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FG Unveils New Incentives for Non-oil Exporters

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  • FG Unveils New Incentives for Non-oil Exporters

The Federal Government has rolled out a new set of incentives that will guarantee payment for exporters before shipment and stakeholders are confident it will boost non-oil exports by 150 to 300 per cent, ANNA OKON writes

The government has gone beyond the revival of the Export Expansion Grant incentive scheme to introduce a new basket of incentives for existing and new exporters.

According to the Acting Executive Director/Chief Executive Officer, Nigerian Export Promotion Council, Abdullahi Sidi-Aliyu, the new basket of incentives is designed to boost the growth of the Small and Medium Enterprises sector.

Speaking during a stakeholders’ forum on the validation of the guidelines of the new incentives in Lagos on Friday, Abdullahi Sidi-Aliyu, who was represented by the Director, Export Development and Incentives at the NEPC, George Enyiekpon, revealed that the government had already made funds available for the implementation of the new incentives.

He added that unlike the EEG, which was a post-shipment incentive where exporters were required to export before accessing, the new basket of incentives was pre-shipment and exporters would be given the grant before carrying out the export.

Sidi-Aliyu said that the NEPC had constituted a technical committee on the new basket of incentives, which reviewed export incentive schemes in the country and came up with suggestions.

“The draft report of the committee proposed the reactivation of moribund schemes such as Export Development Fund, Export Adjustment Scheme Fund, Manufacture-In-Bond Scheme and the introduction of new ones such as Export Support/Litigation Fund, which is being presented for stakeholders’ validation,” he stated.

He noted that the Export Incentives and Miscellaneous Provisions Act had made provision for various forms of incentives out of which only the EEG was operational, adding that it was obvious that the EEG alone was not enough to cater for all the challenges facing the non-oil sector.

With the return of the EEG, some stakeholders including XPT Logistics International Limited expect more people to go into the export business.

The Managing Director and Chief Executive Officer, XPT Logistics International Limited – a consultancy, training and trade facilitation firm, Mr. Kolawole Awe, specifically said the export volume would rise by about 150 per cent.

The President, Federation of Agricultural Commodities Association of Nigeria, Dr. Victor Iyama, told our correspondent that the new scheme would push up the non-oil export sector by about 300 per cent.

The Chairman, Manufacturers Association of Nigeria, Export Promotion Group, Chief Ede Dafinone, stated that with the introduction of the new incentives, there would be a remarkable growth in the non-oil export volume by the end of the first quarter of 2019.

Speaking to our correspondent on the sideline of the stakeholders’ forum in Lagos, Dafinone also expressed confidence that Nigeria was about to witness a reversal of the high unemployment rate.

“The scheme will encourage new operators to come into the export sector and that way more jobs would be generated,” he said.

Iyama, who has been an operator in the agro-export sector for over 27 years, said, “I believe the growth of the sector will be tripled if there is consistency in the policy.

“This policy is better than the EEG in terms of encouraging upcoming exporters who have no opportunity to access bank loans.”

Awe said that with the widening of the basket, more people would be attracted to the non-oil export sector.

“The export sector will grow more than 150 per cent because the EEG is back; utilisation has been expanded, you can use it to pay tax, buy treasury bills, and so on. More people will go back to export to be able to take advantage of the EEG and all the other incentives.”

“This is what is being practised in more developed economies and we are just taking a cue from that,” he said.

Continuing he said, “The EDF, for instance, is targeted at the SMEs that are hampered by funding capacity to expand their market. With the EDF, they have access to funds to take care of their labelling, branding, advertisement issues and more importantly to be able to access the international market.

“So you can imagine the myriad of opportunities opened to new and existing exporters. I believe it is going to greatly impact on the figures of the non-oil export sector and the SMEs would be able to produce, sell more and employ more people and the economy will grow as a result.”

The suspension of the EEG in 2014 led to a decline in non-oil exports by over 50 per cent. By April 2017, the non-oil exports reportedly suffered a 60 per cent decline.

Reports put the yearly loss in the sector between 2014 and 2016 at $1.39bn compared with the $3.4bn recorded in 2013.

