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Lift suspension of export grant, Kano manufacturers urge FG
With the recent Federal Government decision to suspend grants to manufacturers who export their products, JOHN ALECHENU spoke to some Kano industrialists on the implications of the government decision. Excerpts:
Those familiar with the Nigerian economy have argued that one common feature of successive administrations in the country has been the inconsistency of economic policies. Members of this school of thought also argued that in terms of losses incurred by the productive sector of the economy, no regime could be as much as insensitive as that of the late General Sani Abacha, which they said, watched with sadistic orgy, the collapse of many industries. As at the last count, no fewer that 250 industries have been forced to close shop over the past few years in Kano State alone.
At the advent of the new democratic dispensation, President Olusegun Obasanjo�s administration began a process aimed at making the economic environment private sector-driven. For manufacturers in Kano, especially those in the business of leather tanning, the decision of the administration to initiate and promote manufacturing goods for export through the Export Expansion Grant (EEG) was described as laudable.
The grant, which before 2003 stood at barely 20 per cent for intermediate and finished products, was reviewed upwards to 40 per cent by the Obasanjo administration in 2003. The tanning sub-sector, which is mainly export oriented, has 70 per cent local raw materials input.
Raw hides and skins, salt, bagaruwa, acids and hydrated lime constitute the bulk of the raw materials used for the business. Apart from providing direct employment to over 20,000 people, others such as farmers, butchers, raw skin middlemen and big skin dealers are given indirect employment.
Chairman of the Nigeria Tanners Council, Alhaji Lawan S. Garo, told the Minister of State for Finance, Mrs. Esther Nenadi Usman, who was on a working visit to Kano recently, that the scheme had given Nigerian tanners the needed push to compete favourably in the international leather market and double exports between 2002 and 2003.
The chairman said unlike other sub-sectors, tanners have been able to take advantage of the scheme to expand their scope, according to him: �our industries are not only operating at capacity but have expanded tremendously to cope with the challenges of the ever changing and growing global market�.
He spoke of plans by members of the council to further invest in the economy by setting up a $40 million shoe factory, while a big chemical company for the production of leather and textiles chemicals was equally being considered. The development is traced to the successes brought about by the government policy. However, the abrupt suspension of the EEG scheme took members of the Tanners Council by surprise.
The council also welcomed the need to categorize the scheme so that only genuine manufacturers/exporters who had more than 40 per cent local raw material content in their finished products can benefit from the 40 per cent Export Expansion Grant . It also suggested that the review of the scheme should be made on going while the scheme and the processing of applications should be allowed to continue. While stressing the need not to suspend the scheme even for a short period, the chairman argued that: �A suspension even for short period of three months would cause acute hardship to genuine manufacturers such as our members who made huge investments and borrowed heavily at high interest rates based on the Federaal Government�s commitment to sustain\the 40 per cent Export Expansion Grant till 2007�.
The Minister of State for Finance, in her response, said it would not serve the interest of the public, whose money is being kept in trust to continue to dish out such to persons who had no business benefiting from the funds.
According to her: �The EEG has been abused by quite a number of people which led to the suspension. Naturally, government will not want to sit back, fold its arms and watch people abuse and steal.� She, however, assure manufacturers that �the scheme will be looked into with a view to streamline it so as to cut out the abuse of the past�.
Sunday PUNCH August 29, 2004
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