Economic Reports - Markets Around Africa
Compiled by Ben Mensah
For, under the Lome Convention a Centre for Industrial Development (CID) operates to accelerate the pace of industrial development in ACP countries in cooperation with EEC industries. The centre is staffed by a team of professionals with industrial experience from ACP and EEC countries and with wide experience of many facets of industry.
Each year the CID, financed by the European Development Fund, assists thirty to forty companies in the ACP countries to expand their production, overcome production bottlenecks and improve their productivity and quality control.
What sort of industrial enterprise qualifies for assistance from the CID? CID's assistance is free and for projects to qualify for help they must be sponsored by individuals or organisations based in states which are signa- tories of the ACP/EEC Lome Convention. They could be small or medium- sized enterprises which aim to create jobs and provide high yearly manufacturing-value-added and a foreign ex- change saving or earning investment in accordance with the development priorities of the ACP country.
An existing industry can also be re- vived and expanded through the CID which is regularly in contact with potential European partners who, faced with the difficulty in maintaining profits and employment or even surviv- ing due to high interest rates and de- preciation costs, low utilization of capacity, labour intensive equipment, high taxes, high cost of export freight and distribution and inefficient product diversification are anxious to find new markets and also have direct access to sources of raw materials.
In the past the CID has provided a wide range of assistance to industries in the following countries in the Economic Community of West African States (ECOWAS).
CAMEROON: Integrated feedmill and poultry project
Work on a feasibility study co-financed by CID was started in August 1983. The project has two private local sponsors and German and French joint venture partners. It will cover the production of maize and soya, a feedmill, and a chicken farm. It is also planned to include the growing of tomatoes and the production of tomato concentrate for the regional market.
SENEGAL: Optical Glasses - a feasibility study, also co-financed by CID has been completed and a protocol of agreement has been signed between the Senegalese and Belgium partners. The proposed workshop will produce optical glasses for the low income groups.
UPPER VOLTA: Metal Workshop
The CID is financing, for a period of six months, a Belgian engineer to start up a diversification programme of an existing metal workshop. Two Belgian firms have taken up an equity share- holding, together with a Senegalese firm which will use the Upper Volta workshop to market agricultural tools and machines made in its Dakar factory. The project is part of a regional production and marketing link-up which will include Senegal, Upper Volta, Mauritania, Mali and the Gambia.
For the future ACP entrepreneurs who want to start or expand their ventures are invited to read this column, which, with the consent of the CID, will from time to time introduce its readers to various sources of finance and new technology in Europe. Such entrepreneurs will then apply to the CID quoting the reference number which will accompany the offer published.
OFFER 1. Ref 83/84a: A Belgian company which is prepared to invest a total of US$1,200,000 is open to a joint venture agreement with a view to estab- lishing a broiler chicken unit. The total plant would have an annual output of 350,000 broilers, representing approxi- mately 490,000 kg of live meat.
OFFER 2. Ref 83/85a: A Dutch company ready with an investment of nearly US$3 million is interested in getting in touch with ACP sponsors to manufacture, possibly on a joint venture basis, plastic pipes/fitting systems and plastic crates. Estimated investments for pipes/fitting systems are US$1.25 million for an output of 1,500 tons a year and US$1.5 million for an output of 500,000 units of crates a year.
OFFER 3. Ref 83/86a: A Danish firm ready with an estimated investment of about US$1,250,000 is interested in setting up a project for the production of dry batteries. The production capacity is about eight million per year for which the company can consider a joint venture agreement.
US withholds credit to Nigeria NIGERIA has expressed regret at the US decision to withhold $70 million (£50) promised for the purchases of wheat pending an agreement with the International Monetary Fund on an economic stabilisation programme.
This amount represents a balance of a $1,000 million line of credit for wheat purchases granted to the civilian government of ex-President Shehu Shagari but which has been withheld after the coup and pending the outcome of negotiations with the International Monetary Fund.
The Nigerian Government is currently negotiating with the IMF on a three year programme which would provide standby credits of between $2.6 billion and $3.2 billion. However, the talks have been held up due to the military regime's unwillingness to devalue the naira.
If the soldiers persist, Nigeria would be denied the IMF and American sources of finance which then will be made up through an increase in oil production and borrowing from other OPEC members such as Saudi Arabia.
