Exporters in the Niger Delta have been studying the new federal government policy to boost foreign exchange inflow known as RT200 (race to $200bn in five years).
RT200 is a policy of the Central Bank of Nigeria (CBN) to push Nigeria’s foreign exchange (forex) earning from the present level of $4.8bn per year to $200bn in five years (or $40bn per year).
After a recent seminar on the policy in Port Harcourt, stakeholders made some appeals on how to make it work.
A major plank of RT200bn is the offer by the CBN to offer N65 to any exporter exported a fully processed product and repatriated the forex back home. The CBN is also offering N35 to semi-processed one or to someone that is using the proceeds to finance imports.
There was nothing mentioned for those exporting raw materials. The exporters in the south-south thus appealed to the CBN to create a third window and consider at least N10 per dollar for repatriation of forex earned from export of raw materials or unprocessed agric products.
These were the highlights of a one day seminar on TR200 organised in Port Harcourt by the UBA to create awareness on the scheme and convince entrepreneurs in the Niger Delta to see non-oil export as the next destination.
NEPC opens the floor
Opening the event, Joe Itah, the South-South Zonal Coordinator of the Nigerian Export Promotions Council (NEPC), commended the UBA for partnering with NEPC, saying it is good to know what they have in stock for exporters.
He said the onus is on exporters to grab every opportunity, especially to see how exporters and UBA can walk the talk. “Other banks have their packages too. NEPC is aware of this effort and our dream is to move away from oil export. The aim is to strengthen the economy of Nigeria, to see that problems against export are solved.”
Itah admitted that globally, there are challenges, but revealed that with Onne and Customs all there in Port Harcourt, opportunities abound for exporters in the region.
He said the value of exports from Onne has increased in recent times (some put it at $200m) and said there is excitement that the NDDC has been mandated to fix the Onne Road.
Read also: Steps to solving power supply crisis outlined as investors gather in Port Harcourt
Customs ready to support export from PH
The Deputy Controller of Customs Area 2 (Onne) Ahmed Abubakar (in charge of Export Desk) said export is very important to the survival of Nigeria at the moment.
He said non-oil export (even with the figure mentioned by some persons) is still very small. “The FG is promoting export very seriously; even to the extent of setting up domestic export warehouse (DEW) in some locations in Nigeria where exporters can warehouse their products for one-stop shop inspection, packaging and movement to the terminal.
“What is important is that exporters must add value to whatever agric produce they want to export.”
He alerted Nigerians that the African Continental Free Trade Agreement (AfCFTA) is here. “If you don’t add value, how do you compete in the upcoming open African market?”
He was happy that banks are now offering to help and that the CBN is interested now. He this admonished exporters to focus on proper documentation for export because there are no fees for export except RES of 0.5 per cent of value.
The Area 1 Customs boss, an Asst Controller, M.B Hammah, supported what Abubakar said, adding that because of the forex crisis, Nigeria has no option to export. “We have a lot of products that the world needs. Awareness is the issue. With banks, we will go far. Export is next window to create jobs in Nigeria. NEPC is doing a lot. Export is now simplified.’
UBA shows how TR200 works
In a presentation by UBA’s Stephen Unwan, Head, Corporate Banking & Export Manager, the bank said it has so far carried out awareness campaigns in Akure, Ibadan, Lagos, Kaduna, Port Harcourt, Delta State. He said this is to support government agencies to promote non-oil export.
Unwan warned that import amounts to taking money away, whereas export is to bring in money. ‘This is where balance is needed, thus the concept of balance of trade.”
He said foreign exchange for Nigeria is dropping daily; foreign reserve is dropping too. Inflation is flying. CBN is worried.
Beyond politics, he noted that government wants multiple sources of income and foreign exchange earning, but that ‘Sit-at-home’ due to Covid-19 started the crisis over forex scarcity. “A dependent nation is bound to suffer. Ukraine war has made it worse. Thus, the CBN looks at where we have comparative advantages. Some of our products are the best in the world.”
RT200 targets
Unwan said the scheme targets $200Bn in five years. At the moment, Nigeria makes only $4.8Bn per year. Now, the CBN wants to up it to $200Bn in five years or $40Bn per year.
The strategies showed that Diaspora remittances have increased from $6m to $100m in one month because of incentive of N5 per Dollar remitted. It is foreign reserve that makes a nation proud or strong, he stated.
So, the CBN decided to do incentive in export to motivate exporters to repatriate their foreign income. The policy has five pillars; to fund exporters that are ready to set up processing plants at interest rate of at five per cent. This is to boost processing of products for export. It was reasoned that agric loans have times and seasons, so the new loans would be flexible to suit the reasons.
The next is ‘Anchor Borrowers’ scheme to keep raw materials coming so the plants won’t be idle.
The third is that forex is to be sold to exporters at government rate (N425 per dollar). This is to encourage importers to do export and earn forex to finance their import in what is called ‘E’ for ‘I’. The policy involves giving N65 bonus per dollar for such earned forex, but if you want to use it to finance your own import, they pay you N35 per dollar.
There is quarterly review of this policy. First review was March to June 2022. CBN has been serious so far, he said. They have been paying as promised, and this has caused excitement in most quarters as stakeholders now want to maximize it. The incentives are for processed and semi-processed exports. This was where the stakeholders made the appeal for the third category to earn at least N10 per dollar repatriated.
The UBA Export Desk chief said now, films, music, fashion can earn forex and incentive. Big corporates are now bringing back their foreign income to earn huge incentives.
He mentioned four dedicated terminals for export as another incentive to make export easier.
Banks to play key roles
He mentioned where banks have big roles to play in RT200. He said: the FG asked banks to join, to fund infrastructure obstructing export. The CBN, banks, state governments to participate.
UBA has said yes, we are ready. He said good initiatives without knowledge will fail. So, we (UBA) sell the message around Nigeria. UBA did $1.8Bn export. It is always number one in any matter. How did we do it?
First, we set up committees aimed at meeting CBN guidelines. Next, we got the CBN to reduce loan collateral value from 130 per cent to only 100 per cent. Then, get NIRSAL to cover 50 per cent and exporter 50 per cent. Interest is reduced to 14 per cent for export loan. We provide bridging loan till CBN money comes. We help to match customers in AfCFTA especially for SMEs.
Voices
An exporter, Malobi Ogbechie, secretary of the Port Harcourt Export and Multipurpose Cooperative Society Limited, who was on the panel for the day, observed that SMEs in export business have problem of filling up a container. He advised them to consider group age; coming together to fill one container.
He also pointed out a major hindrance for exporters in PH, saying freight disparity was harming PH exporters. “Only Kano has cargo planes that charge cheap. PH planes charge so high you cannot meet up international price. In PH, 1kg is $5 while Kano is 1kg $3.5.
He also said how to get buyers is a major problem for SMEs, but appealed to NEPC and Customs to help. He however released some websites that can help at a fee.
In his agitated contribution, Morgan Menegbo, CEO, Africa Aquatic Park Ltd; E.D MV Elohimel said 14 per cent interest rate is still too high for exporters. He said in Canada and some other countries, the moment an export account is opened, the firm gets grant to help succeed. He said Nigeria needs to wake up in the international trade game.
