Non-oil exporters seek force majeure on AfCFTA as incentives stall
The Manufacturers Association of Nigeria Export Promotion Group (MANEG), has urged economic managers to declare force majeure on the African Continental Free Trade Agreement (AfCFTA), scheduled to kick in on January 1st, 2021, noting that the country is not fully prepared for its take-off.
The Chairman, MANEG, Ede Dafinone, at the 3rd yearly meeting of the group, explained that riding on the back of the Covid-19 pandemic, Nigeria should seek for an additional year to put its house in order before going live on the trade deal.
In his words: “We are not properly prepared to take advantage of the possible benefits to Nigeria in terms of the African Continental Free Trade Agreement (AfCFTA), and in my opinion as a country; we need additional preparation to take full advantage. My view would be that we should, on the back of Covid-19, declare force majeure on this, and ask for an additional year to put our house in order before we go live on the AfCFTA.”
On the Export Expansion Grant (EEG), he said the total amount of the backlog yet to be paid by the Federal Government by promissory notes is in two parts, where N197 billion has been approved by the National Assembly for participation in the promissory note programme, and another N130 billion that is yet to be approved by the lawmakers.
He added: “We are pursuing that with NASS to get that approval. Outside of that, there is a backlog being created for the period of 2017, of which I said only 17 per cent has been paid, where 2018 and 2019 are fully outstanding. The current backlog going by estimates will be approximately N150 to N200 billion, which is again bad because they are creating a fresh backlog, and this would bring another batch of promissory notes to be issued in order for exporters to be paid.
“Sometime in 2019, the Nigerian Export Promotion Council (NEPC), issued export credit certificates to exporters for the 2017 EEG, but at the time, only 17 per cent of the amount that has been approved was paid using those export credit certificates. The balance of 83 per cent is yet to be paid, and we are engaging the NEPC and the Federal Ministry of Industry, Trade and Investment on their plans to pay the 2017, plus the 2018 and 2019 that are also outstanding,” he stated.
According to him, over the last one year as a result of the border closure, two of its members have had to close shop because they had only cross-border export as their sole business, while the rest of MANEG are exporting a percentage of their products.
He pointed out that the non-payment of EEG is greatly affecting non-oil export, saying that with the crash in oil price in March, MANEG had highlighted the need for the government to diversify their revenues away from oil towards non-oil.
“With the stoppage of EEG from 2014 to 2018, there was a complete drop in the amount of non-oil export over that period. It is very clear that with EEG, non-oil export grew significantly when that has been paid. What we found is that exporters who are beneficiaries of the grant have priced their products to break into the new market by pricing them at a lower price that they can afford to sell normally in other to take a stake in the market in foreign countries and a situation where the EEG has not been paid, the exporters find it unprofitable to break into those market and retreat back towards our own local market which clearly is not good for the Nigerian market,” he lamented.
He said the manufacturing export sector witnessed a decline in exports as a result of the border closure, which harshly impacted on its output.
Quoting the National Bureau of Statistics (NBS), he said the value of manufactured goods traded in Q4, 2019 stood at N4.4 trillion accounting for 43.69 per cent of total trade, while the export component accounted for N509.2 billion.
He said the sector witnessed 48.9 per cent decrease in value during the Q4, lower than what was recorded in Q3, 2019, and 573.19 per cent higher than Q4 2018.