Emefiele Rallies Stakeholders’ Support to Accelerate Nigeria’s Non-oil FX
*NPA, Customs, banks, shipping companies to form Ad-hoc team
*Sanwo-Olu harps on economic diversification
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele has called on the Nigerian Ports Authority (NPA), the Nigeria Customs Service (NCS) and shipping companies to support the drive by the bankers’ committee to improve foreign exchange (FX) earnings through non-oil exports.
Speaking at the CBN’s Biannual Non-oil Export Summit in Lagos yesterday, with the theme: “Setting the Roadmap toward achieving RT200 and non-oil export for development,” Emefiele stressed that it had become more urgent for Nigeria to increase its forex and has called for coordinated efforts by players in the export ecosystem to aid seamless export.
Also, the Lagos State Governor, Babajide Sanwo-Olu, who also spoke at the summit, reiterated the call for economic diversification in Nigeria, saying the country should shift from overdependence on oil and gas, to agricultural produce, solid minerals, chemical products, furniture and clothing as well as tourism among others.
The Bankers’ Committee had at its meeting in February 2022, unveiled the RT200 FX Program, which is an initiative aimed at raising $200 billion in non-oil export earnings over the next three to five years. This initiative was anchored on five pillars, namely: Value-adding Exports Facility, Non-oil Commodities Expansion Facility, Non-oil FX Rebate Scheme, Dedicated Non-oil Export Terminal and Biannual Non-oil Export Summit.
Emefiele restated that over N3.5 billion had been paid to exporters who brought in their export proceeds. He said in April 2022, the CBN released a total of N3.5 billion non-oil export rebate to exporters through the banks in support of the RT200 initiative.
He appealed passionately to the NPA, the Customs and shipping companies in a working group to work with the bankers’ committee to resolve challenges associated with international trade.
“We have heard of people who want to export their goods queuing for weeks or months before their goods can go out. Because time is against us, in the short run, what can the NPA and customs do for the exporters, whether they want to create a set of dedicated routes from which they can easily export their goods?”
“We need those export proceeds badly. It is sad that because of the problem of finding an easier route for goods to be exported out of the country, Nigerian exporters prefer to transport by road or sometimes barges from Lagos to Accra or the Republic of Benin to export from there. Doing these we lose the opportunity to earn export proceeds.
“Customs and NPA in the working group, we want you to look at the long run and the short run. In the short run look at how we immediately create a dedicated export route for exporters, so that their goods can leave. Many of those containers that bring goods into the country go out empty because of these problems,” he said.
Speaking further, Emefiele said: “Let us work on finding a dedicated route where exports can go out easily. In the long run, how do we work on the Lagos Free Trade Zone and create a road that will take the goods through an express road. The Lekki port has a blueprint of a road that goes to Ondo which is about 50km.
“The Infracorp is ready to fund that if we can yield to that because what I find is that instead of yielding to doing what is good of our country, people want to own colonies because they believe it is their exclusive responsibility. We’re talking about how we can work together now.”
According to him, the programme was borne out of the realisation that most of the country’s current sources of forex inflows were unreliable and perennially prone to exogenous vicissitudes of global economic developments.
“And with the grossly untapped potential of Nigeria, there is a strong need for us to work together to diversify our forex revenue earnings to the non-oil sector.
“For example, we have all been witnesses to the ever-changing fortunes of oil-exporting countries. Even those that have been reputed to manage their oil proceeds well also suffer from major shocks once oil prices plummet.
“In order to avoid these sudden adjustments to our economic life, it is the view of the banker’s committee to focus on strategies that can help us earn more stable and sustainable inflows of foreign exchange into Nigeria.
“We would need to follow the best practices of other countries and ensure that we protect ourselves a little bit from factors that are beyond our immediate control,” he noted.
Furthermore, he said as things presently stand, the country has very little choice left but to look inwards and find innovative solutions to our problems.
“Monetary Policy alone cannot bear all the burden of the expected adjustments needed to manage these difficulties. These problems call for urgent design and steadfast implementation of other supportive, structural, and complementary policies that are broad-based, coordinated, and focused on complementing the work of the monetary authority.
“We would try as much as possible to provide cheap affordable long-term financing for companies that really truly deserve and would conduct export activities of goods and services.
