In recent times, the paucity of foreign exchange in the Nigerian economy has been of concern to many Nigerians.
Some of believe that the sole dependence on crude oil sale, with its constant volatility, is responsible for the shortage of forex in the Nigerian financial system, resulting to constant depreciation of the Naira.
The Central Bank of Nigeria (CBN), in February, introduced a new intervention programme, “Race to N200 billion dollars in Foreign Exchange Repatriation”. (RT200).
R200 is an effort to reduce exposure to volatile sources of foreign exchange and to earn more stable and sustainable inflows.
The CBN Governor, Mr Godwin Emefiele, while. Introducing RT200 said the programme was designed to help improve non-oil export receipts and boost the country’s foreign exchange earnings.
Emefiele said that RT200 was a set of policies, plans and programmes for non-oil exports, designed to help the country attain a goal of 200 billion dollars exclusively from non-oil exports over the next three to five years.
The apex bank governor said that the programme was initiated after careful consideration of available options and wide consultations with the banking community.
He added that the RT200 programme would have five key anchors.
“They are Value-Adding Experts Facility; Non-Oil Commodities Expansion Facility; Non-Oil FX Rebate Scheme; Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit,” he said.
Emefiele said that RT200 would provide concessionary and long-term funding for business people who were interested in either expanding existing plants or building new ones.
According to him, it is for the sole purpose of adding significant value to the non-oil commodities before exporting same.
“This is because the export of primary unprocessed commodities does not yield much in foreign exchange.
“For example, Nigeria reportedly produces about 770,000 metric tonnes of Sesame, Cashew, and Cocoa. Of this number, about 12,000 metric tonnes are consumed locally and 758,000 metric tonnes are exported.
“Out of the 758,000 metric tonnes that the country exports annually, only 16.8 per cent is processed.
“The rest are exported as raw, thereby giving Nigerian farmers a tiny part of the value chain in these products,” he said.
Emefiele added that the global chocolate industry is valued at about 130 billion dollars.
“Of this amount, Cote D’Ivoire, Ghana, and Nigeria account for more than 72 per cent of global cocoa exports.
“Due to the fact that these countries mainly export raw cocoa beans, Cote D’Ivoire is reported to have received 3.6 billion dollars annually, Ghana generates 1.9 billion dollars annually.
“Nigeria gets about 804 million dollars per year from an industry that is worth over 130 billion dollars.
“In contrast, Belgium accounted for 11 per cent of global chocolate exports in 2019, at a value of 3.16 billion dollars. In the same vein, Germany’s chocolate exports were worth 5.14 billion dollars in the same year, ” he said. .
The CBN believes that the RT200 is a first step to getting back some of the foreign exchange that the country rightly deserves.
Emefiele explained that the RT200 was not intended to provide solution to all of Nigeria’s export problems, adding that it was a first step to solving the challenges.
“It is a first step meant to ensure that the CBN is better able to carry out its mandate in an effective and efficient manner, which guarantees preservation of scarce common wealth and the stability of the Naira.
“It is only by boosting productive and earning capacity of this economy that we can truly preserve the long-term value of our currency as well as the stability of our exchange rate,” he said
The apex bank subsequently released guidelines for the operationalisation of the R200 intervention, stating that a major anchor of the programme was the Non-Oil Export proceeds repatriation Rebate Scheme.
It said that the rebate scheme was designed to incentivise exporters in the non-oil export sector to encourage repatriation and sale of export proceeds into the FX Market.
There is also the Non-Oil Commodities Expansion Facility, a concessionary facility designed to significantly boost local production of exportable commodities.
It is akin to the Naira4Dollar Scheme, which the CBN said has helped boost diaspora remittances from six million dollars per week to over 100 million dollars per week.
The CBN promised to pay N65 for every one dollar repatriated and sold for third party use, and N35 for every one dollar repatriated and sold into Investors and Exporters (I & E) window for own use on eligible transactions only.
The apex bank plans to graduate the percentage of the rebate depending on the level of value addition to the product being exported.
It is tailored to ensure that expanded and new factories that are financed by the value-adding facility are not starved of inputs of raw commodities in their production cycle.
A massive boost in the production of such commodities would also help moderate the prices of these commodities so that the expected increase in demand for them does not put much pressure on aggregate prices in the market.
In order to maximise the potential and impact of this facility, the CBN planned to replicate what other successful export-based economies have done by first prioritising and targeting certain commodities.
According to Emefiele, we would create a geographic prioritisation of crops across the country to achieve production efficiency through the development of special areas that will cater to specific commodities.
