BUSINESS RESOURECES
REVIEW OF AGRICULTURAL INCENTIVES POLICY IN NIGERIA
As part of its efforts to provide an enabling business environment to aid the improvement of productivity of the agribusiness sector, the Federal Government has progressively introduced a number of incentives to encourage private sector participation in the industry and the influx of foreign direct investments (FDIs).
While some of these incentives are in form of tax holidays, exemptions, and reliefs, others are based on sector-specific government policies, performance of the companies as well as relevant international investment treaties.
Some of the key incentives for the agricultural sector investment are:
i All agricultural and agro-industrial machines and equipment enjoy zero percent (0%) duty.
ii Companies in the agro-allied business do not have their capital allowance restricted. It is granted in full i.e. 100%.
iii Agribusiness is tax free. The payments of minimum tax by companies that make small or no profits at all do not apply to agro-allied business.
iv. Agro-allied plant and equipment enjoy enhanced capital allowances of up to 50%.
v. Processing of agricultural produce is a pioneer industry; consequently, there is 100% tax-free period of 3 years, renewable for another 2 years.
vi. Tax relief for Research & Development: Agro-allied industries that attained minimum levels of local materials sourcing & utilization enjoy tax credit.
vii. Up to 75% guarantee for all loans granted by commercial banks for agricultural production and processing under the Agricultural Credit Guarantee Scheme Fund (ACGSF) administered by the Central Bank of Nigeria.
viii. Interest Drawback Program Fund: 60% repayment of interest paid by those who borrow from banks under the ACGS, for the purpose of cassava production and processing provided such borrowers repay their loans on schedule.
ix. Corporate tax incentives rebate of 12% shall be enjoyed by Bakers on attainment of 40% cassava blend within a period of 18 months.
x. The Nigerian Investment Promotion Commission Act allows 100% ownership of companies by foreigners, while the Foreign Exchange Miscellaneous Act, guarantees 100% Repatriation of Capital, Profit, & Dividends through authorized dealers.
xi. Agricultural Start-ups and SMEs with less than N25 million are exempted from payment of Company Income Tax.
In addition, medium-sized companies (with turnover of N25 million to N100 million are now required to pay 20% of CIT instead of 30% applicable to large companies (CIT) (Finance Act. 2020).
NIGER STATE AGRIBUSINESS INCENTIVES
1 Before this Policy, there were no existing codified incentives policy that is State based and applicable.
However, investors were pointed to Federal incentives which are not within the purview of the State.
Instead, investment climate related reforms, which are supposed to be taken for granted, were regarded as incentives.
Where tax exemptions and rebates were offered, there were discretionary. Hence the decision for the development of this Policy.
2 It is therefore part of the on-going efforts by Government to give the State a new lease of socio-economic life and position it as a key driver of Nigeria’s economic transformation, as well as make the State a preferred destination for domestic and foreign investments including enhancement of the productive capacities and contribution of MSMEs to the economy, that the necessitated the Policy.
3 The Policy is also predicated on providing a blue-print for rapid enhancement of the State’s competitiveness in attracting, retaining and expanding new and existing investments.
The Policy is also to bring about improvement of the State’s capacity to attract beneficial private capital leading to massive job creation, drastically reversing the poverty level of the people of the State as well as, addressing the poor infrastructure situation in the State’s Agribusiness value chains.
This as the final outcome will transform the economic fortunes of the State.
4 At the center of the Sector-Specific Incentives Policy is the commitment and determination of the Niger State government to transform the State into economic viability, financial self-sustainability and independence.
The overall objective therefore, is to take the State into 18 economic viability, end the circle of dependence on revenues allocations from the Federal Treasury. This would place the State on the path to rapid and sustainable economic transformation.
5 The essence of the Policy therefore, is the development of Sector-Specific Incentives Offering that focuses on the Agribusiness value chain in which, Niger State has very strong competitive and comparative advantages, with great national endowments and potentials that require to be harnessed and translated as opportunities for achieving high levels of growth and development.
