Nigeria Government releases Official Gazette on list of pioneer industries and products

The Nigerian Investment Promotion Commission (NIPC) recently announced the release of an official gazette (the Gazette) of the list of pioneer industries and products. Although the Gazette was released in November 2018, it became effective in August 2017.

This appears to follow the approval by the Federal Executive Council (FEC), of the updated list of pioneer industries and products. The approval, which was granted in August 2017, saw the addition of 27 new industries to the pioneer list.

According to the Gazette, the list of pioneer industries stands at 99 from 71 in 2017. A review of the Gazette shows that this increase is not necessarily based on the inclusion of additional industries – the old 71 industries were further broken down to provide more clarity and streamlining. Further, the list of pioneer industries and products have been arranged by ‘sectors’ and ‘sub-sectors’, in line with the International Standard Industrial Classification of All Economic Activities.

We have provided below, the key considerations and matters arising from the Gazette:

  • Removal of clinker and cement (as qualifying products) from 1 August 2020. The effective date of removal appears to be in line with the spirit of the “Application Guidelines for Pioneer Status Incentive”, which requires three years notice in cases where any product/industry is to be deleted from the list of pioneer products/industries. However, NIPC made the Gazette available to the public in November 2018, thereby effectively giving industry players and other interested parties only 1 year and 9 months’ notice period, which is less than the 3 years notice period required.
  • The effective date of deletion of clinker and cement – 1 August 2020. It is uncertain whether:
  1. The date of deletion implies that pioneer incentives in respect of the production of clinker and cement cease on 1 August 2020, in which case any existing or ongoing incentive at that date will expire. If this is the case, one would expect that any application that had not been processed and granted as at 1 August 2017 would not be entertained. As such, the Gazette would appear to be having a retrospective effect as it was only made public in November of 2018; or
  2. The deletion date implies that pioneer applications in respect of clinker and cement may still be welcomed up until 1 August 2020, in which case pioneer incentives may be enjoyed up until 1 August 2023.

The issuance of the Gazette is seen as a welcome development, as it is expected to stimulate economic activities in the pioneer industries. This is also expected to extend to infant industries/sectors and help them grow, while also leading to an overall growth in the country’s economy.

On the growth of the economy, a major consideration of the Pioneer Status Incentive (PSI) regime is its exclusion of expansionary activities of existing companies solely because they have been in operation beyond 1 year, despite having huge potentials for stimulating economic growth. We urge the Federal Government, as part of the biennial review of the PSI regime, to re-evaluate this consideration.

Please click here to download the Gazette and here to access our earlier publication on the revised guidelines.

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