Nume Ekeghe writes on the Central Bank of Nigeria’s effort at boosting non-oil earnings using RT200and the laudable triumphs it has recorded since its inception
Last year February, the Central Bank of Nigeria (CBN) in an effort to boost non-oil foreign exchange earnings in the country launched the RT200 FX program, which is targeted at raising $200 billion in Foreign Exchange (FX) earnings from Non-oil Proceeds for the country over the next three to five years. At the launch of the program in Lagos, the CBN Governor, Godwin Emefiele explained that the RT200 Programme was hinged on five key anchors namely Value-Adding Exports Facility, Non-Oil Commodities Expansion Facility, Non-Oil FX Rebate Scheme, Dedicated Non-Oil Export Terminal and Biannual Non-Oil Export Summit. More than a year after the launch of the program, foreign exchange repatriation into the country had improved by 40 percent from $3 billion in 2021 to $5.6 billion at the end of 2022. Asides from this, at the end of the first three months of 2023, available data showed that the RT200 program had raked in $1.7 billion in export proceeds.
RT200 Components
According to the CBN, the Value-adding Export Facility is expected to provide concessionary and long-term funding for businesspeople who are interested in expanding existing plants or building brand new ones for the sole purpose of adding significant value to our non-oil commodities before exporting same.
A major anchor of the program, it added, is the Non-Oil Export proceeds repatriation Rebate Scheme.
“The rebate scheme is designed to incentivize exporters in the non-oil export sector to encourage repatriation and sale of export proceeds into the forex market. It was borne out of the need to develop new strategies aimed at earning more stable and sustainable inflows of forex, in order to insulate the Nigerian economy from shocks and forex shortages.
“Only exporters of finished and semi-finished goods are eligible for this incentive, adding that exporters whose proceeds are sold at the Investors’ & Exporters’ Window (I&E) would be eligible. Under the rebate scheme, exporters who are eligible would get a rebate of N65 for every $1 repatriated and sold at the I&E Window for other third-party use, and N35 for every $1 repatriated and sold into I&E for own use on eligible transactions only.
“However, the spread should not be more than 10 Kobo. Payment of the incentive shall be made on a quarterly basis. The accounts of exporters that qualify for rebates shall be credited latest one week after the end of the quarter, ‘the CBN said.
It however warned that any exporter that presented fraudulent document(s) or tries to undermine this Scheme shall be banned from accessing the incentive for 24 months and all accounts shall be placed on Post No Debit (PND).
Speaking at the last bi-annual Export Summit of the RT200 FX program, the CBN Governor, Godwin Emefiele, noted that the program had become expedient considering the challenges facing Nigeria. According to him, these challenges require the enactment of unconventional, innovative, supportive, and complementary macroeconomic policy actions that are inclined towards a market-based financing system.
He said: “Some of these innovative ideas could spring from deep system thinking and powered by technology to engender growth and rapid transformation. Unfolding global economic development suggests that monetary policy was reaching its limit and would need complementary help from other spheres of the economy to propel sustainable advancement. Our Naira-for-Dollar and RT200 initiatives are all attempts in that direction, to drive long-run economic development.
“Today, I am happy to note that the RT200 program has made good progress in export proceed repatriation since its establishment in February 2022. Available data shows that repatriation due to the program increased by 40 percent from $3.0 billion in 2021 to $5.6 billion at the end of 2022. The momentum for 2023 is equally showing strong numbers and impressive prospects. In the first quarter of 2023, a total of $1.7 billion was repatriated to the economy while about $790 million was sold at the I&E window year-to-date.”
Challenges
Citing the examples of what is obtainable in other climes, Emefiele said, “In Ghana for example, export earnings must be repatriated to the country, at least 40 percent of which must be converted to the domestic currency within 15 working days of repatriation. Exporters may hold the remainder in a Foreign Exchange Account (FEA).
“In some countries, the period of repatriation ranges from less than six months from the exportation of the product and could result in prosecution if the proceeds are not repatriated on time. In India, the Foreign Exchange Regulation Act permits the realization and repatriation of export proceeds within nine months from the date of export.
“For any export to a warehouse established outside India, with the permission of the Reserve Bank of India, export proceeds can be repatriated within 15 months from the date of shipment. Many countries of the world have these requirements to ensure effective export repatriation.”
However, he said in Nigeria it had become a matter of compulsion, noting that the apex bank in its little way has towed the path of encouraging, monitoring, and appealing to exporters as well as local manufacturers to export and also repatriate the proceeds of their exports for the good of their company and the country in general.
He said, “We keep hearing cases of people trying as much as possible to sidestep the process and all I can do now is to appeal to those of us who want to export without documentation to please try as much as possible to desist from this practice. We will continue to engage customs; we will continue to engage Nigeria Ports Authority and we will continue to engage the shipping lines and agents to ensure that we need to nip in the bud the incidences of exporting without documentation.
“What this does is reduce the export earning potential of the country. About three years ago when we had a meeting at the CBN in Lagos with the shipping lines, I had said that the CBN will be beaming the searchlight on undocumented exports and we had advised the shipping lines at that meeting that we will also be monitoring and if we find that they export without documentation we will find them by placing their accounts on post no debit (PND).
“We have so far not done anything like that, because we feel that our shipping lines will be responsible to do what is right but if we do not see the kind of cooperation that we expect, I will have to insist that we do what we need to do.”
RT200 Gains
Speaking on the gains of the RT200, Managing Director and Chief Executive of Fidelity Bank, Mrs. Nneka Onyeali-Ikpe noted that the bank’s lending experience has been great, saying that it was mainly because the bank took its time to understand the business and also made significant investments in the area of business management capacity development.
“Our flagship export management program has run for over six years and has graduated over 600 trainees who are now active exporters. Building on our understanding of the space, we then created lending programs that de-risk the risks of lending to businesses in this space.
“This has translated into a strong performance of our loans in this area with zero NPL. We also support in the area of market access. Our flagship market access platform FITCC connects exporters to buyers overseas. More importantly, it helps to provide guidance in the area of product quality and standard improvements.
“The platform also helped in the development of a working relationship between UK product quality agencies, UK retailers, and a cohort of Nigerian exporters with the aim of providing guidance frameworks to improve the quality of Nigeria’s exports to the UK, ”she said.
On his part, the CBN governor said, “Nigeria used to import fertilizer, there were a lot of scams involving the importation of fertilizer into Nigeria, today, Indorama has 3 million metric tonnes capacity, Dangote fertilizer has 3 million metric tonnes capacity.
“Nigeria has grown to be a country that has 6.5 million metric tonnes capacity we have grown from being a country that imports fertilizer, Nigeria’s own requirement is only one million metric tonnes, so the country has grown from importing fertilizer to a country that has achieved import substitution in fertilizer production and is now exporting fertilizer to the world.
“So, we have transitioned from being an importer to a country that produces for its use and we have transited further down to being exporters of fertilizer. There are many other products that are being exported but the giant of them all comes on May 22 when that fertilizer plant begins to flair and a few weeks after that we will feel that Nigeria now produces its own petroleum products. That is what goes into a commitment that translates into action.
“We are ready to break our backs for exporters to achieve this goal and that is the reason we said when we launched this program that we have about N500 billion available for you as facilities to be able to do whatever you want to do to process your export materials. The disbursement of that facility is sub-optimal.
“By being responsive to exporters we are able to source export proceeds that help our economy, we are able to generate export proceeds that weans us away from depending on the CBN as our source of forex to meet our imports.”
