The call for a fundamental overhaul of Nigeria’s export incentive scheme is growing louder, with leading exporters advocating for an immediate transition from the long-troubled promissory note system to a more efficient and verifiable export certificate model.
This was discussed by Yarub Al-Bahrani, Managing Director, Nigeria and West & Central Africa at British American Tobacco.
Al-Bahrani said that the shift is crucial for stimulating the non-oil sector and ensuring a sustainable future for local industries.
For years, the Export Expansion Grant (EEG) has been a vital, albeit flawed, mechanism designed to incentivise non-oil exporters. However, its implementation, particularly the reliance on promissory notes issued by the government, has been cumbersome for businesses.
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“Regulatory clarity is what we always need, and consistency in policies,” Al-Bahrani said. “The EEG, or export expansion grant, has always been very cumbersome because it relied on promissory notes, debt from the government. And since its inception, we have never received it, by the way.”
This sentiment resonates across the exporting community. The current system, which often involves lengthy delays, bureaucratic hurdles, and even allegations of corruption in the verification and disbursement process, has effectively crippled the intended benefits of the grant. Exporters highlight that the promissory notes, essentially government IOUs, are often difficult to discount or use as collateral, undermining their value and the immediate liquidity needs of businesses.
In contrast, a system of export certificates offers a more transparent and practical solution. These certificates, which could be validated by institutions like the Nigerian Export Promotion Council (NEPC) and the Central Bank of Nigeria (CBN), would provide immediate and verifiable credit or tax offsets to exporters. This would directly address the liquidity challenges faced by businesses, enabling them to reinvest in their operations, expand capacity, and further penetrate international markets.
“It’s imperative that in order to continue to encourage exporters, we move from promissory notes to export certificates, which can also be validated by the NEPC and the CBN and so forth,” Al-Bahrani said. “That is highly important for us.”
Al-Bahrani also said that the export industry needs regulatory clarity and consistency in policy, stating that even the most well-intentioned fiscal policies can be undermined by inefficient incentive structures.
Nigeria’s ambition to diversify its economy away from oil hinges significantly on the growth of its non-oil export sector.
British American Tobacco, which exports over $100 million worth of proceeds back into the country annually, is critical to this vision. Yet, it faces an uphill battle when the very incentives designed to support it are rendered ineffective.
