RT$200bn on Track Six Months After
A cursory look at the Central Bank of Nigeria’s (CBN) FX Policy programme- RT200 billion dollars, in the last six months, indicates that the policy is very much on track in addressing the FX gaps as well as the issuance of the rebates that have accrued to non-oil exporting companies oil production/export quota, diaspora remittances, foreign direct investments as well as the slow pace of recovery by non-oil sectors of the economy, post-COVID, the CBN has prioritised two critical areas germane to the sustainability of the scheme- consistent payment of rebates to participating non-oil exporting companies and capacity- building to address product quality gaps to improve the competitiveness of Nigerian companies in the international market. This is predicated on the expectation that if the nation’s non-oil products are competitive, the prospects of inflow of FX would be guaranteed in line with the aim of achieving the 200Billion Dollars within target timeframe.
It is against this background that the CBN Governor, Godwin Emefiele has solicited the cooperation of all stakeholders- government agencies and privately owned companies involved directly or indirectly in the business of harnessing, processing, and exporting goods and services to streamline the processes so as to enable the exporters to become more competitive and reap maximum benefits of their exports and thus, grow the nation’s economy.
According to CBN figures, by the end of the second quarter in June 2022, the foreign exchange inflows for non-oil-exporting companies stood at $2.9 billion while the rebate paid out to the exporters was well over N20 billion due to the increasing number of exports found to be eligible for the rebates. This was apart from the export proceeds inflow of $60 million from 150 exporters who jointly earned a rebate of N3.5 billion earlier in first quarter of the year. The principle set out for rebate payments by the CBN is that qualified exporters of non-oil goods and services are entitled to a rebate of N65 for every $1 repatriated and sold at the Import and Export (I&E) Window for other third-party use, and N35 for every $1 repatriated and sold in the 1&E window for own use on eligible transactions only.
However, the Manufacturers Association of Nigeria (MAN) is requesting that higher rebate figures be considered by the CBN for foreign exchange repatriated and sold at the Import and Export window. According to MAN Director General, Mr. Segun Ajayi-Kadir, the review is expedient to take care of the existing differentials between the official exchange rate and the parallel market to serve as an incentive for exporters to repatriate their proceeds through the official window. This clarion call by MAN is worth considering in order to secure the cooperation of manufacturers desirous of participating in the scheme.
In line with implementing one of the key pillars of the policy, the Bankers Committee in conjunction with the CBN organized the maiden edition of the biannual Non-oil Export Summit in Lagos, on June 16, 2022. The summit x-rayed the various facets of methodologies to drive non-oil exports just as it proffered recommendations to prevailing challenges that needed to be addressed to effect the urgent diversification from oil to more of non-oil in the nearest time possible.
At the summit, the CBN Governor, Godwin Emefiele, highlighted the challenges confronting the nation, particularly in foreign exchange management as well as in export processes. According to Emefiele, “the pressure posed by the post-Covid pandemic, delays in the logistics value chain, and local security challenges have exerted undue pressure on our economy making microeconomic management very difficult, particularly, FX availability and management. These factors impacted oil production and prices, distorted trade, and export, reduced capital flows and impacted food production. They also exposed the fragility of the Nigerian economy and the need for a more diversified economy”, he stated.
The CBN Governor noted further that despite these odds, the CBN has been confronted with rising demand for foreign exchange for both goods, services, and other needs.
“Monetary policy alone cannot bear all the burden of the expected adjustment needed to manage these challenges and difficulties in our country. These problems call for urgent design and steadfast implementation of other supportive, structural and complementary policies that are broad-based, coordinated and focused for complimenting the work of the monetary authority”, he said. He observed that these were instrumental to the CBN and Bankers Committee’s “search for the more innovative programme and policies geared towards sustainable solutions.”
While we wait for the implementation of other complementary programmes such as port de-congesting, addressing the bureaucratic processes in Nigeria Ports Authority, Nigeria Customs Service and facilitation of ships for carriage of exports, etc, there is a need to focus on softer issue of patriotism. Inter-agency cooperation is critical in reducing the pressures while also working out campaign to effect necessary attitudinal change from what currently obtains regarding the FX demands.
Clement Nwoji is a business analyst and public affairs commentator based in Abuja