“Since sustainable foreign exchange earnings are dependent on national competitive advantage, a prioritisation framework based on crops which Nigeria is best suited to produce will be essential”, he said.
Ozoemena Nnaji, Director of Trade and Exchange Department of the CBN said that only exporters of finished and semi-finished goods were eligible for the incentive.
“It is borne out of the need to develop new strategies aimed at earning more stable and sustainable inflows of FX, in order to insulate the Nigerian economy from shocks and FX shortages.
“Exporters shall qualify for the rebates only where repatriated export proceeds are sold at the I&E window.
“Eligible transactions that qualify for incentives under the scheme shall be export of finished and semi-finished goods wholly or partly processed or manufactured in Nigeria,” she said
Findings reveal that the RT200 appears to be yielding some dividends.
The apex bank said that it raked in about 600 million dollars as at June, through the programme.
Director, Corporate Communications, Mr Osita Nwanisobi who made the disclosure recently, said that the CBN remained committed to resolving the foreign exchange issues confronting the nation.
He added that the apex bank had been working to manage both the demand and supply side challenges.
“The CBN’s records show that foreign exchange inflow through the RT200 FX Programme in the first and second quarters of 2022 increased significantly to about 600 million dollars as of June,” he said.
He added that initiatives like the RT200 and the Naira4Dollar rebate scheme had helped to increase foreign exchange inflow to the country.
During a conference on RT200 in Lagos, Mr Babajide Sanwo-Olu, the Governor of Lagos State, commended the CBN for taking steps to promote non-oil exports in Nigeria.
He used the opportunity to inform stakeholders that the Lekki Ports would be open to all Nigerians before the end of the year.
According to Mrs. Nneka Onyeali-Ikpe, Managing Director of Fidelity Bank, exporters have gotten approval of more than three billion Naira incentive from the CBN.
“In fulfilment of its promise of a rebate, the CBN governor approved the immediate release of N3.5 billion export incentives to a total of 150 exporters in Nigeria’s non-oil sector, under RT200 foreign exchange policy,” she said.
Experts believe that introduction of the RT200 programme is one of the most far-reaching policies by the CBN to rejuvenate the country’s economy.
They said that the programme would place the economy on a sustainable pedestal to cope with the present inadequacy of FX supply and constant pressure on the exchange rate.
There are four major sources of FX inflow into the Nigerian economy.
They are, proceeds from oil exports, non-oil exports, diaspora remittances, and f00oreign direct investments.
Most of them have proven to be unreliable sources that are perennially prone to external global economic developments.
To avoid these sudden adjustments to economic life, the need to focus on strategies that can help the country earn more stable and sustainable inflows of foreign exchange necessitated the introduction of RT200.
The Director General of the Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadir, commended the CBN for the initiative.
Ajayi-Kadir suggested that the rebate offered under the programe should be expanded to cover the FX rate gap between the official and parallel markets.
He said that the RT200 was a laudable initiative which would go a long way to boost non-oil exports in the country, considering the ineffectiveNess of the Export Expansion Grant.
“Without a doubt, the RT200 programme is a good initiative as it was designed to stimulate the growth of non-oil export in Nigeria.
“This comes against the backdrop of the lacklustre implementation of the Export Expansion Grant.
“But we should also talk about the issue of adequacy of the RT200 as an export incentive.
“The ambition is to hit 200 billion dollars in foreign exchange earnings over the next 3-5 years from non-oil proceeds.
“So, it is important to create a conducive and stimulating environment in order to achieve the target,” he said. .
He added that the N65 or N35 to one dollar rebate offered by CBN could not cover the FX rate gap between the official and parallel markets.
“The payment of N23.6billion as rebate in the first and second quarters of 2022 presupposed a commendable level of repatriated export proceeds sold on the I&E window.
“On this score, we may also assume that the programme is encouraging FX inflow and sale.
“We should however be interested in the content of the export that earned the repatriated proceeds. Are they commodities with value addition? Are they processed or manufactured goods?
“This will enable us to answer the very important question of whether we have been able to achieve expanded job and wealth creation within the value chain of the exported products,” he said. .
He suggested an upward review of the rebate to above N100, so that it can have a direct and effective bearing on the business of the beneficiary.
“This will stimulate further investment in export oriented production and in a way, ameliorate the high cost of forex,” he said.
According to the Divisional Head, Agribusiness, Natural Resources and Project Development, Heritage Bank, Olugbenga Awe, the Nigerian economy had been well diversified, going by statistics except the sources of forex.
Awe said that the Nigerian non-oil products could boost forex earnings if they meet global standards.
” Any product whose electronic receipt is traded on a commodities exchange must be of global standard,” he said.
