• Export Expansion Grant (EEG) is a post- shipment export incentive scheme that is designed to induce non-oil exports. The scheme is aimed at assisting non-oil exporters to expand their volume and value of non-oil exports, diversify export markets and make them more competitive in International markets.
It was established by the Export (Incentives & Miscellaneous Provisions) Act of 1986. Administered by inter-ministerial committee which include the following: Federal Ministry of Finance, Central Bank of Nigeria, Nigerian Custom Service, Nigerian Export Promotion Council, Special assistance to the President on MAN.
• EEG policy as announced by the Fed Ministry of Finance, the NDCCs ( Negotiable Duty Credit Certificates) are valid and legal tender for payment of any customs or excise duty. The policy does not create any exception or limitation for the use of NDCCs.• The EEG policy is one of the notable policies which is open to all, has a complete objective framework and every single disbursal is backed by verified proof of shipment from customs and repatriation of export proceeds by CBN.
EEG policy has been in force since 2005 and exporters have deployed massive amounts of capital, resources and efforts in growing the non-oil export sector. It is noteworthy that non-oil exports have jumped from USD600 Million in 2005 to over USD 3 Billion in 2011 ( CBN Annual Report figures).
• Cashew exports account for over $150 Million USD in revenues for Nigeria annually.• This figure will more than triple within 2 years as value addition to cashew is encouraged under the Agric Transformation Agenda.• Over 300,000 families in Nigeria depends on cashew for their livelihood.• WOMEN EMPOWEREMENT IS CENTRAL TO CASHEW PROCESSING- 90% of the workforce involved in processing cashew are women.• The 10-30% EEG depending on the category of export will help expand the cashew industry in Nigeria.• The EEG is calculated as part of the cost of doing business by the cashew industry.• EEG helps cashew exporters remain competitive in the international market.
HIGH COST OF PROCESSING IN NIGERIA In-land Transport cost is very high. Ex Makurdi to Lagos is 47$/MT.. Whereas it costs only $32/MT from Lagos to Vietnam. Power cost (Generator Power N35/Kwh vs Grid N10/Kwh). Road transport – 2-3 times of Asian Countries. Rail Transport – practically non existent. Funding cost – Local 16-25% vs 3-8% outside. Low farm productivity – high cost of raw material.
Effective implementation of EEG is the biggest challenge.Uncertainty caused by unpredictable Government policies.Backlog of claims yet to be processed.
We recognize that no scheme would be perfect at all times. Allow and provide for periodic review (ideally minimum 5 yrs) of the scheme – Exporters need a planning horizon for committing investment. Once a policy has been announced – it should be sacrosanct – blanket suspension should be eschewed Allow wider usage/validity of NDCCs: VAT, Levy, Tax besides customs duty. Consider issuing NDCCs in demutualised/electronic form – like company shares for ease and speed.
The growth of the cashew sector is affected by EEG.We support EEG.All limitations and constraints affecting the smooth implementation of the EEG should be removed.