In recent times, the paucity of foreign exchange in the Nigerian economy has been of concern to many Nigerians. Some believe that the heavy dependence on crude oil sales, with its volatility, is responsible for the shortage of foreign exchange earnings for the Nigerian financial system has led to the depreciation of the Naira.
To address this challenge, apex bank, the Central Bank of Nigeria (CBN), in February, introduced a new intervention programme, the “Race to N200 billion dollars in Foreign Exchange Repatriation” otherwise known as RT200, to boost the country’s Foreign exchange earnings.
R200 was designed to help reduce exposure to volatile sources of Forex and to earn more stable and sustainable inflows. The CBN Governor, Mr Godwin Emefiele, while introducing RT200 said the programme was would help improve non-oil export receipts.
Emefiele explained that RT200 was a set of policies, plans and programmes designed to help the country attain a goal of 200 billion dollars exclusively from non-oil exports over the next three to five years.
He said that the programme, anchored on five key areas, was initiated after careful consideration of available options and wide consultations with the banking community.
“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, in addition to its potential to provide concessionary and long-term funding for business people who were interested in either expanding existing plants or building new ones.
According to him, its main purpose is to add 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 further said 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 in a recent media report.
Emefiele believes that the RT200 is a first step to getting back some of the foreign exchange that the country rightly deserves.
He explained that the initiative 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 the 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 R200, 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.
The new package 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.
It Naira4Dollar Scheme 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 with CBN promising 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.
Shedding light into the programme, Mr Ozoemena Nnaji, Director of Trade and Exchange Department, CBN, said that only exporters of finished and semi-finished goods were eligible for the new 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 foreign exchange 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
The apex bank said that the RT200 appears to be yielding some dividends with the apex bank raking in about 600 million dollars as at June, through the programme.
According to Mr Osita Nwanisobi, the bank’s Director of Corporate Communications, said through the new intervention and similar ones in the past, CBN remains committed to resolving the foreign exchange issues confronting the nation through effective management of both the demand and supply ends of the challenge.
“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 also said 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, Gov. Babajide Sanwo-Olu, of Lagos State, is also confident that RT200 will yield expected dividends for the nation’s economy and commended the CBN for taking steps to promote non-oil exports in Nigeria, while using the opportunity to inform stakeholders that the Lekki Ports would be open for business before the end of the year.
According to Mrs Nneka Onyeali-Ikpe, Managing Director, Fidelity Bank, was recently quoted as saying the results were already showing as exporters have got approval of more than three billion Naira incentive from the CBN through the programme.
“In fulfillment 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 forex supply and constant pressure on the exchange rate.
There are four major sources of foreign exchange inflow into the nation’s economy, namely proceeds from oil exports, non-oil exports, diaspora remittances, and foreign direct investments.
The Director General of the Manufacturers Association of Nigeria (MAN), Mr Segun Ajayi-Kadir, commended the CBN for the initiative that would help in boosting foreign exchange earnings and suggested that the rebate offered under the programe should be expanded to cover the forex rate gap between the official and parallel markets.
He said that the RT200 is 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 lackluster 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 200billion 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 was recently quoted as saying.
He was further quoted as saying that the N65 or N35 to one dollar rebate offered by CBN could not cover the foreign exchange rate gap between the official and parallel markets.
According to him, the payment of N3.6billion 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 in a recent media report.
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, however, said that the Nigerian non-oil products could only boost foreign exchange earnings if they meet global standards.
As the CBN continues to operationalise and consolidate on the gains of RT200, Nigerians remain hopeful that the initiative will lead to the much-needed boost in the productive sector of the economy.
They are also hopeful that it will result to value-add exportable products that will positively impact on the country’s forex earnings by targeting 200 billion dollars in the short term.
