The Centre for the Promotion of Private Enterprise, CPPE, has criticised the proposed Raw Materials Bill currently before the Nigerian National Assembly, which seeks to restrict manufacturers from importing essential raw materials and intends to impose barriers on exports.
Chief Executive Officer of CPPE, Dr Muda Yusuf, made this known in a statement on Monday.
This comes as the Raw Materials Bill awaits passage by the National Assembly.
However, the CPPE noted that the bill would result in significant adverse and unintended consequences for Nigerian exporters and manufacturers.
The economic think tank has therefore called for the bill to be withdrawn.
According to the statement: “On the face of it, the idea of promoting local value addition is good for the economy and potentially enhances the chances of better earnings from our exports. But the policy has to ensure a balance between the interests of exporters of primary products and the processors. It is also imperative to undertake a robust study on domestic raw materials availability before legislating 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 penalise 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, and shea butter. Even crude oil export is still a major component of Nigeria’s export. Until recently, domestic refining capacity was nil.
“This proposition raises a number of questions. What metrics would be used to determine the minimum 30% value addition?
“Who will determine and give approval for the export to proceed? What study has been done to determine the local processing capacity for each category of primary products currently being exported?”
“What metrics would be used to determine raw materials that manufacturers would be allowed to import into the country?”
“What is the effective time frame for implementation? Is it within the mandate of the 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 that has not taken into account the critical challenges of manufacturing, processing, and value addition in the Nigerian economy. This 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 because of 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 need to be addressed to promote value addition. We should be causative in our approach to solving problems and focus less on the symptoms.
“If passed, the bill would create new corruption gateways in the bureaucracy as businesses will now be burdened with another chain of approvals.
“Additionally, the issue of export or import bans is not within the remit of the Raw Materials Research and Development Council or the Ministry of Science and Technology. It is in the realm of fiscal policy, which is within the purview of the Ministry of Finance, working in collaboration with the Ministry of National Planning and the Ministry of Industry, Trade, and Investment. And in this particular instance, the Nigeria Export Promotion Council [NEPC] must be in the loop. This is essential to determine the implications for the non-oil export sector, the manufacturing sector, and the economy as a whole. It is also important for policy coordination and coherence.
“Import and export regulations are not often legislated. They are trade policy issues that are calibrated from time to time by the fiscal policy authorities in light of prevailing economic conditions. 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 the most cost-effective raw materials option for manufacturers. The council’s involvement in trade policy matters is an aberration. Besides, the bill has a very weak value proposition. The CPPE advises the RMRDC to withdraw the bill.”
