The Centre for the Promotion of Private Enterprise, Nigeria’s leading OPS advocacy organization, has described the current Raw Materials Research and Development Council (RMRDC) Bill now before the National Assembly as risky to entrepreneurship and businesses in the country in view of its prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers.
The private sector advocacy group in a statement issued by its Director/Chief Executive Officer, Dr. Muda Yusuf, on Monday pointed out that the bill currently proposes that no primary products exports should take place unless there is a minimum of 30% local value addition; and that manufacturers will not be allowed to import raw materials that are available in sufficient quantity in the country.
According to the renowned economist, on the face of it, the idea of promoting local value addition is good for the economy and potentially enhances the chances of better earnings from our exports.
He, however, maintained that the policy had to ensure a balance between the interests of exporters of primary products and the processors, adding that it is also imperative to undertake a robust study on domestic raw materials availability before legislating on a ban on raw materials for manufacturers.
Specifically, the CPPE chief stressed that what was needed is a win-win proposition, not a zero-sum game as the current proposal in the bill will penalize exporters in the country, most of who export primary products and put thousands of jobs in the primary products export supply chain at risk.
Yusuf listed the major non-oil exports as cocoa beans and cocoa butter, Cashew nuts, Gum Arabic, Ginger, sesame seeds, Shea butter, even crude oil export is still a major component of Nigeria’s export, noting that until recently, domestic refining capacity was nil.
He further maintained that this legislative proposition raises a number of questions, namely what metrics would be used to determine the minimum 30% value addition? Who will determine and give approval for the export to proceed? and what study has been done to determine the local processing capacity for each category of primary products currently been exported?
Other posers the CPPE boss raised were that What metrics would be used to determine raw materials that manufacturers would be allowed to import into the country?, What is the effective time frame for implementation?, and is it within the mandate of the RMRDC to be promoting the ban of exports or imports?
Yusuf stressed that the position of the CPPE was that the RMRDC Bill raised more questions than answers, pointing out that it is a very simplistic proposition which has not taken into account the critical challenges of manufacturing, processing and value addition in the Nigerian economy.
He explained that these contextual understanding remained very critical to enrich the conversations around the raw materials bill as most agro processors have collapsed not so much because of the raw materials availability, but the challenges of productivity and competitiveness.
The economist also stated that production costs had become prohibitive based on the current cost of energy, cost of funds, logistics cost, bureaucratic bottlenecks, exchange rate, and multiple taxation, among others.
The frontline OPS advocacy champion noted that these remained the bigger issues that needed to be addressed to promote value addition and that stakeholders in the economic landscape should be causative in the collective approach aimed at solving problems and focusing less on the symptoms.
The CPPE Director/CEO cautioned: “If passed, the bill would create new corruption gateways in the bureaucracy as businesses will now be burdened with another chain of approvals. Additionally, the issue of export or import ban is not within the remit of the Raw Materials Research and Development Council or the Ministry of Science and Technology.
“It is in the realm of fiscal policy which is within the purview of the Ministry of Finance, working in collaboration with the Ministry of National Planning and the Ministry of Industry, Trade and Investment. “And in this particular instance, the Nigeria Export Promotion Council [NEPC] must be in the loop. This is essential to determine the implications for the non-oil export sector and the manufacturing sector and the economy as whole. It is also important for policy coordination and coherence.
“Import and export regulations are not often legislated. They are trade policy issues which are calibrated from time to time by the fiscal policy authorities in the light of prevailing economic conditions. It is not a matter for the national assembly to legislate upon. Trade policies are also meant to be flexible, which is why they are not often a subject of legislation.
“We, therefore, submit that the national assembly should discontinue deliberations on the bill and encourage the raw material research and development council to focus on its core mandate of raw materials research to offer most cost effective raw materials option for manufacturers. The council involvement in trade policy matters is an aberration. Besides, the bill has very weak value proposition. The CPPE advises the RMRDC to withdraw the bill”, Yusuf added.
