Why CBN SET Up A Committee To Administer Exporters’ N500 billion Credit?

By Nwangwu Uba

For years,  Companies involved in exporting Agricultural products have not found it easy in penetrating the United States and the European markets to sell their products. This is because of the enormous financial resources involved in packaging their products to compete with  other African countries, particular, Ghana and Cote d’Ivoire and the Asian countries of Malaysia, Thailand to name but a few.

The ministry of Agriculture, at the instance of President Muhammadu Buhari had given the exporting Companies the go-ahead to export ginger which is  one of the most traded spices in the world and Nigeria , happens to be one of the largest producer. This in addition to textiles and garments, cocoa butter, gallstone, rubber, sesame seed and honey.

Other Agricultural  products on the approved list for export include palm kernel oil, unprocessed wood, Shrimps, garlic, yam tubers, charcoal, cotton, cassava flour, cashew nuts, snail, chili pepper, fruit juice, poultry products, cosmetics and soap.

As a prelude  to encouraging the exporting Companies ,  the Nigerian Export- Import Bank, NEXIM, which have been at the vanguard for export of Agricultural products from primary production  to the exporting stage over the years. The Bank,  alone ,was said to have earmarked about N37 billion, to develop  and support exportable commodities in the country.

Given the condition attached  for the management of the funds, farmers in each state of the Federation and Abuja, were said to have been given access to N1 billion  of the fund   with a single digit interest rate as a way of assisting them to  harness  chosen Agricultural  products that could be exported outside the country to compliment the Federal Government’s effort of diversifying the economy from oil to Agriculture.

Past and present government  was said to have set  various incentive schemes for the companies whose business is export focused. The incentives range from  tax exemption , duty drawbacks to other form of grants. Some of the incentives , according to a source in the Nigerian Export Promotion Council, NEPC, were among those that were  set up in the law establishing the Council in 1986, by Abdulsalami Abubakar, a retired General and the then Head of State. They are the Export Development Fund, EDF, Export Expansion Grant, EEG, and Export Adjustment Scheme fund.

Investigation by The Value News shows that only the EEG, which was reestablished in 2005 by former President Olusegun Obasanjo and currently managed by officials of the Nigeria Customs Service, NCS, on the Export Seat, are  actually issued  to the non oil exporters to reduce their production, distribution  and logistics costs which had made it impossible for them to compete effectively  in the International Agricultural market.

The grant, accord to a Customs source ranges from 10 percent to 20 percent of the Free on Board, FOB, value of the products being exported with a confirmation  that the export proceeds have been repatriated. The grant  given to the exporting companies, the source said  depends on the categorisation  of the exporter among others.

Insiders told the Magazine that many approved exporting Companies and their Customs collaborators may have abused the scheme,  forcing the Customs Authorities to suspended it several times. The Fund  was said to have been reactivated eight times  between 2005  and 2013.

It was said to have been suspended again in August 2013, by Abudullahi Dikko, the then Comptroller General of Customs, because of alleged allegations of abuse by exporters. Inspite of the  disbursement of funds from the EEG to exporters ,  Gowin Emefiele, the governor of Central Bank of Nigeria, CBN, said the government was done with assisting the  exporters to excel in the International market.

He had revealed how the N500 billion made available  to ” support activity  and boost export business so as to help in generating  exporting earnings for the country”  had turned out to be a wasted  effort because of lack of patronage.

The CBN, governor noted that this is even as  the nation’s external reserves  had reached an all time high of $43 billion as at December 3, 2018. The challenges faced by the Agricultural products exporting companies in accessing the  credit, may have informed the reason why the apex bank decided to set up a Committee to manage the funds to give the exporting companies opportunity to have unfettered  access to it. ”We will make it easy for them to access  the credit  by putting in place policies  that will reinvent their export earnings in a way  that funds that could  be earned would be beneficial to the  economy”.

There is no gain saying the fact that if the N500 billion credit made available by the apex Bank  to support export activities in the country are well managed without creating administrative bottlenecks for the exporting companies to access the funds without restraint, it would  go a long way to boost the country’s Agricultural product exports and improved export earnings  which had been the plan of the government  over the years .

This is where Emefiele , the CBN, governor had to come in to monitor the Committee to ensure they do the right thing instead of advancing the Credit only to their friends and cronies  in the export business. At present officials of the export Seat at the various Customs Commands across the major seaports in county were said to be very busy. Take for instance in, the export officials at Apapa and Tincan Island   Commands  are  frequently found at Nigerian Shippers Council NSC or NEPC, holding one meeting or the other with the officials of the agencies on how to advance the cause of the exporters. This may have gone a long to improve the export of Agricultural products  in the recent time giving the number of exporters who  process their documents at these Commands  Export Seats daily.The good news was that the cargo carrying vessels are always there to carry the semi-processed wood, according to Customs  sources to China where there is a ready market for it.

But most of the  exporting Companies appears to have abused the privilege by trying to export unprocessed wood.This is evident going by the seizure  at various times of Containers of tens of ”20ft” unprocessed wood heading to Apapa or Tin can Island ports in  Lagos for shipment to China.