The Central Bank of Nigeria (CBN) spent N155 billion on the now-abolished RT200 and Naira-4-Dollar scheme in 2022 in a bid to boost foreign exchange inflows into the country, data from its annual report show.
According to the CBN, the expenses were classified as “rebate expenses” which the apex bank explained was connected to RT 200 and Naira-4-Dollar, policy initiatives introduced by the central bank-led Godwin Emefiele to attract forex inflows.
“Rebate expenses represent expenses incurred by the CBN in connection with the RT200 and Naira-4-Dollar schemes which the Bank introduced to enhance foreign currency inflow, diversify the sources of FX inflow, increase the level of non-oil exports, ensure stability and sustainability of FX inflows, and support export-oriented companies to expand their export operations and capabilities,” CBN said in the report.
The bank said it incurred N137 billion in 2022 on the RT200 scheme and N4 billion as an expense for the Naira-4-Dollar scheme in 2021. These initiatives were scrapped when the unification of the exchange rates was announced.
“The RT200 scheme which was planned to attract roughly $40 billion a year managed to attract $3 billion last year. Even more amusing is what might have happened if it actually attracted the $40 billion it aimed for,” Feyi Fawehinmi, a senior investment accountant, said.
The Naira-4-Dollar scheme was launched in 2021 to encourage remittance inflows from Nigerians in the diaspora. Under this scheme, the CBN offered a rebate of N5 for every $1 received by beneficiaries through licensed International Money Transfer Operators (IMTOs). The scheme was aimed at increasing the supply of foreign exchange and reducing the pressure on the naira.
“There is no cap on the payments, so would CBN have spent more than N1 trillion on this RT200 scheme?” Fawehinmi asked.
Concerning the Naira-4-Dollar scheme, Fawehinmi said, “The problem here has been that a lot of remittances are simply ‘exchanged’ these days without any money actually ever flowing into Nigeria”.
The RT200 scheme was introduced in 2022 to stimulate exports and foreign direct investment, Under this scheme, the CBN offered a rebate of N5 for every $1 remitted by exporters and investors through licensed IMTOs. The scheme was aimed at diversifying the sources of foreign exchange and supporting export-oriented businesses.
Bismarck Rewane, managing director of Financial Derivatives Company Limited, labelled the incentives as a promo that was designed to increase awareness and inflow of the Nigerians in the Diaspora into the system.
“It’s very unusual for policies to be tied around promos; it is only manufacturers who use promos to push or launch products,” Rewane said.
Although the RT200 and Naira-4-Dollar schemes have been cancelled, the naira is the worst-performing African currency this year, slumping more than 40 percent against the dollar, according to Bloomberg.
Since the adjustment of USD/NGN at the Investors and Exporters window in June, interbank FX liquidity has not improved as much as anticipated, partly due to the re-introduction of de-facto controls limiting local trades above 800 and loose monetary policy conditions, analysts at US-based bank JP Morgan said in a note to clients.