The Central Bank of Nigeria (CBN) and Bankers’ Committee recently launched the “RT200 FX Programme,” an initiative that would drive some projected annual earnings of up to $200 billion from non-oil exports over the next three to five years. The programme, which began immediately, was designed to help drive in more foreign exchange (FX) earnings, stabilize the local currency, and create jobs in Africa’s largest economy struggling to shore up reserves, a country that has watched unemployment rise to 33.3 percent.
Godwin Emefiele, the CBN governor, who announced the programme after the Bankers’ Committee meeting in Abuja, said it would be anchored on five pillars which include Value-Adding Exports Facility; Non-Oil Commodities Expansion Facility; Non-Oil FX Rebate Scheme; Dedicated Non-Oil Export Terminal, and Biannual Non-Oil Export Summit.
“The RT200 Programme is not intended to be a silver bullet to all the problems in the export segment of the economy, but will help boost productivity and earning capacity of this economy, preserve the long-term value of the naira, and ensure exchange rate stability,” Emefiele warned ahead. He also mentioned plans to halt dollar sales to the banks before the end of the year as the programme fully picks up. Meanwhile, he announced that the CBN’s concessionary interest rate of 5 percent on its intervention facilities will be extended in view of the promising trajectory established in economic growth and job creation. The rate expired on 1 March 2023.
The Value-Adding Export Facility would provide concessionary and long-term funding for businesses interested in expanding existing plants or building brand new ones for the sole purpose of adding significant value to the non-oil commodities before exporting the same. According to Emefiele, this facility is important because the export of primary unprocessed commodities does not yield much in foreign exchange. Today, Nigeria produces about 770,000 metric tons of sesame, cashew and cocoa, out of which about 12,000 metric tons are consumed locally and the remaining 758,000 metric tons exported annually, unprocessed. Also, Nigeria, a major exporter of cocoa, generates a paltry $804 million from the global chocolate industry valued at about $130 billion, while even smaller countries like Cote D’Ivoire get $3.6 billion annually and Ghana, $1.9 billion.
“Therefore, given these alarming disparities between exporters of raw commodities and exporters of semi-finished or finished products, we believe that the Value-Adding Export Facility is a first step to getting back some of these foreign exchange that we rightly deserve,” he said. The expectation is that the facility would also accommodate the demand of Nigerian youths who are already adding value through e-commerce and other tech platforms to provide and export software, financial services, financial technology, fashion, among others.
“As long as these exports are captured with Form NXP and the FX proceeds are repatriated and verifiable, we will accommodate such businesses under this facility,” he assured. The Non-Oil Commodities Expansion Facility will also be a concessionary facility designed to significantly boost local production of exportable commodities and will be designed to ensure that expanded and new factories are financed by the Value-Adding Facility are not starved of inputs of raw commodities in their production cycle, he explained.
In order to maximize the potential and impact of this facility, certain commodities would be prioritized in line with what other successful export-based economies have done as well as develop special areas that will cater for specific commodities, he stated. He further announced the introduction of the Non-Oil FX Rebate Scheme, a special local currency rebate scheme for non-oil exporters of semi-finished and finished products who show verifiable evidence of exports proceeds sold directly into the I&E window to boost liquidity in the market.
Emefiele said analogous to the Naira4Dollar Scheme, which has helped boost remittances from only $6 million per week to over $100 million per week, the plan is to establish the modalities for granting a rebate for each dollar that non-oil export proceeds that an exporter sells into the market, for the benefit of other FX users and not for funding its own operations. The detailed guideline of the scheme will be rolled out this week, he stated, and the plan really is to graduate the percentage of the rebate, depending on the level of value addition into the product being exported.
Following the perennial problems of port congestion cited by exporters as a major impediment to improved operations and foreign exchange earnings, the Dedicated Non-Oil Export Terminal- the third anchor of the RT200 programme, is crucial, especially as Nigeria, reportedly loses about $14.2 billion annually due to congestion at the ports. “If we are to reach our goal of $200 billion in non-oil exports, then we can neither ignore nor wish away this problem. We must confront it head-on and provide a solution.”
He threw a challenge to all state governments that have existing ports and are willing to partner with the Bankers’ Committee to establish not only a dedicated export terminal but also the entire ecosystem of world-class infrastructure needed for non-oil exports.
The governor said over the next three months, the Bankers Committee would be collecting and analyzing detailed proposals from interested state governments in order to decide “which one we can partner with.” The Bankers’ Committee would also be arranging a significant part of the financing that would be needed for this port while the selected State Governments would have their responsibilities spelt out in due course. “We believe that this dedicated port would be capable of creating over 100,000 direct and indirect jobs and would provide a huge boost to our quest for significant improvement in non-oil export earnings in Nigeria.”
Under this arrangement, loans to companies wishing to expand or build new plants that will generate verifiable export proceeds for the economy will remain at 5 percent per year for 10 years loans inclusive of 2 years moratorium. But to drive the programme, the CBN would host the first Biannual Non-Oil Export Summit, during the first week of April this year. The Summit will bring together all the relevant stakeholders in the export business including bankers, customs officials, the Nigerian Ports Authority, the Nigerian Export Promotion Council, clearing agents, cargo airlines, shipping lines, logistics companies, insurance practitioners, to harness ideas that will drive the $200 billion in non-oil exports per year.