By Merit Ibe
The Centre for the Promotion of Private Enterprise (CPPE) has kicked against the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly, saying it has the prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers.
Director of the centre, Dr. Muda Yusuf, posited that the policy has to ensure a balance between the interests of exporters of primary products and the processors, emphasising the need to undertake 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 bill currently proposes that no primary products exports should take place unless there is a minimum of 30% local value addition.
“That manufacturers will not be allowed to import raw materials that are available in sufficient quantity in the country.”
In view of the content of the bill, Yusuf noted that, 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.
He, however, argued that the current proposal in the bill will penalize exporters in the country, most of whom export primary products, as thousands of jobs in the primary products export supply chain would be put at risk.
Calling the council’s involvement in trade policy matters an aberration, the CPPE boss noted that the bill has a very weak value proposition and therefore advised the RMRDC to withdraw the bill.
“We therefore submit that the National Assembly should discontinue deliberations on the bill and encourage the council to focus on its core mandate of raw materials research to offer the most cost-effective raw materials option for manufacturers.”
“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.”
He posited that the bill raises more questions than answers, noting that it is a proposition that has not taken into account the critical challenges of manufacturing, processing, and value addition in the Nigerian economy.
“These contextual understandings are very critical to enrich the conversations around the raw materials bill. Most agro-processors have collapsed not so much because of raw materials availability, but the challenges of productivity and competitiveness.
“Production costs are prohibitive. The cost of energy, funds, logistics, bureaucratic bottlenecks, exchange rate, multiple taxation, etc., 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.”
He viewed that, 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 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 which 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.”