The Central Bank of Nigeria (CBN) has introduced a policy to address the inadequacy of foreign exchange (FX) supply and constant pressure on the exchange rate.
The new scheme to improve dollar supply is tagged Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to $200 billion in FX Repatriation.”
The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, said the programme includes a set of policies for non-oil export promotion over the next 3 to 5 years.
“After careful consideration of the available options and wide consultation with the Banking Community, the CBN is, effective immediately, announcing the Bankers’ Committee “RT200 FX Programme”, which stands for the “Race to US$200 billion in FX Repatriation.
“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 Programme will have the following five (5) key anchors: Value-Adding Exports Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal, Biannual Non-Oil Export Summit,” he said.
He explained that, through the bankers’ committee, the apex bank will be giving concessional non-oil export financing to those interested in adding value to exportable non-oil commodities.
Mr. Emefiele explained that the need to support non-oil export is necessary because the export of primary unprocessed commodities does not yield much in foreign exchange:
“In Nigeria today, we produce 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.
“The unfortunate thing, though, is that out of the 758,000 metric tonnes that are exported annually, only 16.8 percent is processed. The rest are exported as raw sesame, raw cashew, and raw cocoa, thereby giving Nigerian farmers an infinitesimal part of the value chain in these products.
“For example, the global chocolate industry is valued at about US$130 billion. Of this amount, Cote D’Ivoire, Ghana and Nigeria account for more than 72 percent of global cocoa exports.
“Yet, because we mainly export raw cocoa beans, Cote D’Ivoire gets US$3.6 billion annually, Ghana generates US$1.9 billion annually and Nigeria gets about US$804 million per year from an industry that is worth over US$130 billion.
“In contrast to West African countries, Belgium accounted for 11 percent of global chocolate exports in 2019, at a value of US$3.16 billion. Similarly, Germany’s chocolate exports were worth US$5.14 billion in the same year. These numbers are the same for other commodities as well.”
He explained that in order to maximize the potentials and impact of this facility, the bank would create a geographic prioritization of crops across the country to achieve production efficiencies through the development of special areas that will cater to specific commodities.
“Since sustainable foreign exchange earnings are dependent on national competitive advantage, a prioritization framework based on crops, which Nigeria is best suited to produce, will be essential.
“If we are to reach our goal of US$200 billion in non-oil exports, then we can neither ignore nor wish away this problem. We must confront it head-on and provide a solution. That is why we are today throwing a challenge to all State Governments that have existing ports and are willing to partner with the Bankers’ Committee to establish not only a dedicated export terminal but also the entire ecosystem of world-class infrastructure needed for non-oil exports.
“Over the next three months, the Bankers’ Committee will be collecting and analyzing detailed proposals from interested State Governments in order to decide which one we can partner with.
“The Bankers’ Committee will be arranging a significant part of the financing that will be needed for this port, while the selected State Government will have responsibilities that will be spelt out in due course,” said the CBN Governor.
