CBN’s Investors and Exporter FX Window Boosts Companies’ Earnings


Goddy Egene
The Investor and Export (I&E) foreign exchange (FX) introduced by the Central Bank of Nigeria (CBN) in April has continued to enhance the performance of most listed manufacturing companies that rely on imported inputs for their operations.

Besides, companies who borrowed foreign currency loans are benefitting from the positive impact of the I&E FX window as the liquidity brought by the policy has reduced the interest paid on those loans.

THISDAY checks showed that some manufacturing firms are recording improved bottom-lines in their nine months half year results as their level of finance costs reduced significantly.

The reduction in finance cost was due to improved FX exchange that resulted from the introduction of I&E window by the CBN.
For instance, Nestle’s cost of finance fell by 56 per cent from N19 billion for the nine months in 2016 to N8.606 billion in 2017. This development contributed to the company recording a jump of 4,638 per cent in profit after tax from N5.504 billion to N34.479 billion in 2017.

Also, Nigerian Breweries Plc’s finance cost fell from N10.2 billion to N7.9 billion, making the company to end the period with a 24 per cent increase in profit to N34.42 billion, from N27.79 billion in 2016.
CBN recently said the E&I window has performed beyond expectations.

The Deputy Governor, Financial System Stability, CBN, Dr. Joseph Nnanna said: “The I&E FX window is truly a mighty success, because its performance has exceeded our expectations. Within four months the I&E window was introduced, we have seen a volume of over $10billion. It’s a huge success; and we therefore encourage other countries to adopt this system.”

He explained that the different exchange rates were slowly converging and that the CBN has no plans to force this convergence in other to speed up the appreciation of the Naira in the parallel market.

He added: “The IMF consistently talks about the need for a single exchange rate. This single exchange rate can be achieved organically or inorganically. The CBN believes that the organic convergence is the way forward. The inorganic convergence involves engaging all possible measures to force the various exchange rates to align. This will definitely lead to arbitrage. That is exactly what we do not want.

“We can say we have achieved stability in the FX market and we expect it to remain stable even as we conclude the last quarter of the year. The sustainability of the naira is already evident.” He further explained that despite the prominent gap between the inter-bank rate and the indicative exchange rate for I&E window, known as Nigerian Autonomous Foreign Exchange (NAFEX), the CBN will not in any way force a convergence. He said that the convergence, which may appear to be happening slowly, will occur naturally in due time.”