The Export Expansion Grant (EEG) is a non oil revenue buffer set in place to give tax credits to companies that create value for the Nigerian Economy through Exports. They are issued through Export Credit Certificates. The Nigeria Export Promotion Council (NEPC) had asked Companies to submit their Baseline Data, for a review between the 20th of November & 29th December 2017. The results show that amongst the major Multinationals granted ₦70bn in tax savings through the export credit certificates are Olams Nigeria, Cadbury, Flour Mills of Nigeria, Guinness Nigeria, Royal Mills & Foods Limited, Aarti Steel, African Industries Group, Louis Dreyfus
The Ministry of Trade & Investment in coordination with the Nigeria Export Promotion Council are hoping to use the EEG as a tool to buffer foreign export to Sub Saharan African Countries as a means to boost export revenues and reduce the dependence of the Nigerian Economy on Oil receipts.
The 2018 Appropriation Bill shows that Oil receipts will generate ₦2.4trillion of ₦8.61trillion the FG needs to fund its budget. Encouraging Companies to manufacture and sell to other Countries which achieves more tax revenues for the Federal Government as well as foreign exchange income through certificates of capital importation by companies who earn money abroad for trading across borders.
Early in November, Moody’s (International Rating Agency) downgraded Nigeria’s Sovereign Rating to B- with a stable outlook on fears that the Government is not doing enough to diversify its revenue away from oil, which might make it prone to shocks from unexpected shocks in the Oil market, it also indicated that the practice of giving undue tax credits to Nigerian Companies and not doing enough to widen the tax bracket is detrimental to the long term sustainability of the income sources for the Federation Account.
The Nigerian Government hopes that it can bring foreign exchange income for companies which will improve balance of trade, that currently sits at a surplus of ₦1trillion, it also hopes it can lead to the creation of more private sector jobs by more companies expanding their production and delivery line, along with the tax revenues it will bring in for the Federal Government.