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The Centre for the Promotion of Private Enterprise (CPPE) has raised concerns over the proposed Raw Materials Bill currently before the Nigerian National Assembly.
The bill aims to restrict manufacturers from importing crucial raw materials and proposes barriers for exports.
Dr. Muda Yusuf, CEO of CPPE, highlighted these concerns in a statement on Monday.
The bill, which is awaiting approval by the National Assembly, has sparked criticism from the CPPE, which argues that it could have severe and unintended negative impacts on Nigerian exporters and manufacturers.
As a result, the CPPE has called for the bill to be withdrawn.
The statement explains: “On the surface, the goal of encouraging local value addition seems beneficial for the economy and could potentially boost export earnings. However, the policy needs to strike a balance between the interests of primary product exporters and processors. It is crucial to conduct a thorough study of domestic raw materials availability before implementing any ban on raw materials for manufacturers.
“What is required is a mutually beneficial solution, not a zero-sum approach. The current proposal in the bill would harm exporters in the country, many of whom deal in primary products. Thousands of jobs tied to the export of primary goods would be at risk. Key non-oil exports include cocoa beans, cocoa butter, cashew nuts, gum arabic, ginger, sesame seeds, and shea butter. Even crude oil export remains a significant part of Nigeria’s exports. Until recently, the country had no domestic refining capacity.
“This proposal raises several important questions. What criteria will determine the minimum 30% value addition?
“Who will approve exports once they meet the criteria? Has a study been conducted to assess the local processing capacity for each primary product currently exported?”
“What criteria will be used to determine which raw materials manufacturers can import into the country?”
“What is the timeline for implementation? Does the RMRDC have the authority to promote bans on exports or imports?
“The CPPE’s stance is that this bill raises more questions than it answers. It presents an overly simplistic approach that fails to consider the critical challenges of manufacturing, processing, and value addition in Nigeria’s economy. A nuanced understanding of these issues is essential to enriching discussions around the raw materials bill. Many agro-processors have collapsed not because of a lack of raw materials, but due to issues related to productivity and competitiveness.
“Production costs are high. Energy costs, funding challenges, logistics expenses, bureaucratic obstacles, exchange rate issues, and excessive taxation are far greater concerns that need to be addressed to foster value addition. We need to focus on the root causes of problems rather than just addressing the symptoms.
“If passed, the bill would create new avenues for corruption within the bureaucracy, as businesses would face additional layers of approvals.
“Furthermore, decisions regarding export and import bans fall under the realm of fiscal policy, which is managed by the Ministry of Finance, in collaboration with the Ministry of National Planning and the Ministry of Industry, Trade, and Investment. The Nigeria Export Promotion Council [NEPC] should also be involved in discussions to understand the impact on non-oil exports, manufacturing, and the economy as a whole. This is crucial for effective policy coordination.
“Import and export regulations are typically flexible and subject to adjustment by fiscal authorities in response to changing economic conditions. Such issues are not typically legislated upon by the National Assembly.
“We urge the National Assembly to discontinue discussions on the bill and instead encourage the Raw Materials Research and Development Council to focus on its core role of raw materials research. Its involvement in trade policy matters is inappropriate. Moreover, the bill offers little in terms of tangible benefits. The CPPE strongly advises the RMRDC to withdraw the bill.”