CPPE Highlights Flaws in Raw Materials Bill, Urges National Assembly to Discontinue Deliberations

• Urges promotion of local value addition, raw materials development that balances the interests of exporters and manufacturers

The Centre for the Promotion of Private Enterprise (CPPE) has expressed concerns over the Raw Materials Research and Development Council (RMRDC) Bill currently before the National Assembly due to the prospect of creating significant adverse and unintended consequences for Nigerian exporters and manufacturers.

The bill proposes to mandate a minimum of 30% local value addition for primary product exports and restrict manufacturers from importing raw materials available in sufficient quantities in the country.

In a statement signed by Dr. Muda Yusuf, Director/CEO of CPPE, the Center highlighted that the policy has to ensure a balance between the interests of exporters of primary products and processors.

“A robust study on domestic raw materials availability is imperative before legislating on a ban on raw materials for manufacturers. What is needed is a win-win proposition, not a zero-sum game,” Dr. Yusuf argued.

The CPPE has asked several questions regarding the bill, such as what metrics would be used to determine the minimum 30% value addition? Who will determine and give approval for the export to proceed?

What study has been done to determine the local processing capacity for each category of primary products currently being exported?

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? Is it within the mandate of the RMRDC to be promoting the ban of exports or imports?

The Centre describes the bill as a simplistic proposition that has not taken into account the critical challenges of manufacturing, processing, and value addition in the Nigerian economy.

“The contextual understanding of these challenges is critical to enrich the conversations around the raw materials bill.

“Most agro-processors have collapsed due to challenges such as productivity and competitiveness, production costs, energy costs, logistics costs, bureaucratic bottlenecks, exchange rates, and multiple taxation,” the statement read.

The CPPE warns 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 ban is not within the remit of the Raw Materials Research and Development 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,” Dr Yusuf added.

The CPPE emphasizes the importance of policy coordination and coherence, stating that the Nigeria Export Promotion Council (NEPC) must be involved in determining the implications for the non-oil export sector and the manufacturing sector and the economy as a whole.

According to the Centre, import and export regulations are not often legislated; they are trade policy issues that are calibrated from time to time by the fiscal policy authorities in light of prevailing economic conditions.

The CPPE advises the RMRDC to withdraw the bill and focus on its core mandate of raw materials research to offer the most cost-effective raw materials option for manufacturers.

The CPPE also urged the National Assembly to discontinue deliberations on the bill, stating that the bill has a very weak value proposition and that the council’s involvement in trade policy matters is an aberration.

The Centre warned that the bill’s passage would have far-reaching consequences for the Nigerian economy, including job losses and reduced competitiveness.

The CPPE also heaped on the need for a more nuanced approach to promoting local value addition and raw materials development, one that balances the interests of exporters and manufacturers while addressing the critical challenges facing the Nigerian economy.