The Central Bank of Nigeria (CBN) has prioritized the non-oil export sector to attract foreign capital to the economy. The third bi-yearly non-oil export summit in Lagos with the theme: “RT200: Challenges and Prospects to Success” presented an opportunity for the CBN Governor, Godwin Emefiele, and other stakeholders to chart a new path for the economy and support the realization of $200 billion non-oil export earnings target. The CBN’s Naira-for-Dollar and RT200 initiatives are attempts to drive long-run development and give sustainable backing to the economy, writes Assistant Business Editor COLLINS NWEZE.
The third bi-yearly non-oil export summit in Lagos with the theme: “RT200: Challenges and Prospects to Success” was an opportunity for the Central Governor to discuss with stakeholders how to explore the opportunities in the non-oil sector.
The CBN Governor Godwin Emefiele made it clear that the apex bank is looking beyond the monetary policy measures in its determination to address foreign exchange challenges facing the country.
To bridge the forex gap, the RT200 Forex Programme, an initiative of the Bankers’ Committee, was created to raise $200 billion in non-oil export earnings over the next five years.
The RT 200 Policy was designed to incentivize exporters in the non-oil export sector to repatriate and sell their export proceeds in the foreign exchange market.
This will be achieved through value-adding export facility extension to companies to boost production and more forex earnings to the economy.
According to Emefiele, monetary policy measures need the support from non-oil sector to lift the economy.
He said many countries are turning to export earnings and proceeds repatriation as a veritable tool for bolstering foreign reserves, maintaining a robust balance of payments position, and a stable source of foreign exchange inflows.
According to him, in Nigeria, developing the non-oil export sector is imperative, given that this holds great potential for generating a significant amount of forex earnings.
He said the enactment of unconventional, innovative, supportive, and complementary macroeconomic policy actions that are inclined towards a market-based financing system is the right way to go.
He said now is the time for us to reposition Nigeria on sustainable growth by taking diversification of the economy seriously.
He said the global economic development suggests that monetary policy was reaching its limit and would need complementary help from other spheres to propel sustainable growth.
He said some of these innovative ideas needed to support monetary policy decisions could spring from deep system thinking and be powered by technology to engender growth and rapid transformation.
He said the CBN’s Naira-for-Dollar and RT200 initiatives were attempts to drive long-run development.
The RT200 progress report
Emefiele said the RT200 program has made good progress in export proceed repatriation since its establishment in February, last year.
“Available data shows that repatriation due to the program increased by 40 percent from US$3.0 billion in 2021 to US$5.6 billion at the end of 2022. The momentum for 2023 is showing strong numbers and impressive prospects,” he said.
The CBN boss added that in the first quarter of the year, a total of US$1.7 billion was repatriated while about $790 million was sold at the Investors’ & Exporters’ Window. The balance of the proceeds remained in the Export Domiciliary Accounts of exporters.
He said proceeds not sold at the I&E Window would not be eligible for the rebate, adding that names of exporters who received the rebate would be published.
“So, we encourage holding their export proceeds in their domiciliary accounts to take advantage of the rebate by selling at the I&E Window. We are committed to strengthening and expanding foreign exchange supply into the market.
“Naturally, you are important in this clarion call of expanding the supply of foreign exchange inflow into the economy. For exporters, flying the flag of Nigeria in the international market, the Bankers’ Committee and the CBN stand ready to partner with you to achieve your goals. You can benefit from the many financial programs introduced by the CBN through your bank and as such grow your business exponentially,” he said.
He said the theme for the program was selected to review the progress made, from the inception of the RT200 program in the first half of last year to date.
He said the summit provides a platform to deliberate on how to accelerate the value and volume of Nigeria’s non-oil exports and ensure that proceeds therefrom are utilized most optimally for the benefit of our economy.
He said in some countries, the period of repatriation ranges from less than six months from the export of the product and could result in prosecution if proceeds are not repatriated on time.
Emefiele said the CBN, in collaboration with the Bankers’Committee, identified the RT200 program and export promotion as a critical tool for attaining sustainable and stable external balance and safeguarding the value of our currency.
He explained that if a nation continues to consume more than it produces, and imports more than it exports, such a nation is destined to fail as there would be no meaningful national development without harnessing the export sector potential.
In Nigeria, he said, developing the non-oil export sector is imperative, given that this holds vast potential for generating a significant amount of foreign exchange earnings.
Emefiele admitted that the challenges facing the country are many.
These challenges require the enactment of unconventional, innovative, supportive, and complementary macroeconomic policy actions that are inclined towards a market-based financing system.
Citing Ghana, he said its export earnings must be repatriated, and that 40 percent of it is converted to the domestic currency within 15 working days of repatriation. Exporters may hold the remainder in a Foreign Exchange Account (FEA).
Also, India’s Foreign Exchange Regulation Act permits the repatriation of the 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 have these requirements to ensure export repatriation.
“There is no better time than now to synergize for the benefit of our nation, as we implement a coordinated policy agenda that will support the economy and improve the economic activities,” he said.
In addition to the keynote speech by Emefiele, the Lagos State Governor, Babajide Sanwo Olu, also addressed the gathering. There was as well a presentation by the Managing Director/CEO, InfraCorp, Lazarus Angbaso.
Besides, the summit featured two-panel sessions. The first session focused on “Appraising the Gains of RT 200 & Unlocking the Opportunities in Non-Oil Exports”. The second focused on “RT 200: Challenges and Prospects to Success”.
Also, Managing Director/Chief Executive Officer, of Zenith Bank, Mr. Ebenezer Onyeagwu, said export proceeds of N144 billion have been paid to exporters under the program. He urged more exporters to embrace the scheme in the interest of the economy.
Other stakeholders spoke on the need to support CBN’s non-oil export initiatives to protect the naira, save dollars and support local industries.
Raw materials exporters get a rebate
Addressing concerns expressed by some stakeholders at the summit, namely the need for the inclusion of more players in the non-oil export sector, especially small exporters, the CBN announced that it would to pay rebates to exporters of unprocessed items.
Announcing this measure, Emefiele stated: “The reason we initially decided that we would only pay a rebate for value-added products was to encourage exporters to move from just exporting crude items.
“We wanted to create an opportunity to encourage you to set up an arrangement that processes these raw materials and creates job opportunities for our people rather than just exporting raw materials.”
He, however, noted that the inclusion would encourage more exporters and further strengthen the efforts of attaining the RT-200 goal, but said the rebate for unprocessed items would not be at the same rate paid for value addition or processed products.
More loans to the economy
In addition, Emefiele reiterated the commitment of the apex bank and others to helping exporter achieve their goals.
He said: “For exporters, flying the flag of Nigeria in the international market, the Bankers’ Committee and the CBN stand ready to partner with you to achieve your goals.
“You can benefit from the many financial programs introduced by the CBN through your bank and as such grow your business exponentially.
“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 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 wean us away from depending on the CBN as our source of forex to meet our imports.”
Earlier, Emefiele had directed banks to lend, at least, N500 billion to non-oil export-oriented companies yearly to boost the productive sector and support dollar inflows.
He said the lending plan to support non-oil exporters would require the big banks to take a larger chunk of the loan plans and lend more to the sub-sector as part of their support for the business segment.
He called for continuous support to exporters who might need facilities to bring improvements to the way they could process their goods and make them high-standard products qualified for export due to their higher value.