Manufacturers fault CBN’s FX rebate for non-oil export

Manufacturers Association of Nigeria (MAN) has faulted the Central Bank of Nigeria’s (CBN) repatriation rebate scheme, saying the N65 to $1 offered by the apex bank does not cover the foreign exchange rate gap between the official and parallel market.

Segun Ajayi-Kadiri, director-general, MAN, said rather than giving money to those that repatriate funds on the export of value-added non-oil export, the apex bank should support the current Export Expansion Grant (EEG).

The DG said that if the bank must retain the rebate, then it should consider increasing it to at least N100 to N120. “This is because the current gap in the FX rate is at least N150.”

The CBN had said exporters will get a rebate of N65 for every dollar of non-oil export proceeds sold to third parties at the importers and exporters (I&E) window.

The non-oil export proceeds repatriation rebate scheme is a major anchor of the CBN’s RT200 FX programme aimed at attracting $200 billion in foreign exchange earnings from non-oil export proceeds over the next three to five years.

Ajayi-Kadiri speaking in Abuja at the just concluded national conference on non-oil export with the theme “Export for survival: Optimising Nigeria’s non-oil export potentials”, organised by the Nigerian Export Promotion Council (NEPC), said an emerging challenge of the export business sector is the control of the sales price of repatriated export proceeds by the CBN.

“The CBN FX is a good initiative to stimulate the growth of non-oil export in Nigeria. However, the 65 to $1 offered by CBN is not covering the FX rate gap between the official and parallel market.

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“One of the emerging challenges of the export business sector is the control of the sales price of repatriated export proceeds by the CBN. This has been a major source of discouragement to exporters who sell their export proceeds at the controlled price on the importer and exporter FX window.

The MAN DG said the CBN should allow forces of demand and supply to determine the FX prices on the I& E window. This, according to him, will encourage more repatriation leading to improved supply in the FX market consequently causing a decline in the FX prices in the I & E window.

“It is imperative for Nigeria to address the challenges confronting businesses in Nigeria. The manufacturing sector is particularly hit and deliberate action must be taken to boost its competitiveness. There is a need to review and re-energize the vision of the NEPC and CBN’s RT200 FX programme.

The DG further stressed that Nigeria must take non-export very seriously, especially with the impact of the Russia-Ukraine war. According to him, countries that were prepared are the ones closing the gap now in terms of production.

He noted that the highest export volume by Nigeria was at $62.5 billion before the COVID-19 pandemic, explaining that Nigeria is lagging, despite opportunities, while South Africa is doing over $90 billion.

Ajayi-Kadiri further decried that majority of Nigeria’s export remain raw and unprocessed. He, therefore, urged the Nigerian government to encourage investment in local processing through direct incentives. He also urged that a significant proportion of available FX is allocated to production.

Also speaking, Victor Iyama, national president, Federation of Agricultural Commodity Association of Nigeria (FACAN), also stressed that programmes and incentives should be channelled more to the production and processing of raw materials rather than export.

According to him, “production is one thing, export is another thing, our people must be ready to learn how to crop, but we always start from the top. We are getting it wrong on these incentives because we cannot make any meaningful progress if we do not start from the production, but people are reluctant to fund production,” he said.

Bashir Aliyu, managing director/CEO, Aljawdah Export Trading House, noted that there are still many products of high value that are yet to be listed on the NEPC list of products that can be exported such as the Cassia Tora seed and the galangal root.

“We keep talking about cocoa, sesame, and we are not making new additions. Cassia Tora seed is an agricultural commodity, which grows more than sesame seed. The galangal roots are exported from Asia to the European market. It is grown in Nigeria but nobody exports these.

We have to go into massive production of agricultural commodities to get foreign exchange for us to survive. This is a wake-up call for potential exporters,” he said.