THE Centre for the Promotion of Private Enterprise (CPPE) has called for a withdrawal of the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly, warning that the bill has the prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers.
The CPPE Director and Chief Executive Officer, Muda Yusuf, raised concerns over the bill in a statement on Monday, April 21.
The bill proposes that no primary product exports should take place unless there is a minimum of 30 per cent local value addition.
It also proposes that manufacturers will not be allowed to import raw materials that are available in sufficient quantity in the country.
The ICIR reports that the bill passed its 2nd reading in the Senate on Tuesday, December 10, 2024.
Yusuf, a renowned economist, who believes the idea of promoting local value addition is good for the economy and potentially enhances the chances of better earnings from the nation’s exports, pointed out that the policy had to ensure a balance between the interests of exporters of primary products and the processors.
He suggested it would be 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,” Yusuf argued.
He noted that the major non-oil exports include cocoa beans and cocoa butter, cashew nuts, gum Arabic, ginger, sesame seeds, and shea butter.
He said even crude oil was still a major component of Nigeria’s export, stressing that until recently, domestic refining capacity was nil.
Yusuf argued further that the proposed bill raised several questions which including what metrics would be used to determine the minimum 30 per cent value addition.
He asked who would determine and approve the export, and what study had been done to determine the local processing capacity for each category of primary products currently being exported.
Other pertinent questions he raised are: 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? And whether it is within the mandate of the RMRDC to promote the ban on exports or imports.
According to the CPPE boss, the position of the CPPE is that the bill raises more questions than answers.
“It is a very simplistic proposition which 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,” he said.
Yusuf also pointed out that most agro-processors have collapsed not so much because of the raw materials but the challenges of productivity and competitiveness.
He lamented that production costs were prohibitive, including the cost of energy, funds, logistics, bureaucratic bottlenecks, exchange rate, and multiple taxation, among others.
He maintained that these variables were bigger issues that needed 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,” Yusuf submitted.
