Nigeria’s contribution to global trade could significantly increase if the new non-oil receipt programme of the Central Bank of Nigeria (CBN) is successfully implemented, according to FBNQuest.
Godwin Emefiele, the CBN governor, announced the introduction of the RT200 Foreign Exchange (FX) programme, targeted at raising $200 billion from non-oil exports over the next three to five years.
If the programme, which one of its anchors has similarity with the Naira4dollar scheme, is successful, it will also raise Africa’s largest economy’s average income and its Gross Domestic Product (GDP), a measurement of the monetary value of final goods and services of a country.
The “RT200 FX Programme” stands for “Race to $200 billion in FX repatriation.” With oil receipts – the major source of Nigeria’s FX earnings under pressure due to evacuation challenges in Nigeria’s oil sector, Emefiele sees the RT200 as a major route to raising non-oil FX earnings.
The African continent accounts for only 3 percent of global trade. With non-oil exports accounting for less than 15 percent of Nigeria’s FX earnings, government-backed policies to raise the value of trade is a welcome development.
Some of Nigeria’s products with significant export earning potentials include Cotton ($2.6bn annually), Leather ($750m annually), Soya ($5bn), and Sugar ($2.5bn annually), among others.
Nigeria currently produces about 770,000 metric tons of Sesame, Cashew and Cocoa of which about 12,000 metric tons are consumed locally and 758,000 metric tons are exported, 16.8 percent of the 758,000 metric tons exported annually is processed.
The global chocolate industry is valued at about $130 billion, but Cote D’Ivoire, Ghana and Nigeria produce 72 percent of the global cocoa exports only earn 5 percent (CDI-$3.6bn; Ghana-$1.9bn and Nigeria-$804m).
Ken Ife, development consultant and lead consultant, Industry & Private Sector Development, ECOWAS Commission, noted this on Friday during a virtual Zoom conference on ‘Nigeria Economic Recovery and CBN RT200 FX Programme: Role of Banks and Export Promotion Institutions’, organised by Finance Correspondent Association of Nigeria (FICAN).
The RT200 programme has five key anchors, which include value-adding exports facility, non-oil commodities expansion facility, non-oil FX rebate scheme, dedicated non-oil export terminal and bi-annual non-oil export summit.
Muda Yusuf, CEO, Centre for the Promotion of Private Enterprise (CPPE), commended the new focus of the CBN on supply side strategy, saying supply-side policies were even more critical and impactful than demand management interventions in the foreign exchange market.
Over the last couple of years, the CBN has been fixated on managing the demand side of the foreign exchange market and the outcomes have been suboptimal, he said.
According to the CBN, the first anchor aims to provide concessionary and long-term funding for firms interested in expanding existing plants or building new ones to increase non-oil commodities value before they are exported. With the majority of current non-oil commodity exports being unprocessed, processing should increase Nigeria’s FX earnings.
The second anchor, a non-oil commodities expansion facility, will provide financing to business projects that will significantly boost the local production of exportable commodities. This is to ensure there are raw commodities as feedstock to value-adding facilities i.e., the first anchor. This anchor will also ensure that local prices of commodities do not get inflated.
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The third anchor, the non-oil FX rebate scheme, aims to reward non-oil exporters that repatriate FX earnings back into the I&E window to boost liquidity in the market. It has similarities with the Naira4Dollar Scheme, which has increased remittances to $100m/week from only $6m, according to the CBN.
The fourth anchor, which will involve the building of dedicated non-oil export terminals, seeks to hasten the export process. To achieve its realisation, the CBN has called on state governments with existing ports to establish a dedicated export terminal and infrastructure network. States with current seaports in Nigeria include Lagos, Rivers, Cross River and Delta.
The final anchor is a biannual non-oil export summit with its inaugural event scheduled for the first week of April 22. The summit will aim to discuss the issues, challenges, and opportunities in the non-oil segment of the economy. Participants will include bankers, customs officials, the Nigerian Ports Authority, the Nigerian Export Promotion Council, clearing agents, cargo airlines, shipping lines, logistics companies, insurance practitioners, among others.
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