The 2016 recession added to the suspension in the EEG to compound the loss. According to data from the National Bureau of Statistics, export trade on non-oil goods in 2016 was the lowest at about $1.1bn compared to 2011 and 2012 when receipts from agro-based produce were over $3.8bn and $3.9bn, respectively.

Following series of screening of outstanding claims, meetings and negotiations with stakeholders, President Muhammadu Buhari in his 2016 budget speech announced that the EEG would be revived and made provision for it in the 2017 budget.

This, in addition to the country’s exit from recession, led to a rise in the non-oil exports to $1.26bn by the third quarter of 2017.

It was also resolved that the backlog of the unclaimed Negotiable Duty Credit Certificates (instruments presented by exporters to enable them to benefit from payment of the EEG claims) would be settled through promissory notes.

The new basket of incentives would be claimed through the presentation of the Export Credit Certificates, which was used to replace the NDCC.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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African Economy Set for Steady Growth: 4% Projected for 2025

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Experts are forecasting a robust growth trajectory of 4% for the continent in 2025.

This optimistic projection was highlighted during the ongoing Afreximbank annual meetings, incorporating the Africaribbean Trade and Investment Forum, held recently in Nassau, The Bahamas.

Yemi Kale, Group Chief Economist and Managing Director of Research and International Cooperation at Afreximbank, presented the 2024 African Trade Report and Economic Outlook, saying the African Continental Free Trade Area (AfCFTA) is significant in driving economic integration and growth.

The projected growth rate of 4% for 2025 reflects a steady recovery path for Africa, building on the expected 3.5% growth anticipated for 2024.

This positive outlook comes at a crucial time when African economies are navigating challenges posed by global economic dynamics, including inflationary pressures and supply chain disruptions.

Kale underscored the resilience of intra-African trade, which expanded by 3.2% in 2023 despite a 6.3% overall contraction in Africa’s trade volumes.

This resilience is a testament to the AfCFTA’s potential to bolster regional trade ties and reduce dependency on external markets.

The Afreximbank report also delved into macroeconomic environments, trade patterns, and sovereign debt sustainability dynamics, providing policymakers and business leaders with actionable insights to navigate complexities in global markets effectively.

Nomusa Dube-Ncube, Premier of Kwazulu-Natal, highlighted Africa’s modest share of global GDP and manufacturing output, emphasizing the untapped potential within intra-African trade.

She noted that while Africa currently accounts for only 3% of world trade, intra-regional trade is steadily increasing, indicating a growing economic ecosystem within the continent.

Pamela Coke-Hamilton, Executive Director of the International Trade Centre (ITC), echoed the sentiment, advocating for enhanced trade between Africa and the Caribbean.

The ITC projects trade in goods and services between these regions to reach $1 billion by 2028, underscoring the mutually beneficial opportunities for economic expansion.

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Nigeria Sees 95% Surge in Food Imports Despite Emergency on Food Production

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Nigeria’s food import bill has surged to a five-year high in the first quarter of 2024, despite the federal government declaring a state of emergency on food production.

Data from the National Bureau of Statistics (NBS) reveals a 95.28 percent increase in food imports to N920.54 billion from January to March, compared to N471.39 billion in the same period last year.

This alarming rise comes amid soaring food inflation, which hit a record 40.5 percent in April, reflecting a 15.92 percent year-on-year increase.

The sharp inflation has left many Nigerians struggling to afford a balanced diet, exacerbating the food security crisis in Africa’s most populous nation.

In March, President Bola Ahmed Tinubu emphasized the government’s commitment to self-sufficiency in food production, stating that Nigeria would not rely on imports to stabilize prices.

“We will not allow the importation of food but rather turn the lack in the country into abundance,” Tinubu declared. However, the latest import figures suggest that this goal remains elusive.

The NBS Foreign Trade Statistics report highlights that the value of food imports via maritime, air, and land routes surged 29.4 percent from N711.4 billion in the fourth quarter of 2023.

Major agricultural goods imported included durum wheat from Canada and Lithuania, valued at N130.26 billion and N98.63 billion, respectively. Frozen blue whitings from the Netherlands accounted for N16.67 billion.

