CPPE urges FG to reconcile CBN, Finance Ministry’s trade policies

The Centre for the Promotion of Private Enterprise (CPPE) has called on the Federal Government to reconcile and address conflicting concerns in the trade policies put up by the Central Bank of Nigeria (CBN) and the Ministry of Finance.

The CPPE noted that while some items are prohibited in CBN’s Forex exclusion list, they are not so in the import prohibition list of the Ministry of Finance.

The centre, in a comment on the 2022 fiscal policy measures by its Chief Executive Officer, Dr Muda Yusuf, said these trade policy conflicts by the fiscal and monetary authorities are disrupting trade in Nigeria and portray the country as having two divergent trade policies.

“It is untidy to have what we can describe as two sets of trade policy documents; one by the Central Bank of Nigeria and the other by the Federal Ministry of Finance.

“The presidency should reconcile these two lists in order to resolve the current policy conflict in our international trade ecosystem and minimise disruption to trade. We should not have a situation where an item that is not prohibited under our fiscal policy and being denied access to Form M by the Central Bank of Nigeria,” Dr Yusuf said.

The centre also commended the Federal Government for coming up with the new fiscal policy measures that would ensure an industrial sector that is protected and supported for competitiveness.

It, however, urged the Federal Government to release the Fiscal Policy Measures alongside the Finance Act and Appropriation Act as “This would facilitate planning, reduce uncertainty, minimise investment risk and boost investors’ confidence. We propose that the Fiscal Policy should be released effectively from the 1st of January.

“The CPPE commends the grace period of ninety days that was provided for the implementation of the tariff component of fiscal policy. We commend the Finance Ministry for creating this transition window to minimise the shocks of fiscal policy changes on investors,” it said.

CPPE also said that access to fiscal incentives from the Federal Ministry of Finance is rid of bottlenecks, red-tapism and bureaucracy that could arise in the process of getting approvals for the importation of items with concessionary import duty.

“The experience of importers and the business community with seeking approvals from the Ministries before the fiscal incentives can be enjoyed is often fraught with frustrating bureaucracy, bottlenecks, delays and sometimes extortion.

“We, therefore, recommend that once the Fiscal Policy document has been approved by the government, the Nigeria Customs Service should be left to fully implement these policies without further recourse to the Ministry for additional approvals.

“We believe that the Customs is competent enough to interpret the Fiscal Policy and determine eligibility for fiscal incentives. The idea of seeking approval and exemption certificates from the Ministry of Finance or any other ministry is not consistent with the spirit of the Ease of Doing Business and should therefore be discontinued,” he said.

Lending his voice to the call by the Manufacturers Association and other business associations for the suspension of imposition of excise duties on some products by the Finance Ministry, Dr Yusuf said such would further escalate manufacturing costs in the face of rising energy costs and slump of citizens’ purchasing power.

“The imposition of excise duty makes Nigeria products more expensive relative to products from the neighbouring countries who are in the same economic community with Nigeria.

“The implication is that Nigerian industrialists will lose market share to countries in the West African sub-region under the ECOWAS trade liberalisation scheme because the cost of production in Nigeria is much higher and the imposition of excise duty will make domestically produced products even more expensive.

“We, therefore, appeal once again that the timing of the imposition of excise duty of selected manufacturing firms is auspicious and should therefore be suspended to demonstrate greater sensitivity to the plight of manufacturers in the Nigerian economy,’ he added.

Dr Yusuf also advocated for the recognition and inclusion of traders and middlemen in the international trade process as they help with the importation of equipment, raw materials and machines needed by small-scale industrialists.

He said, “It is therefore discriminatory and unfair to exclude middlemen and traders from the importation of raw materials, equipment, spare parts or machinery which may be required by some small-scale industrialists who do not have the capacity to import these items on their own. This policy position should be reviewed for the sake of economic inclusion and without prejudice to regulatory measures to ensure standards and quality.”

In the face of the worsening energy crisis and rising costs of powering businesses in Nigeria, the centre called on the Federal Government to promote diversification into renewable energy through its fiscal policy measures.

To ensure greater access to clean and renewable energy in line with the global trend of decarbonisation, the centre posited “Zero import duty on solar panels, inverters, solar batteries; zero import duty on all renewable energy equipment and installations; zero VAT on renewable energy equipment, including batteries and tax holidays for renewable energy companies in the country.

“The CPPE submits that if the government can budget N4 trillion (about $9 billion) for petrol subsidy, it should be able to afford these incentives to improve energy access and promote the development of renewable energy. The potential benefits to the economy and the environment far outweigh the revenue loss from these concessions,” it said.

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