Nigeria's Exchange Control Regulations The Central Bank of Nigeria recently issued a notice to all authorised dealers spelling out the foreign exchange control provisions for 1984. We reproduce some of these provisions for the benefit of our readers:
Basic Travel Allowance (BTA):
The Basic Travel Allowance is reduced from a maximum of N500.00 to N100.00 per annum, per person of the age of sixteen years and above. However, foreign exchange allowance for people travelling on pilgrimages, or any other organised religious journeys will be reviewed at the appropriate time.
Business Travel:
Foreign exchange allowance for Business Travel is suspended until further notice.
Medical Travels:
Henceforth, no foreign exchange will be made available for medical treatment outside Nigeria until such request is certified by the Chief Medical Officer of the State where the applicant patient is resident.
The following documents should be presented to the Central Bank in support of applications for medical treatment abroad:
A letter of reference from a specialist doctor (not a general practitioner), or a specialist hospital e.g. University Teaching Hospitals. A letter of certification from the Chief Medical Officer of the State where the applicant - patient is resident, stating that the patient requires overseas treatment.
3. A letter of acceptance from the overseas doctor/hospital stating bills payable, and the number of days the patient will stay for treatment. receipts in respect of medical and other expenses must be submitted to the Central Bank Office from where the approval was obtained on return of the patient to Nigeria.
In all cases where approval has been given by the Central Bank for medical treatment abroad,
Payment for Imports into Nigeria
(i) Compulsory Advance Deposits: The following rates of Compulsory Advance Deposit on import which were in operation in the 1983 fiscal year will continue during the 1984 fiscal year.
(a) Raw Materials except petroleum products 10%
(b) Spare Parts 15%
(c) Food (except Rice) 50%
(d) Medicament 50%
(e) Building Materials 50%
(f) Capital Goods 50%
(g) Books (except single copies of books, periodical magazines etc.) 50%
(h) Motor Vehicles & Trucks 200%
(i) Motor Cars 250%
(j) Other Goods 250%
However, all importers will be required to pay the applicable rates at the point of application for registration Form 'M'. The Compulsory Advance Deposits shall also be applicable to all imports irrespective of whether or not they enjoy credit facilities of over 180 days.
(ii) Buying Commission
The Buying Commission paid to Agents or confirming Houses which act as intermediary between importers and exporters is reduced from a maximum 4% to 2% of the F.O.B. value of the consignment.
Payments for Export from Nigeria:
Repatriation of Exports and Non-Export Proceeds
Henceforth any exporter or any commission agent who fails to repatriate foreign exchange proceeds shall be blacklisted and denied future foreign exchange facilities until such funds are repatriated to Nigeria.
Fishing, Shipping & Air Transport Payments
Freight on Personal Effects
The amount allowed in respect of freight on N2,000 per applicant.
Miscellaneous & Sundry Payments
(i) Technical Service/Management Fees:
The existing rate of 20% of net profit before tax will apply in 1984. However, payment of technical service fees and management fees will not be allowed except in exceptionally deserving cases such as manufacturing companies where high technology is required.
(ii) Consultancy Fees: The present 20% limit of consultancy fees payable in foreign exchange will continue to apply. However, consultancy fees in respect of pre-feasibility and feasibility studies will still not be allowed since this can be done locally.
Foreign National's Remittances:
Remittance of Final Balance
The remittable limit for expatriates is limited to 50% of their net Income. This remittance is allowed on monthly basis. On final departure from Nigeria, such expatriates are allowed to transfer balances of unremitted limits, terminal pay and gratuity. The practice of foreigners including sales of assets which is far in excess of their above stated entitlements shall be discontinued.
Henceforth remittance of proceeds from sales of assets shall be allowed only in cases where such amounts are within the remittable balance. No foreigner will be allowed to exceed the remittable balance limit.
Education Outside Nigeria
(i) Undergraduate & Professional Courses
Henceforth, no foreign exchange will be made available to any new student who intends to study abroad. However, genuine students who are attending Universities and Institutions of Higher Learning abroad and who have previously personal effect is limited to a maximum of been granted foreign exchange to start the courses will be allowed to receive foreign exchange to complete their studies provided that their applications are accompanied with adequate documentation including an authentic letter from a Nigeria Embassy/High Commission.
(ii) Post-graduate Courses
Foreign exchange will be made available for post-graduate courses on sponsorship by Government etc. provided such courses are not obtainable in Nigerian Universities.
