Yarns Users Advise FG to Reclassify EEG
Yarn Users Group, a sub-sector under the Manufacturers Association of Nigeria (MAN) has advised the federal to reclassify the Export Expansion Grant (EEG) into three categories based on value addition ton prevent the exporters from taking undue advantage of the situation.
A statement signed by the spokesman of the group Mr. Samuel Okumade said that the EEG should be graduated into three categories from raw materials like all types of fibres at 5 per cent, intermediate products such as all types of yarns at 15 per cent and finished products like finished fabrics at 30 per cent.
He said the 40 percent blanket rate on all products exported was too high as it would not only continue to encourage raw materials flights but also make yarns and fibres very scarce and expensive, causing adverse effect on the country's economy.
"Such categorization will also help the government curb the tendency of spinners to charge the local market prices that are inclusive of the 40 percent EEG amount", he said.
It stressed that as much as the scheme "is very good to encourage export", the 40 percent placed on the EEG only make most spinners as well as fibre manufacturers to export more at the expense of local yarns users and weavers.
Thus, the statement said had used untold hardship to them as their final product prices were no longer competitive in the local market, resulting to low productions and closure of so many mills.
The group, which described themselves as genuine weavers, printing and processing companies that produce suiting materials, bed sheets, African prints, towels among others, had been badly affected by the ban on polyester as well as spun yarns, blend yarns and finer counts of cotton.
"With the ban and the EEG percentage being quite high, many companies are not getting the right kind of yarns and this is threatening our existence", he said.
According to the statement, the over 26 companies affected empty more workers than the spinning companies that are using fully automated machines that do not require many workers.
"But we the weavers and yarn users are labor intensive. We therefore, employ more workers. This is the case all over the world", he said.
The group therefore, appealed to the government to reclassify EEG to be in line with the federal government's decision to prevent the misuse of the scheme.
The Federal Government recently suspended the EEG temporarily due to fraudulent activities of exporters such as false claims from "ghost exports", that had claimed large sum of the grant.
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