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The recent review of the Pioneer Status Incentive (PSI) list with inclusion of some agricultural industries could be a game changer in boosting Nigeria’s agro processing capabilities, resulting in the creation of more jobs, revenue, as well as reduction in some post harvest losses.
The pioneer status incentive is a tax holiday given to companies to enable them hit the ground running (or expand) so that they can thrive and be profitable. The tax holiday is given for an initial three year period and renewable for another two years as a way of stimulating growth and development of Nigeria’s economy. This privilege may also be a seven-year tax holiday in respect of industries located in economically disadvantaged local government areas of the country.
The list of 27 industries in the recent PSI list has in it, agriculture based industries such as; Processing and preservation of meat/poultry and production of meat/poultry products; Manufacture of starches and starch products; Processing of cocoa; and Manufacture of animal feeds.
In the manufacturing of starch products for instance, the Nigeria Cassava Growers Association (NCGA) has opined that Nigeria imports over 95 percent of the Industrial starch used in the country, and 97 percent of Ethanol.
NCGA had previously made exclusive to BusinessDay, value chain plans which suggested that there could be potential for N10 trillion if cultivation of cassava is not only increased but matched with requisite processing to substitute for importation. The announcement by the FG to now include manufacture of starch products under the PSI list is expected to stimulate interest in the sector.
“Industrial Starch is another major product from Cassava. Industrial Starch is used in the Gum/adhesives, Textiles, Pharmaceuticals, Book binding, Paper and packaging, Confectionery, Chemical and household products manufacturing, Batteries, Drinks, beverages, Baby foods, and Wood finishers etc.,” read a portion of the letter earlier made available by Segun Adewumi, National president, NCGA.
Another industry which is to benefit from the revised Pioneer status list is Poultry, with production, processing of poultry and manufacturing of animal feed separately captured. The Agriculture Promotion Policy (2016 – 2020) shows the country has 60 million poultry birds deficit, which is filled by illegal imports that enter market at lower price point than domestic producers, and this gap is also a moving target based on fast food/QSR demand.
An agitated Onalo Akpa, director general, Poultry Association of Nigeria (PAN), told BusinessDay earlier this year, that “A lot of farms are being closed down because so many people cannot afford to feed their birds.”
“If you have a (poultry) farm and you cannot feed your birds then you better shut it down!” Akpa said.
The incentives to be offered through inclusion of poultry in the pioneer status list, is expected to assuage some of the difficulties in the industry, and stimulate increased productivity. With manufacturing of animal feeds also getting included, the challenges of poultry feed which have made many businesses shut down could offer a new lease of life.
“If you want to attract development in certain areas, you incentivise operations, and one way of achieving this is by giving tax breaks (as the government has now announced),” said Ibrahim Kabiru, President, All Farmers Association of Nigeria (AFAN).
Similarly, Emmanuel Ijewere, Vice President, Nigeria AgriBusiness Group (NABG) described the selected agricultural industries as a good development in addressing the myriads of challenges confronting the sector, and the need for increased processing.
According to Ijewere, “Those of us in the sector have often said that apart from improving the yield of our produce, value should be added at every stage. The addition of value creates wealth for the nation, and giving pioneer status encourages the sacrifice that is made for such value adding. The agricultural industry has been underdeveloped for so long, so it is only right and appropriate that at this time of agricultural rejuvenation, government should be seen supporting and encouraging agriculture, especially in the area of value adding.”
Okechukwu Enelamah, the Minister of Industry Trade and Investment, while announcing the revised PSI list, had said it was part of measures to reduce the cost of doing business in Nigeria by providing corporate income tax relief to qualifying companies making investments in industries designated as “Pioneer”.
The review of the list of pioneer industries and products was done to bring it in line with the economic realities of Nigeria and the Economic Recovery and Growth Plan (ERGP).
He further pointed out that, “The Federal Government is committed to encouraging and attracting investments into critical sectors of the economy which will significantly impact development and deliver key benefits to the country.
CALEB OJEWALE
