Export Expansion Grant Backlogs and Bureaucracy Hamper Nigeria’s Revenue Diversification Efforts
The Export Expansion Grant (EEG), Nigeria’s primary incentive scheme for exporters, has faced challenges including corruption allegations and a lack of due diligence, leading to a loss of trust among exporters. These issues have hindered the country’s efforts to diversify revenue sources away from oil. Experts suggest a comprehensive overhaul of the EEG to enhance non-oil export earnings, create employment, and achieve trade balance. They emphasize the importance of supporting exporters to bring in foreign exchange, particularly in the current FX-demanding environment.
Key Points:
- The EEG, established in 1986, aims to enhance competitiveness in global markets and increase non-oil exports from Nigeria.
- Companies exporting products since 2009 are owed significant sums in claims due to the government’s failure to fulfill its obligations.
- Challenges with the EEG include favoring larger companies over small businesses, unresolved incentive backlogs, and a complex bureaucratic process.
- Nigeria’s non-oil export earnings in Q2 2023 were N688.7 billion ($1.27 billion), indicating room for growth compared to other countries like Brazil.
- The introduction of the reverse auction system, where exporters bid for promissory notes, has further complicated the process.
Analysis: The issues surrounding the EEG underscore the need for a streamlined and efficient incentive scheme to boost non-oil exports in Nigeria. The current challenges, including unresolved backlogs and bureaucratic hurdles, hinder the country’s efforts to diversify its revenue sources. Addressing these issues through a comprehensive overhaul of the EEG, as suggested by experts, is crucial for Nigeria’s economic growth and stability. Streamlining the process, providing adequate support to exporters, and allocating budgetary resources for export grants are key steps toward achieving this goal. Additionally, creating an environment that encourages SMEs, the backbone of any economy, to thrive in the export market is essential for sustainable economic development.
