Inefficiencies in the Export Expansion Grant (EEG) system are undermining Nigeria’s efforts to diversify its revenue sources, hindering non-oil exports, and creating job opportunities. The EEG, Nigeria’s primary incentive scheme for exporters, has been marred by allegations of corruption and inadequate due diligence by the Nigerian Export Promotion Council (NEPC). These challenges have eroded trust in the system, with many exporters questioning the possibility of receiving the grant when needed.
Experts argue that a comprehensive overhaul of the EEG is necessary to promote non-oil export earnings, boost job creation, achieve trade balance, and reduce the country’s dependence on oil revenues. Without access to the export grant, Nigerian manufacturers face fierce competition in global markets within a challenging business environment.
Odiri Erewa-Meggison, Chairman of the Manufacturers Association of Nigeria Export Promotion Group (MANEG), highlights the importance of supporting exporters to bring in much-needed foreign exchange, emphasizing the need to eliminate bottlenecks.
In Nigeria, companies that exported various products as far back as 2009 are owed substantial sums due to the government’s failure to fulfill its obligations. The EEG, established in 1986, was designed to enhance the competitiveness of Nigerian exporters globally and increase non-oil exports. However, numerous issues have plagued the scheme, including favoring larger corporations over small businesses.
Despite past complaints and government committees tasked with addressing these issues, challenges persist. Brazil, with a population only slightly larger than Nigeria’s, managed to earn $1.4 billion from sugar exports alone in June 2023, underscoring Nigeria’s potential for non-oil exports.
Furthermore, the introduction of the “reverse auction” approach to address the export grant backlog has further complicated matters. This system requires creditor exporters to bid for promissory notes, offering discounts to the government. The lower the bid, the greater the chance of payment. However, MANEG reveals that approximately N71 billion is still owed to exporters under the scheme, and the impact of inflation has eroded the value of these funds.
To revamp the EEG and support exporters, stakeholders are calling for a reduction in bureaucratic processes, a return to the export credit certificate model, and annual budgetary allocations to cover export grants. Failing to adequately support exporters during a time when Nigeria desperately needs foreign exchange could result in a significant loss as foreign earnings are channeled elsewhere, ultimately impacting the country’s economic stability.