INCENTIVES OFFERING FOR SECTOR POLICY ON TOURISM
In addition to the above policy measures, Government shall provide the following incentives to specifically boost investment into the sector
• Tourism Infrastructure Projects – Major projects involving the development and enhancement of tourist sites such as: hotel Accommodation, landscaping, entertainment centers, entering as a package, provided the Quantum of investment is not below N500 Million and up to N1 Billion, shall enjoy the Consolidation and Stabilization Incentives i.e.
Exemption from payment of State imposed levies/charges for the first Five (5) years of entry, namely:
• Signage Levy
• Business Premises
• Tenement Rates
• Ground Rent
• Intent/Processing Fee for C of O.
• For investment above N1 Billion, in addition to the Consolidation and Stabilization Incentives, the investment shall qualify for 10 free land lease.
• Where the Investment is a Mega Project, or engage in activity not contemplated by this Policy, with investment outlay of up to N5 Billion, Special Negotiated Incentives shall apply base on the merit of the project.
• To empower MSMEs to participate in Tourism Value Chain the following incentives shall apply:
• Access to single-digit credit from the Tourism Development Fund/Micro Finance Banks in which State Government have Equity Stakes;
• Exemption from payments of State imposed levies/charges for the first Two (2 years).
To encourage informal sector to register and licensed as Tour Guards, Government shall provide free training and certification.
INCENTIVES OFFERING FOR SECTOR POLICY ON SOLID MINERALS
In addition to the above policy measures, Government shall provide the following incentives to specifically boost investment into the Solid Mineral Development in the State.
Since Solid Minerals Sector is under the Exclusive List, investment in the sector shall be based on partnership between Investors and Zuma Development Company Limited (ZDCL) on one hand, and Investors that have secured exploration and mining licenses directly from the Federal Government.
• Investor that will partner with ZDCL shall qualify for the following incentives:
Consolidation and Stabilization Incentives i.e. Exemption from payment of State imposed levies/charges during the first Five (5) years of entry, namely:
•Signage Levy
• Business Premises
• Tenement Rates
• Ground Rent
• Intent/Processing Fee for C of O.
• Where applicable, ZDCL shall apply and secure all relevant Federal Government Incentives and waivers on behalf of the Partnership.
• To empower MSMEs to participate in Solid Minerals Value Chain, the following incentives shall apply:
1 Access to single-digit credit from Micro Finance Banks in which State Government have Equity Stakes.
2 Exemptions from payments of State imposed levies/charges for the first Two (2 years).
3 To encourage informal sector to register and licensed as Artisanal Miners, Government shall provide free training and certification for registered members of Mining Cooperatives.
• For investors with Federal Government Mining Licenses operating in Niger State, the following incentives shall apply:
1 Negotiated Special Incentive for investments of up to N5 Billion, this is in additional to the Consolidation and Stabilization Incentive with resultant exemptions.
2 Investments of between N2.5 – N5 Billion are qualified for the Consolidation and Stabilization Incentive with resultant exemptions from payments of State imposed taxes/levies.
INCENTIVES OFFERING FOR SECTOR POLICY ON INFRASTRUCTURE
In addition to the above Policy Measures, Government shall provide the following incentives to specifically boost investments into the Infrastructure Sector in the State.
New Investors in the hard infrastructure sub-sector, whether in partnership with the State Government or directly investing in infrastructure, shall qualify for the following incentives:
i. Consolidation and Stabilization Incentives shall be granted to all new infrastructure investment between N5-10 Billion, i.e. Exemption from payment of State imposed levies/charges during the first Five (5) years of entry, namely:
• Signage Levy
• Business Premises
• Tenement Rates
• Ground Rent
• Intent/Processing Fee for C of O
• Negotiated Special Incentive (NSI), shall apply to infrastructure investments of N10 Billion and above, this is in additional to the Consolidation and Stabilization Incentive with resultant exemptions.
NSI is designed to attract mega projects across all the sectors.
Evaluation and negotiation of the Special Incentives shall be based on waited scores based on the following variables:
i. Size of employment
ii. Local sourcing of raw materials
iii. Training and Technology transfer
iv. Linkages with MSMEs
v. Export potentials