Wheat imports alone constituted N519.75 billion of the total food import bill. The average cost of wheat imports, a significant driver of the food import value, increased by 33 percent compared to the previous quarter’s value of N391.01 billion.

The rising importation of wheat reflects its popularity among Nigerian consumers amid skyrocketing prices of close substitutes like garri and rice.

Overall, Nigeria’s total imports for Q1 2024 amounted to N12.64 trillion, representing a 39.65 percent increase from N9.05 trillion in Q4 2023 and a 95.53 percent rise from N6.47 trillion in Q1 2023. Food imports accounted for 7.3 percent of total imports during the period under review.

The bulk of Nigeria’s imports came from Asia, China, Europe, America, and Africa. Mineral fuels topped the import category with N4.44 trillion, representing 35.09 percent of total imports.

Machinery and transport equipment followed with N3.17 trillion, contributing 25.08 percent, and chemicals and related products at N1.79 trillion, making up 14.13 percent of total imports.

Despite the federal government’s initiatives to boost local food production and reduce dependency on imports, the latest data underscores the persistent challenges facing Nigeria’s agricultural sector.

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Ethiopia Boosts Spending by 21%, Eyes IMF Program for Economic Relief

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Ethiopia has announced a 21% increase in its 2025 budget, marking the first budget since defaulting on a Eurobond payment and committing to economic reform discussions with the International Monetary Fund (IMF).

The nation’s Finance Minister, Ahmed Shide, revealed the new budget details to lawmakers on Tuesday, outlining plans to spend 971.2 billion birr ($16.9 billion) in the fiscal year starting July 2024.

The increased budget reflects Ethiopia’s commitment to addressing its economic challenges head-on. Despite the heightened expenditure, the fiscal deficit is projected to remain stable at 2.1% of gross domestic product (GDP), unchanged from the current fiscal year.

Financing the Deficit

Minister Shide outlined a plan to cover the 358.5 billion-birr deficit through a combination of local and foreign borrowing.

The domestic borrowing component will be managed via government treasury bills and medium-term bonds. Shide emphasized that until substantial external donor support is secured, Ethiopia will continue to rely heavily on its domestic markets to finance budget deficits.

“While the government has secured some external financing from the World Bank and the European Union, negotiating an IMF program will be crucial to alleviate pressure on local banks and secure overall debt relief,” said Giulia Filocca, a senior analyst at Standard & Poor’s for sovereign and international public finance ratings.

IMF Program and Economic Reforms

An agreement with the IMF is seen as a pivotal step for Ethiopia. The nation failed to remit a $33 million coupon payment for its $1 billion bond in December 2023, leading to agreements with some creditors, including the Paris Club, to suspend debt repayments.

In exchange, Ethiopia is expected to reach a staff-level agreement with the IMF, which will likely include economic reforms such as devaluing the birr currency.

“Our expectation is that an IMF program will be signed this year, but the timeline remains unclear due to ongoing political developments and challenges over foreign-exchange reforms,” added Filocca.

Budget Highlights

The new budget includes 451.3 billion birr for recurrent spending, 283.2 billion birr for capital expenditure, and 236.7 billion birr allocated for regional subsidies.

The government projects income of 612.7 billion birr, with tax revenue expected to contribute 502 billion birr and non-tax income 61.6 billion birr. Sector budget support is anticipated to bring in 7.3 billion birr, with aid and grants expected to add 41.8 billion birr.

Economic Outlook

Ethiopia’s economy is forecasted to expand by 8.4% in the coming fiscal year, up from an expected 7.9% growth rate in the current period. The budget increase is designed to support this growth trajectory by enhancing public investment and stimulating economic activity.

“Our partnership with the IMF and other international financial institutions will be key to ensuring Ethiopia’s economic resilience and sustainable growth,” Minister Shide concluded. “We are committed to implementing the necessary reforms to secure a brighter economic future for our country.”

As Ethiopia navigates its economic challenges, the government’s proactive approach to increasing spending and engaging with the IMF reflects a strategic effort to restore fiscal stability and drive long-term economic development.

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