The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, yesterday February 24th 2014 announced that consultations are ongoing between President Goodluck Jonathan, the Minister of Agriculture and Rural Development, Dr Akinwumi Adesina and her ministry, over the review of the current rice tariff policy in the country.
Okonjo-Iweala made the statement in Lagos at an interactive session with members of the Manufacturers Association of Nigeria (MAN), which attracted all key manufacturing companies in the country.
The minister noted that it had become necessary to review the 100 per cent duty and 10 per cent levy on rice because it had created significant challenges even though it had also led to a marked increase in rice output in the country and created a significant number of jobs mostly in the northern part of the country.
“The 100 per cent duty and 10 per cent levy on rice has led to an increase in the nation’s rice output especially in the North and it has created jobs but it has also caused a significant reduction in customs revenue and has been largely hijacked by smugglers and neighbouring countries,” she said.
“So we are reviewing the rice duties policy and we are discussing with the president and the minister of agriculture,” she added.
She also noted that it became necessary for the federal government to put the Export Expansion Grant (EEG) on hold in order to enable it review the entire process and ascertain its sustainability and effectiveness.
The minister said while over N200 billion worth of Negotiable Duty Credit Certificate (NDCC) had been honoured by the federal government in the past couple of years, around N82 billion was outstanding.
“We are restructuring the entire EEG process. It had become very unsustainable so we had to reform it. While we find that it has increased export in the country, the employments it has generated and the value addition it engendered could have been better,” she said.
Okonjo-Iweala maintained that until the EEG policy is completely reviewed and sent to the Federal Executive Council (FEC) for approval, it would be kept on hold.
“The scheme has not been scrapped by any means, but we will not move on with it until we see that its impact on revenue flow is sustainable,” she stressed.
She however pointed out that if the federal government is no longer able to carry on with the EEG, it will ensure that reasonable notice is given to manufacturers before it is effectively terminated.
The finance minister expressed satisfaction over the successful implementation of the sectoral waiver policy, which ensures that levy and duty waivers are not granted to companies on individual basis, rather to manufacturing sectors across board.
She said the sectoral waiver policy had helped to reduce the pressure piled on government by various individuals for one incentive or the other to be granted specifically to their companies.
The minister then called on the operators of the manufacturing sector to speak up in the defence of government with respect to the impact that the numerous concessions from government has brought to their businesses in terms of increase in capacity utilisation, increase in value addition and their ability to put more Nigerians to work.
“People who are not well informed are saying that these sectoral waivers and concessions are not making any difference and that it they are hinged on corruption. So, I believe that you people who are beneficiaries, whose businesses have been improved by these interventions should speak up and explain that the waivers are helping you to create jobs and boost economic growth,” she said.
She disclosed that the medium to long term development finance institution being planned by the federal government had received a $500 million backing from the World Bank and had also been supported by the French and Brazilian development finance institutions.
The minister also noted that the institution, which would provide medium and long term funds to businesses at favourable interest rates is expected to start operating by the end of 2014 or the first quarter of 2015.
The President, MAN, Chief Kola Jamodu, who also spoke at the event, said the main aim of the interactive session was to provide a platform to brainstorm on the way forward for the manufacturing sector, adding that the quest to transform the manufacturing sector is a joint responsibility, which requires a public private partnership.
He said the role of the manufacturing sector cannot be over-emphasised due to its ability to provide technological acquisition, wealth creation and job opportunities in the country.
He added that 24 out of 100 people are out of job with age brackets of 20 ad 27 years, pointing out the need to empower the manufacturing sector not only to boost the economy, but also to attract investment into the sector and create job opportunities for the nation’s teeming unemployed youths.
He pointed out that recent global activities on the continent and the world over had made it imperative for Nigeria to adopt new survival strategies to achieve and maintain its leadership role as the most industrialised nation in the continent.
In his words, “Economic Community of West Africa States (ECOWAS) countries are countries to watch out for in terms of industrialisation. We are satisfied with the level of growth of the sector despite daunting challenges but we are hopeful things can only get better in the nearest future,” he said.
According to him, the sector was beginning to show some signs of improvement as macro economic variables are beginning to show positive results; inflation rates on the low sides but not much to be said about interest rates.
He noted that capacity utilisation had increased, pointing out that, in 2012, capacity utilisation was around 47 percent as against 51 per cent in 2013.
“Manufacturing investment stood at about N556 billion in 2013, which was 50 per cent more than what was recorded in 2012. There had also been improvement in the use of local raw materials from 47 per cent to 51 per cent in 2013. Our members have started looking inward in utilising our local resources for manufacturing activities and taking advantage of areas where the country has comparative advantage,” he added.
He said the sector was still faced with manifold challenges, stating the most recent of them to be the issue of delays at the nation’s sea ports.
