NIGERIAN INVESTMENT INCENTIVES NEED UPDATING?

Recently, as an offshoot from the Nigerian Investors Forum held at Abuja, the Nigerian Investment Promotion Council (NIPC) and the Federal Inland Revenue. Service (FIRS) released a compendium of investment incentives dated October 2016.

They said it was based on 2016 fiscal policy regime and covers 5 sectors of the economy

The compendium was put together by the two organisations with input and help the Bank of Agriculture; Ministries of Agriculture and minerals development, finance, health, industry and trade, mines and steel and agencies like Nigerian Electricity Regulation commission and the Nigerian Export promotion council.

A good idea no doubt because it provides one stop list of existing incentives and government agencies in charge of their administration.

It contains tariff based incentives; export incentive; free zone incentives especially for export processing and oil and gas, and general tax based incentives.

There are also specific incentives for agriculture, solid minerals, processing and production of cassava;  for the tourism and hospitality industry and oil and gas production on shore and under production sharing arrangements at different depths offshore.

Most of the incentives talk of allowable deductions, capital allowances, tax exemptions, credit guarantee for agriculture mainly, graduated royalty rates, tax credits and pioneer status relief among others.

"The compendium" declared the compilers, "will be updated particularly as more incentives are duly gazetted as a clear demonstration of the commitment of the Federal government. to encourage investment in Nigeria".

However, a close look reveals that it may in fact be outdated already since the bulk of the incentives emanate from laws passed or amended in 2004, 2007 and 2015 well before Nigeria's 2016 recession and given the urgent need to get over today's still continuing stranglehold on the economy by foreign exchange earnings especially from crude oil and from gas.

It looks outdated because there is as yet nothing to encourage hitech companies to look the Nigerian way for anything yet of course, now and the future belongs to wealth innovation, and not just wealth creation.

It also looks outdated because nothing in it reflects yet lessons learnt from the decline into recession and the still very slow recovery all round from this bottom.

The existing incentives were well in place before the exodus of manufacturers batteries, tyres, textiles and other key products decided to close down plants and relocate elsewhere and service consumers through imports from new base countries. Now there is nothing in it to attract such companies back.

In the end, it is a very good document and those who put it together should be commended but government should please live up to its change mantra and update it soonest.

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