The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, on Thursday announced a new programme to stimulate the country’s non-oil exports and achieve $200 billion repatriation of proceeds between three to five years.
Emefiele said the scheme, code-named, “Race to $200 billion in FX Repatriation (RT200 FX Programme),” which takes immediate effect, consists of a set of policies, plans and programmes for non-oil exports which would help the country attain its goal of $200 billion in FX repatriation, exclusively from non-oil exports transactions over the next three to five years.
He added that the initiative was a product of consultation with the banking community.
Addressing journalists at the end of the 364th meeting of the Bankers’ Committee in Abuja, the CBN governor also announced further extension of all the central bank’s concessionary five per cent interest rate on its intervention facilities till March 1, 2023.
The CBN had in January 2021, approved an extension on all its facilities by 12 months to March 2022, from the earlier March 2021 expiration date, against the backdrop of the dangers posed by the second wave of the COVID-19 pandemic businesses.
The concessions were provided during the first wave of the pandemic as part of measures to cushion its impact on businesses and economy.
This was as Emefiele further hinted that the central bank may end the sale of FX to banks for the purpose of funding their export bills, adding that the banks would be rather encouraged to generate their export revenue and proceeds.
He, however, explained that the new non-oil export initiative would have five key anchors namely value-adding exports facility; Non-oil commodities’ expansion facility; Non-oil FX rebate scheme; Dedicated non-oil export terminal as well as Biannual non-oil export summit.
Essentially, he said the new FX drive was informed by the inadequacy in FX supply and constant pressure on the exchange rate, pointing out that the country’s four major sources of FX inflow namely: proceeds from oil exports, proceeds from non-oil exports, diaspora remittances, and foreign direct/portfolio investments had been constrained by the COVID-19 pandemic.
He said: “I believe the lessons we have learnt from our policies on remittances can be applied in improving some aspects of FX inflow into the country.”
Emefiele further argued that most of the sources of FX inflows were unreliable and perennially prone to exogenous vicissitudes of global economic developments.
He added: “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, we need to focus on strategies that can help us earn more stable and sustainable inflows of foreign exchange. 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 said though the $200 billion FX proceeds target appeared unattainable to some, “But I am resolute and determined that we can achieve it.”
The CBN Governor added: “Many countries that are much less endowed than Nigeria are doing it. Consider for example that agriculture exports alone from the Netherlands was about $120 billion last year.
“Yet, Netherlands has a land mass of about 42,000 square kilometers, which is much smaller than the land mass of Niger State alone, at over 76,000 square kilometers.”
He said while the RT200 Programme was not intended to be a silver bullet to all the challenges in the export segment, it remained a first step meant to ensure that the CBN was able to carry out its mandate in an effective and efficient manner, which guarantees preservation of the scarce commonwealth, and the stability of the naira.
Emefiele insisted that, “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.”
However, Emefiele, while justifying the extension of the concessionary loans, said the impact of the intervention measures helped the country make the fastest recovery from recession ever recorded and changed the trajectory of inflation to an eight-month downward spiral.
He noted that although interest rates on the CBN’s various intervention facilities were expected to revert to nine per cent effective March 1, 2022, it has been extended to March, 2023.
Emefiele added: “We are announcing that the rates would remain at five per cent for another year in view of the promising trajectory we have established in economic growth and job creation. In effect, the concessionary interest rate of five per cent on our intervention facilities would now be extended until March 1, 2023.”
He further revealed that the policies and measures adopted by the bank led to a significant improvement in diaspora inflow from an average of $6 million per week in December 2020, to an average of over $100 million per week by January 2022.
Commenting further on plans by the central bank to limit FX sales to banks for exports activities, Emefiele said: “The banks don’t have a choice, and I said so this morning in the meeting,
“I said the era is coming to an end because when your customers need $100 million, $200 million foreign exchange demand, and so you want to pack all the dollar and pass it to CBN to give you dollar – that era is coming to an end.
“I have told them at the meeting before, that latest end of this year, we would tell them don’t call the central bank for FX again, rather go and generate your export revenue and proceeds.
“Fund people who want to generate export proceeds, when those export proceeds come, we would fund them at five per cent for you and they would earn rebate and that’s how we can help you.
“Then, when these proceeds come, sell them to your customers that want $100 million or $200 million. That you will continue to come to central bank to give you dollar, we would stop it. The banks don’t have a choice because it is their bread and butter, right?”
James Emejo in Abuja and Nume Ekeghe in Lagos
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