BY EMEKA EJERE
The Central Bank of Nigeria (CBN) and the Bankers’ Committee are applying the necessary policy improvement to ensure that the RT200 Forex Programme achieves its aim of stabilising the nation’s foreign exchange market.
Last week, the CBN governor, Mr. Godwin Emefiele, said the apex bank and the Bankers’ Committee would commit a minimum of N500 billion annually in loans to Nigeria’s export-oriented firms in a bid to enhance non-oil export earnings.
Emefiele, who disclosed this at the 13th annual Bankers’ Committee Retreat, held in Lagos, with the theme, “Increasing the Productive Base of the Nigerian Economy and Non-Oil Export Revenues,” said there was a possibility of CBN continuing to support banks with the foreign exchange needs of their customers because of the gains recorded from the RT200 programme.
Before the commencement of the RT200, the apex bank put Deposit Money Banks (DMBs) on notice that it would stop selling forex to them by the end of 2022, arguing that it was ripe for the banks to source for their forex by funding entrepreneurs with ideas, skills and support to make them responsive and attract foreign currencies to Nigeria.
But speaking last week, Emefiele said: “But seeing the progress that has been made so far, we are talking about $62 million plus $622 million plus $850 million, we are talking of almost two billion dollars.
“So far, we think that with the good progress and on the basis of the progress that has been made so far, the CBN will continue to support the market with foreign exchange, albeit as hard as it may be.
“We will continue to support the market while banks themselves continue to ramp up their own sources of non-oil export that can earn foreign exchange through repatriation, which they can use to fund the needs of their customers.’’
It would be recalled that the CBN governor in February unveiled the RT200 scheme which is aimed at raising $200 billion from processed and semi-processed non-oil exports in the next three to five years, saying the policy direction would ultimately lead to the self-sufficiency of the commercial banks in foreign exchange needs in the coming years.
Emefiele had said, “The RT200 FX Programme is a set of policies, plans and programmes for non-oil exports that will enable us attain our lofty yet attainable goal of US$200 billion in FX repatriation, exclusively from non-oil exports, over the next 3-5 years.”
The RT200 initiative is anchored on five key areas which are: value-adding export facility, non-oil commodity expansion facility, non-oil export rebate scheme, non-oil export terminal financing and bi-annual non-oil export summit.
The CBN believes that the rebate would narrow the arbitrage between the official and parallel markets, a differential which is responsible for the low participation at the official window by exporters.
Highlighting the gains of the programme, Emefiele said: “During the six weeks in February and March when the programme started, rebates of N65 were given export proceeds repatriation that earned rebate was about $62 million.”
“During the second quarter, export proceeds repatriation that earned rebate was about $622 million and the third quarter, we saw almost about $850 million of export proceeds that earned rebate.
“This is not export proceeds that did not earn rebates. Let’s not forget the rebate is only meant for processed goods. So, by the time we add both processed and unprocessed goods like unprocessed cocoa and cashew, we actually ran into almost $1 billion during the third quarter.
“And we are beginning to think that we should be able to continue to ramp up. We are looking hopefully in the fourth quarter, which we will be seeing in January, we hope that we should be able to hit over a billion dollar in export proceeds and repatriations that will qualify for rebate.’’
Boosting export repatriation
“The retreat also agreed that in an attempt to boost the volume of export repatriations, there is a need to continue to support our exporters who may need facilities either to bring in equipment with which they can process their goods and make them high standard that can qualify for export abroad and earn higher value.
“So, the Bankers’ Committee decided that every year and it should be measurable, the entire banking industry must grant at least a minimum of N500 billion in loans to export oriented companies that will generate measurable export receipts, non-oil export proceeds that will complement what the CBN is doing.
“The CBN will come up with modalities where it will insist that bank A should grant a minimum of X amount in export loans and naturally the big banks will have to take a bigger share of this pie.
“But we also see that the big banks have made tremendous progress and contribution toward the repatriation that we have seen so far on RT200,’’ Emefiele said.
Meanwhile, the Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has lauded the RT 200 FX Programme. Yusuf, in a statement, said though ambitious, the initiative is laudable as the management of the supply side of forex would greatly impact the economy.
“The reality is that supply-side policies are even more critical and impactful than demand management interventions in the foreign exchange market. Over the last couple of years, the CBN has been fixated on managing the demand side of the foreign exchange market and the outcomes have been suboptimal,” he said.
The CPPE CEO said for the initiative to succeed, given the peculiar operating environment of Nigeria, the CBN should consider such factors as fixing structural constraints impeding non-oil exports, reviewing the pricing regime in the I&E window, giving exporters access to export proceeds, expanding the scope of forex supply strategies and allowing forex-generating MDAs to sell at the I&E window.
“Structural issues are very vital for driving the growth and competitiveness of non-oil exports. Structural variables are not within the purview of the CBN or the Bankers Committee. The fiscal authorities have much bigger roles to play in fixing the structural constraints which have been impeding non-oil exports productivity and competitiveness for decades.
Therefore, collaboration with fiscal authorities is a critical success factor for the realisation of the RT200 outcomes.”
Similarly, the Director-General of the Lagos Chamber of Commerce and Industry, (LCCI), Chinyere Almona, noted that the RT200 FX Programme would need additional policy improvement with export infrastructure, financing for exporters and others to achieve the desired result.
Almona, in a statement, added that the CBN also needs to educate the public, especially potential exporters on the benefit of the scheme so as to enhance the participation of the business community.
Praising the scheme, Almona observed that a major challenge in Nigeria’s export chain is the unstructured procedures that cause delays, corruption, and rejection of exports and advised that it requires critical export infrastructure, international trade diplomacy, and adequate funding to succeed.
“These facilities should be well directed to process targeted products in which Nigeria has some comparative advantage such as sesame, cashew, cocoa into finished goods”, she said.
“The reason for the low FX revenue from exports is due to the export of primary unprocessed commodities. Nigeria must take bold steps to establish a trading system that supports the seamless flow of trade.”
According to data published by FMDQ where forex is officially traded, the naira closed at N450.58 per dollar on Wednesday with $141.92 million recorded as forex turnover within the business day.
The strongest rate the local unit traded at the Investor’s window within the week was N446.00 it exchanged on Monday. However, the naira has been trading within the range of N440 and above at the official market over the last two months.
Likewise, the naira exchange rate in the open market has been hovering within the rate of N730.00 and N750.00 to a dollar in the past two weeks. However, this is about 18.0 percent appreciation from the N880.00 and above rate it was exchanged after the CBN announced the naira redesign policy over a month ago. Checks with currency dealers on Wednesday showed an unauthorised market rate closed between N735.00 and N750.00 per $1 across states.