The Ministry of Mines and Solid Minerals Development (MMSD) is almost set to implement an export regulation that will trigger the beginning of the end for minerals exportation in Nigeria. According to a newspaper report published on January 15, 2019, “the minister said that under the soon-to-be-released Mineral Export Guidelines, the lingering issue of evading payment of royalties or false declarations had been dealt with. According to him, all mineral exports shall henceforth be inspected by government-appointed independent pre-shipment inspection agents.”
This guideline was drafted without the input of the stakeholders which are the mineral exporters in Nigeria. The uproar from the stakeholders who got to know through other means lead to a public hearing last year. Despite the input from the practitioners, the MMSD has refused to make the recommended changes on the document. It is bent on going ahead to implement it at the detriment of the growth of the sector. The major focus of the ministry is to increase revenue by passing the royalty that are being evaded by the miners to the merchants who export theses products.
The non-oil export sector contributions to the total export volume in Nigeria declined from about 12% in Q1 of 2018 to 3.6% in Q3. This is primarily due to the gridlock in Apapa. Instead of first putting pressure on all the stakeholders and working with them to resolve the issue in order to increase the export volume, it is sad that what MMSD is interested in is increasing the tax burden on the exporters who are currently incurring losses due to increasing delays, demurrage and debts.
The new regulation will increase the timeline of exportation in Nigeria by 27days in addition to the current delay of about 3-4weeks needed to get your goods into the port. It will increase NESS fees from the current 0.5% to 2% of the FOB value for mineral exporters. It will pass the royalty fees from miners to merchants that are exporting the minerals. It will increase the logistics cost of the exporters because of the cost of moving the goods to the premises of the Pre-Shipment Inspection agents (PIA). It will also discourage funding by the commercial banks because the PIA will now take the custody of the goods for export and not the commercial banks that are funding the transaction. It will introduce additional documentation which will increase the export documentation to 11 as against the reduction to 7 which was done by the policy of the presidential enabling business environment and finally, it reduce employment opportunities in the sector by granting foreigners with tourists visa a license to buy and export minerals from Nigeria.
The type of regulation Nigerian exporters needs right now is a policy that ensures that all goods being exported out of Nigeria are inspected by an agency of government at a designated location near the different ports in the country to ensure that the quality of the exported items are good enough to avoid rejection and boost the competitiveness of the Nigerian non-oil export sector. We do not need a regulation that makes worse the current precarious situation of the sector.
We will like to finally call on the presidency to call the staff, consultant and the minister MMSD to order and halt their ignorant, inept and inimical plans to implement a new mineral export policy that is capable of plummeting to zero the over $215 million currently being realised annually from this sector.
For questions and clarifications, contact Bamidele Ayemibo on email via bayemibo@3timpex
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