The Nigerian economy has been challenged on many fronts in recent years due to a combination of local and global factors. Disruptions due to the COVID-19 pandemic, delays in global logistics value chains and local security challenges have put undue pressure on our economy, making macroeconomic management very difficult.
These factors impacted oil production and prices, disrupted trade and exports, reduced capital inflows, and impacted food production. They also exposed the fragility of the Nigerian economy and the need for a more diversified economy.
Despite the rise in the value of oil on the international market, the local currency has been weak, with the naira trading against the dollar N620 on the parallel market and closing at N427 at the counter for investors and exporters last week.
To bridge the growing gap between demand and supply of dollars within the economy, the CBN has taken several measures to manage the shortage of dollars in the country. The apex bank had launched the RT200 FX program in February this year, which is the race to reach $200 billion in non-oil inflows into the country over the next three to five years.
According to CBN Governor Godwin Emefiele, the program was born out of the realization that most of our current sources of foreign exchange inflows were unreliable and constantly subject to the exogenous vicissitudes of global economic developments.
“We have all witnessed the ever-changing fortunes of oil-exporting countries. Even those who are known to manage their oil revenues well also suffer major shocks once oil prices fall. In order to avoid these sudden adjustments in our economic life, we needed to focus on strategies that can help us gain more stable and sustainable currency inflows. We should follow the best practices of other countries and make sure to protect ourselves somewhat from factors that are beyond our immediate control.
The program is based on five pillars, namely the Value-Added Export Facility, the Non-Oil Expansion Facility, the Non-Oil Currency Reimbursement Program, the Dedicated Non-Oil Export Terminal and the bi-annual non-oil exports.
The Value-Added Export Facility is expected to provide concessional and long-term financing to businessmen who wish to expand existing factories or build new ones for the sole purpose of adding significant value to our non-oil commodities. before exporting them.
There is also the Non-Oil Products Expansion Facility, which will also be a concessionary facility designed to significantly boost local production of exportable products. This facility will be designed to ensure that the expanded and new factories that are funded by the Value Added Facility are not deprived of raw material inputs in their production cycle.
Also announced was the Non-Oil Export Earnings Repatriation Rebate Scheme, a special local currency rebate program for non-oil exporters of semi-finished and finished products who present verifiable evidence of repatriation of export earnings. exports sold directly in the I&E window to stimulate liquidity in the market.
The rebate program is designed to incentivize exporters in the non-oil export sector to encourage the repatriation and sale of export earnings on the foreign exchange market and has attracted an inflow of $60 million in two months from 150 exporters who jointly obtained a rebate of 3.5 naira. billion.
Under the rebate scheme, eligible exporters would get a rebate of N65 for every dollar repatriated and sold to the I&E window for use by thirty other parties, and N35 for every dollar repatriated and sold to !&E for their own use on qualifying transactions only.
However, exporters still face several challenges, which were the focus of the first edition of the bi-annual Non-Oil Export Summit. Stakeholders in the export value chain had come together to discuss and find a way out of the various dilemmas facing the country’s exporters.
Emefilele, while speaking at the summit, said, “We have heard of people who want to export their goods queuing up for weeks or months before their goods can come out. So because time is against us, in the short term, let’s work on what the NPA and customs are doing for exporters. That they want to create a set of dedicated routes from which they can easily export their goods.
“It is sad that due to the problem of finding an easier route for goods to be exported out of the country, Nigerian exporters prefer to transport by road or sometimes barges from Lagos to Accra or Benin Republic to export from the.
by losing them, we lose the opportunity to earn export revenue.
To address the challenges faced by the country’s exporters, especially in ports, the CBN Governor alongside Access Corporation Group Chief Executive Herbert Wigwe who is also Chairman of the Banking CEOs Committee backed by Chiefs bank and other stakeholders in the export ecosystem had come to major decisions.
One of them was the agreement that the bankers committee will work with the export ecosystem to help integrate the automation system into the export value chain to reduce the time goods spend in ports while heading to their destination and making the process less cumbersome.
Apart from that, the CBN Governor, who said the country has reached a stage where non-oil export revenue is “absolutely needed”, said: “I want to appeal to the Nigerian Ports Authority and to Nigeria Customs for us to establish a working group. including the Bankers Committee, NPA, Nigerian Customs and possibly a shipping company to address these issues.
“In the short term, let’s see how to immediately create a dedicated export route for exporters, so that their goods can leave. Many of these containers that bring goods into the country come out empty because of these issues. Let’s work on finding a dedicated route where exports can exit easily.
“In the long term, we can talk about how we are working on the Lagos Free Trade Zone and create a road that will move goods through an express road. The port of Lekki has a plan of a road that goes to Ondo which is about 50 km.
“Infracorp is willing to fund this if those of us can give in. Because what I find is that instead of giving in to doing what is for the good of our country, people want to own colonies because they believe it is their exclusive responsibility. We talk about how we can work together now. In the long term, we can talk about the ports of Badagry, Bonny and Ondo.