to succeed
The challenges of exporting home-grown products came on the front burner with complaints from exporters that the Federal Government has not made good its promise to disburse grants to back their commercial activities.
This refers to the Export Expansion Grant (EEG), being a revival of a project abandoned by the Federal Government since 2007. The idea is to encourage the Nigerian entrepreneur who wants to sell Nigerian goods, especially in the agricultural sector, to other countries. This will boost foreign exchange, but more importantly, it will tilt our reliance from oil as our principal source of foreign exchange revenue.
Before 2007, grants flowed to the exporters but they were sullied by the Nigerian penchant for corruption. The grants were abused and so undermined the lofty goal of the policy. Fast forward to the Buhari government. The Federal Executive Council approved promissory notes to the tune of N195 billion to 270 firms. But this seems, and should be seen, as a salutary development.
However, the sum is too small and the scale of business and stature of the firms too unambitious to tackle a mono-economy buoyed by oil. Yet, it is a trend to be encouraged if it can hold up. Again, the debt profile is higher than what is being made available for transactions that took place between 2007 and 2016. For, while the Debt Management Office (DMO) computes it at about N350 billion, the Export Promotion Council counters that it is about N1.2 trillion.
There is also an issue of inequity. The DMO that operates directly with the exporters in this matter has said that it disbursed the N195 billion on the principle of what is designated as Reverse Auction Process (RAP), which implies that only exporters who will accept discounted rates will become beneficiaries. Even at that, the DMO is not giving the money to all eligible exporters.
So, the policy that the FEC approved and enjoyed the overwhelming endorsement of the National Assembly still endangers the capacity to fuel exports, even if in modest terms. About 39 other exporters are expected to benefit from another tranche of disbursements, which does not detract from the essential problem in the matter.
The RAP policy does not take cognisance of the accumulation of debts the exporters have fallen under between 2007 and 2016, and the interests that have piled up. It is obvious that key local business bodies like the Manufacturers Association of Nigeria (MAN), the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) as well as the Organisation of Private Sector Exporters Association (OPSEA) have hedged their support for the exporters.
The Federal Government may provide the excuse that the debts have accumulated over the years and it made it up in one fell swoop. Wise enough, but it is also a measure of the ambition the government has invested in foreign exchange. In a sense, the comparatively negligible sum does not scale with the grand view and rhetoric the Buhari administration has uttered for its agricultural goals. We are still mired in oil subsidies where the mesh of corruption and our extortionate elite are still feeding fat.
Yet we have quite a raft of produce that can make exports compete with oil. Again, exports will provide desired jobs that can give livelihood and the economy a new can face. One of them is palm produce that still lies dormant. Ditto groundnut. But more of such have been discovered over the past few years. One of them is cashew in shells, and it is on record that they generate about $167 million and can make $115 million more.
It is high time we paid more attention to the EEG with a view to easing the burden of the exporter and truly wage war against a mono-economy.