“But we feel we cannot do this alone. We need a handshake between the bankers, central bank, exporters, and those in the value-chain and more importantly with our brothers and sisters in the government agencies that are involved in the process of export in Nigeria.
“There has been indeed unbearable difficulty and challenges faced by exporters in exporting goods out of Nigeria. We need the support of NPA, please work with us, the bankers’ committee is ready in any way to provide the needed support that can smooth the challenges involved in our port operations in Nigeria. We truly and badly need foreign exchange to fund the import needs of our country. We can no longer continue as a country to depend on revenue from crude oil where we have no control over price and quantity.
“We all need to work together because it is a pledge and responsibility that we can and will something as Nigerians to help our country. Nigerian ports authority, the customs, the shipping lines, please lets do this together. Nigeria can be great in export,” he added.
In his opening remarks, Sanwo-Olu stressed the need for Nigeria to discourage over-reliance on mono-economic revenue, which is the oil sector, and scale up its non-oil exports. He noted that a situation in which oil and gas consistently account for the bulk of government revenues and foreign exchange earnings, was not ideal.
Sanwo-Olu who commended the central bank of Nigeria for organising a summit to promote non-oil exports in Nigeria said Lagos State was delighted to host the maiden edition of the strategic meeting.
He added: “Lagos State is home to the biggest and most important sea ports in the country. There cannot, therefore, be any conversations about growing non-oil exports in Nigeria, without bringing Lagos State and our transport and logistics infrastructure into the picture. This is why I am pleased that Lagos State is hosting the maiden summit.
“For us as a government, a lot of the work we have been doing and still doing is aimed at improving the state of transportation infrastructure, to enable imports and exports, and generally bring down the cost of doing business.
“When goods for export get stuck on the roads and can’t make it to the ports, we have a big problem on our hands. There is a big price that the economy pays for these dysfunctions, at all levels – from the small and large businesses whose goods are being exported to the people in the business of exports, to the users of our roads who have to waste valuable time in traffic because of worsening gridlock.
“It is, therefore, our responsibility, as governments, to ensure that we make the business of exporting (and also importing) as seamless as possible. Nigeria has so much potential to scale up its exports, shifting from over-dependence on oil and gas to agricultural produce, solid minerals, chemical products, furniture, clothing, and so on.”
Sanwo-Olu, while stressing the need for Nigeria to scale up its exports said, “a country in need of foreign exchange has no business downplaying the importance of exports.”
He said: “We can do a lot to strengthen the naira and our external reserves by focusing on our non-oil exports. This diversification also gives us immunity from the severe shock of depending on a limited pool of exports.
“I commend the central bank for making this a priority, through the launch of the Race To $200 Billion FX Scheme (RT200), among other laudable initiatives. The RT200 FX Scheme seeks to generate as much as $200 billion in FX earnings, specifically from non-oil sources, over the next few years.
“I am aware that, so far, the central bank has approved the payment of billions of naira to more than 100 exporters who have taken advantage of the scheme and have scaled up their non-oil exports of finished and semi-finished goods in line with it.
“I have no doubt that this scheme will go from strength to strength, and deliver to an extent beyond the expectations of the central bank and the Nigerian economy. I urge exporters to readily take advantage of it. I also urge the central bank to continue to fine-tune and strengthen this process, while also thinking of new and innovative initiatives that will achieve similar outcomes.
“Let me also commend the efforts of all the businesses that are investing heavily in the production of products that qualify for the RT200. One example that comes to mind readily is the Dangote Group, which recently commissioned the largest granular urea plant in Africa, right here in Lagos.
“I am delighted to note that the factory’s main product, urea, displaced Sesame seeds as Nigeria’s biggest non-oil export in the first quarter of 2022. I look forward to similar impactful investments of this nature, in Lagos and across the country.”
In his contribution, the Managing Director, NPA, Muhammed Bello-Koko, said to create a seamless ecosystem for export, there was need for coordination amongst all the agencies.
“The problem with automation is that each of the stakeholders is working in silos. So, the level of automation of the NPA is not the same as the customs and the shipping line. The second problem is that when we all automate we will be able to integrate the system,” he added.