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Nigerian leather makers urge Govt to end Export Grant
08 Dec '11
2 min read
The Leather and Allied Product Manufacturers Association of Nigeria (LAPAN) has urged the National Assembly to end the Export Expansion Grant (EEG) as it is bestowing more negative effects than positive.
The Association stated that more than NGN 300 billion have been distributed since introduction of the grant, but the same has not delivered any positive outcome till now, and there is no sign of development or any change in the export infrastructure.
For instance, LPAN said, a single tannery in Kano has bagged a grant of over NGN 35 billion over last five years, but there is no evidence of any form of improvement in the tannery so far.
Foreigners, who pass the benefits of the grant to other countries, have benefited the most from the said grant, it added.
The rush to export in order to bag the easy finance flowing in the form of export grant has resulted in lapse of quality control, it said and added that it has blemished the long established reputation of the Nigerian leather and hides and skin industry for quality to an irredeemable extent.
According to LAPAN, EEG was intended at apparently enhancing the country's production base, but the scheme is delivering totally adverse results as most of the exporters of raw inputs also avail the grant at the same level as manufacturers. Due to this, procurement of cotton is less expensive in China as compared to Funtua, just like hides and skin are less expensive in Spain compared to Kano.
As stated by LAPAN, owing to competition to export domestic raw materials to cash in on the reward linked with it, Nigerian textiles fail to stand in competition with textile items from China, as Nigeria subsidizes the raw inputs meant for use by Chinese industry in the same pattern as it subsidizes the one for Spanish shoe manufacturers.
It is for this reason that 90 percent of the Nigerian textile firms and 99 percent of the shoe factories ceased operations since the EEG came into being, following which thousands of domestic workers lost their jobs, while local manufacturers are left in the lurch of poverty.
The Association stated that more than NGN 300 billion have been distributed since introduction of the grant, but the same has not delivered any positive outcome till now, and there is no sign of development or any change in the export infrastructure.
For instance, LPAN said, a single tannery in Kano has bagged a grant of over NGN 35 billion over last five years, but there is no evidence of any form of improvement in the tannery so far.
Foreigners, who pass the benefits of the grant to other countries, have benefited the most from the said grant, it added.
The rush to export in order to bag the easy finance flowing in the form of export grant has resulted in lapse of quality control, it said and added that it has blemished the long established reputation of the Nigerian leather and hides and skin industry for quality to an irredeemable extent.
According to LAPAN, EEG was intended at apparently enhancing the country's production base, but the scheme is delivering totally adverse results as most of the exporters of raw inputs also avail the grant at the same level as manufacturers. Due to this, procurement of cotton is less expensive in China as compared to Funtua, just like hides and skin are less expensive in Spain compared to Kano.
As stated by LAPAN, owing to competition to export domestic raw materials to cash in on the reward linked with it, Nigerian textiles fail to stand in competition with textile items from China, as Nigeria subsidizes the raw inputs meant for use by Chinese industry in the same pattern as it subsidizes the one for Spanish shoe manufacturers.
It is for this reason that 90 percent of the Nigerian textile firms and 99 percent of the shoe factories ceased operations since the EEG came into being, following which thousands of domestic workers lost their jobs, while local manufacturers are left in the lurch of poverty.
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