The Centre for the Promotion of Private Enterprises (CPPE) has called for a withdrawal of the Raw Materials Research and Development Council [RMRDC] Bill currently before the National Assembly, stating that it has the prospect of creating adverse and unintended consequences for the exports, Nigerian exporters and manufacturers ss well as manufacturing activities.
The organisation, in a document signed by Muda Yusuf, the chief executive officer, noted that while the idea of promoting local value addition is good for the economy and potentially enhances the chances of better earnings from exports, the policy has to ensure a balance between the interests of exporters of primary products and the processors.
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The bill currently proposes that no primary products exports should take place unless there is a minimum of 30% local value addition. It also proposes that manufacturers will not be allowed to import raw materials that are available in sufficient quantity in the country.
However, Yusuf stressed on the the need for a robust study on domestic raw materials availability before legislating on a ban on raw materials for manufacturers
“What is needed is a win-win proposition, not a zero-sum game. The current proposal in the bill will penalize exporters in the country, most of whom export primary products. Thousands of jobs in the primary products export supply chain would be put at risk.
“The major non-oil exports are: 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. Until recently, domestic refining capacity was nil,” Yusuf said.
He explained that the proposition raised a number of questions, including what metrics would be used to determine the minimum 30% value addition, who would determine and give approval for the export to proceed, is it within the mandate of the Raw Materials Research and Development Council (RMRDC) to be promoting the ban of exports or imports?
“The position of the CPPE is that this bill raises more questions than answers. 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. These contextual understanding is very critical to enrich the conversations around the raw materials bill.
“Most agro processors have collapsed not so much because of the raw materials availability, but the challenges of productivity and competitiveness. Production costs are prohibitive. The cost of energy, cost of funds, logistics cost, bureaucratic bottlenecks, exchange rate, multiple taxation etc. These are bigger issues that needs to be addressed to promote value addition.
“We should be causative in our approach to solving problems and focus less on the symptoms.”
He also stated that if passed, the bill would create new corruption gateways in the bureaucracy as businesses will now be burdened with another chain of approvals.
According to Yusuf, import and export regulations are not often legislated, as they are trade policy issues which are calibrated from time to time by the fiscal policy authorities in the light of prevailing economic conditions.
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“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”, he added.
