Nigerian exporters in the manufacturing sector have recently raised concerns regarding a new policy implemented by the Federal Inland Revenue Service (FIRS) that imposes taxes on grants provided under the Export Expansion Grant scheme. During a stakeholder engagement in Lagos, the Chairperson of the Manufacturers Association of Nigeria Export Group (MANEG), Odiri Erewa-Meggison, highlighted that this taxation policy undermines the fundamental intent of incentivizing export growth. She emphasized that taxing these grants further dilutes the financial benefits exporters receive, as the credit certificates or promissory notes are issued in arrears and often subject to discounting. This additional tax, according to Erewa-Meggison, effectively negates the very purpose of the incentive, making it increasingly difficult for Nigerian exporters to remain competitive in the global market.
Erewa-Meggison also pointed out the impact of the delays in grant issuance, which erode their value over time. When considering the time value of money and the process of discounting, exporters typically experience a significant loss in the value of these grants, which can restrict their pricing flexibility in international markets. She revealed that MANEG had previously addressed these concerns with the former Minister of Industry, Trade, and Investment, Doris Uzoka-Anite, as well as with Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, aiming for their intervention to resolve these issues. Erewa-Meggison expressed hope that Oyedele would take the lead in addressing this “low-hanging fruit” to help create a more favorable environment for exporters.
In addition to the tax-related concerns, MANEG suggested that the government should simplify the process of using grants to settle multiple obligations, which they believe could enhance operational efficiency for exporters. Erewa-Meggison further elaborated on other challenges hindering the export sector, such as exorbitant electricity costs, the unavailability of single-digit loan facilities, and the logistical challenges encountered within interstate transport networks. She acknowledged the commendable strides made by Lagos State in improving rail transport but called upon other states to collaborate with Lagos in reducing transportation costs and eliminating logistical bottlenecks.
The collaborative effort among states is deemed essential, as it would facilitate the smoother movement of goods across regions while potentially lowering costs for exporters. Erewa-Meggison expressed the hope that an inter-state partnership could bridge gaps in logistics that exporters presently endure. As part of her advocacy, she underscored the necessity for enhanced diplomatic measures to ensure that Nigerian goods are recognized and accepted in international markets. She indicated that, despite the benefits that the Continental Free Trade Area could provide, Nigerian exporters must ensure their goods meet international standards and are not unwarrantedly rejected upon arrival in foreign markets.
Erewa-Meggison also remarked on the compliance of exporters with the new FIRS policy, stating that, as of now, she is not aware of any member fulfilling the payment obligations mandated by the tax. Although dissatisfaction is prevalent among exporters regarding this tax policy, there has been no confirmed payment, illustrating the sector’s resistance to the new taxation measure. The concerns raised by MANEG reflect a broader urgency for creating an enabling environment for exporters, particularly as Nigeria aspires to diversify its economy through non-oil exports and build a more robust manufacturing sector.
In conclusion, the mounting issues faced by Nigerian exporters, including unfair taxation on essential grants, significant operational hurdles, and diplomatic challenges, highlight the need for government intervention and policy reform. By addressing the concerns raised by the manufacturing sector, the Nigerian government can better support exporters in navigating market challenges and remaining competitive on the global stage. The ongoing collaboration between stakeholders and authorities will be crucial in fostering an environment conducive to sustained growth in non-oil exports and achieving economic diversification objectives for Nigeria.
